Five Ways China Took the Helm in 2017
It’s tempting to say that 2017 was the “Year of China” in the shipping trade, but it’s equally fair to say that we are deep into the Decade of China -- with the possibility of many decades to come.
As the Asian giant continues its ascent to global superpower status, more and more international trade is pivoting to its shipping lanes, driven by the supply of manufactured goods and demand from the world’s largest population. In fact, as we explored in our popular infographic, nine of the top 20 international ports can be found in China.
So it makes sense that Freight Forwarders and others in the ocean freight business need to be extra aware of what’s happening in China -- not just shipping-specific trends, but also the broader trade, political, and cultural developments that affect our business. Here are the five top China stories that captured our attention in 2017.
Container Traffic Set New Records
According to analysis by Drewry, container traffic will set a global record in 2017, surpassing 200 million TEU’s. China contributed mightily to this lift: it increased its container throughput by 10%, while 30% of the worldwide increase came from intra-China activity alone. For Freight Forwarders, the numbers speak clearly: neglecting China trade is a risky proposition. In business, it always makes sense to go where the growth is, and when looking for new opportunities, forwarders would do well to look to China.
Read More: China on the Rise: What You Need to Know
Infrastructure Takes Center Stage
The world has taken notice of China’s One Belt One Road Initiative. Since 2013, China has been investing heavily in the infrastructure along the Silk Road with an intent to improve infrastructure in between China and the nations of Europe. And unlike so many underfunded infrastructure initiatives in other countries, China spent $32.2 billion on warehouse, trucking, and other logistics investments in 2017 alone. Of primary importance to ocean freight, though, is the companion “Maritime Silk Roads,” which similarly aims to enhance sea routes between China and the nations of Southeast Asia and the Middle East.
Automation is Making Waves
This year, the Port of Shanghai opened the world’s largest automated container terminal: Shanghai Yanshen Deep Water Port. Already one of the largest ports in the world, Shanghai has now become a proving ground for the futuristic automation benefits we’ve all been anticipating. As quoted in the Straits Times, Chen Wuyuan, president of Shanghai International Port Group said, "The automated terminal not only increases the port's handling efficiency, but also reduces carbon emissions by up to 10 percent.” That means that China is solidifying its position as a leader not just in efficiency and capacity, but also in environmental friendliness -- a factor that will only become more important in the coming years.
Domestic Energy Demands are Shifting
More Chinese residences are converting to liquified natural gas (over coal), which led to an increase in gas imports, leading to a new record of 4 million tons imported in November. Even though China has its own LNG reserves, most of the demand is being met by ocean imports. Demand is expected to continue to rise in the new year. The real story here is that a wide variety of trends -- ranging from the cost of natural resources to domestic consumption preferences -- can have a huge impact on the economics of ocean freight. Yet another reason for freight forwarders to broaden their focus and pay attention to the big picture in China.
Waiting on The Trump Effect
Despite much anti-China rhetoric and tough trade talk during last year’s presidential campaign, the jury is still out on how trans-Pacific trade will play out in the Trump era. President Trump railed against a trade deficit, highlighted by the imbalance in import vs. export between the two companies, and upon taking office the United States withdrew from the Trans-Pacific Partnership. But at the Asian Summit this fall, Trump also made clear that he understood the importance of China trade and has maintained a cordial, if not entirely friendly, relationship with Chinese President Xi Jinping. It’s hard to overstate how valuable the US-China trade relationship will be in the coming years, but it’s equally difficult to predict what direction it will take.
By: Fauad on Dec. 20, 2017, 11:01 a.m.