polar silk road

China longing for a Polar Silk Road

Following on from their Silk Road direct link, China are now looking to capitalise on a Polar version.

The first silk road train from China to Britain arrived in February of last year – (see our news post at that time for more information)

China now plans to create a Polar Silk Road of new Arctic shipping lanes, to extend the Belt and Road initiative created by President Xi Jinping.China is a non Arctic state, but is becoming more active in the polar region, and even became a member of the Arctic Council back in 2013. The council has eight permanent members made up of the five coastal Arctic countries, Norway, Russia, Canada, U.S. and Denmark, and three non coastal members, Finland, Iceland and Sweden.

They have this week published their Arctic Policy Whitepaper.  in which they set out that as a result of global warming, the Arctic shipping routes are likely to become important transport routes for international trade. China respects the legislative, enforcement and adjudicatory powers of the Arctic States in the waters subject to their jurisdiction.

According to the paper China, as a responsible major country, is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region, jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative, so as to build a community with a shared future for mankind and contribute to peace, stability and sustainable development in the Arctic.

Global warming in recent years has accelerated the melting of ice and snow in the Arctic region. As economic globalisation and regional integration further develops and deepens, the Arctic is gaining global significance for its rising strategic, economic values and those relating to scientific research, environmental protection, sea passages, and natural resources.

With the ice melted, conditions for the development of the Arctic may be gradually changed, offering opportunities for the commercial use of sea routes and development of resources in the region. Commercial activities in the region will have considerable impact on global shipping, international trade and energy supply, bring about major social and economic changes, and exert important influence on the way of work and life of Arctic residents including the indigenous peoples.

Shipping through the Northern Sea Route would shave almost 20 days off the regular time using the traditional route through the Suez Canal, the newspaper reported last month.

In 2017 a Russian tanker made the journey from Norway to South Korea without need of an icebreaker for the first time, because of climate change.

However, there are misgivings from other countries who believe this to be an example of rapid Chinese expansion and a chance to use resources that should be beyond their reach.  China refers to itself in the paper as a ’near-Arctic state’ and as such believes that its close geographical location means that the natural conditions of the Arctic and their changes have a direct impact on China’s climate system and ecological environment, and, in turn, on its economic interests in agriculture, forestry, fishery, marine industry and other sectors. However, oil, gas and mineral resources are also part of the rich range of resources that are present in the Arctic, and China seem keen to capitalise on those. Fishing, scientific research and mining are also possibilities and China requests involvement due to the direct impact that the Arctic has on their climate system, ecological environment and economic interests.

Vice-Foreign Minister Kong Xuanyou said at a briefing “Some people may have misgivings over our participation in the development of the Arctic, worried we may have other intentions, or that we may plunder resources or damage the environment, I believe these kinds of concerns are absolutely unnecessary.”

In the conclusion of the paper, China state that the future of the Arctic concerns the interests of the Arctic States, the wellbeing of non-Arctic States and that of the humanity as a whole. The governance of the Arctic requires the participation and contribution of all stakeholders. On the basis of the principles of “respect, cooperation, win-win result and sustainability”, China, as a responsible major country, is ready to cooperate with all relevant parties to seize the historic opportunity in the development of the Arctic, to address the challenges brought by the changes in the region, jointly understand, protect, develop and participate in the governance of the Arctic, and advance Arctic-related cooperation under the Belt and Road Initiative, so as to build a community with a shared future for mankind and contribute to peace, stability and sustainable development in the Arctic.

China have already proved their expansion plans through their earlier silk road and belt initiatives which although could take up to half a century to complete, ultimately should succeed. Safeguarding the environment of the arctic has to be a priority in a time of global warming, and with China pushing ahead it is down to the other members of the Arctic Council to make sure that they are doing as they say they would and keeping to the premise that the counties can work together to build a better Arctic for many centuries to come.

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Here are some photos from their recent trip to Dubai.

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chinese new year

Do you have any urgent cargo that needs to be shipped before the Chinese New Year?

Unlike our New Year festivities, the Chinese version is a movable celebration and this year happens on 16th February. As a national holiday, Chinese families gather together for a reunion dinner on New Year’s Eve, and clean their houses to sweep away bad fortune on New Year’s Day.

This obviously means that Chinese Shipments will be affected around this date for possibly up to two weeks.

Please see our graphic for more information:

chinese new year

port of Southampton,

Costs are rising at Port of Southampton

According to The Loadstar, Hauliers and logistics operators are warning UK shippers and consignees using the country’s second busiest container gateway, Southampton, of higher land side rates, as costs rise as a result of growing box congestion.

The congestion has been a longer term effect of the  new alliance structure, which came into effect in April 2017. It was meant to provide a more even split of UK ports. At the time it was argued that port of Southampton would see an increase of 9% of vessels, a 17% increase in average vessel size and ten inbound calls, closely followed by Felixstowe with nine inbound calls.

DP World, a global global ports and logistics company operating Southampton, is the only port to handle vessels operated by ‘The Alliance’, ‘Ocean Alliance’ and ‘2M’ alliance – the three major container shipping line consortia.

DP World Southampton is linked to an unrivalled global shipping network, providing competitive shipping options to all corners of the globe. The unmatched geographical location, excellent road and rail connectivity of both terminals – plus their outstanding productivity levels and resilience to bad weather – help make the UK more competitive for importers and exporters.

However, one haulier told The Loadstar: “The problems began with the move of The Alliance services from Felixstowe to Southampton last April, which meant a lot of hauliers moving with their customers.

“With the increased volumes there is greater demand for haulage transport yards in and around Southampton and, since then, every haulier has been jostling to get facilities in the right place. The trouble is that these simply don’t exist, there is simply nothing available.

“You have to go a lot further than the 10-mile radius of a port that makes economic sense for a haulier and, as a result, round-trips between port and transport yard have greatly increased,”

This has been compounded by two further issues: the introduction of larger vessels, resulting in more container exchanges per vessel call; and the ongoing squeeze on driver availability. This has led to a battle to obtain drivers, with agencies said to be targeting their recruitment efforts on luring drivers from haulage firms with the promise of higher wages.

Port executives have however defended their record in handling containers with a spokesperson for DP World Southampton claiming that its operations serving hauliers had improved over the last 12 months.

“Southampton’s landside truck turnaround times actually decreased from average 36 minutes during 2016 to just below 33 minutes during 2017, an improvement of 7%.

“This is for the total time a truck is in the terminal, from arriving at the gate for dropping off an export container to picking up an import container and leaving from the gate.

“So, allegations from hauliers that there is structural congestion at Southampton are factually incorrect,” the spokesperson said – although acknowledging the disruptive effect the change in alliance schedules had on haulage operations in the UK.

“The large national haulage operators have a long presence at Southampton as well as the locally established hauliers. The choice of THE Alliance to call at DP World London Gateway and DP World Southampton meant some hauliers that previously worked out of Felixstowe have picked up new business at Southampton and London Gateway and are now looking for facilities.”

The terminal also disputed claims that the number of boxes at the port had increased significantly, and pointed to a 2016 terminal expansion project as evidence that it had sought to alleviate possible congestion.

It has previously been estimated that at any one time, there are around 15,000 containers in Southampton’s container yard, compared with around 6,500 before The Alliance services began calling there. The issue is not so much the new services, but the size of vessels deployed in the strings, which has led to more extreme peaks and troughs of container volumes.

It’s easy to see the trend in the growth of ships, but what cannot be forgotten is the role of ports. Amidst the fanfare that greets the arrival of colossal ships, there’s a feeling that ports are struggling to keep pace.

“When these ships come in to port, they need larger container gantry cranes, a larger storage yard, and better inland distribution,” says Richard Clayton, chief correspondent at IHS Maritime and Trade. . That of course costs money, not to mention the necessary space to expand, which is not always a given in densely populated cities.

•Sources: The Loadstar / Multimodal / APB / ship-technology

calm sea

Calmer seas for world Shipping in 2018

The 2018 marine forecast for transpacific and other major shipping trade routes notes that full recovery depends on a number of political, economic and technological factors.

China is also a concern.  “I know analysts have been harping on about it for years,” said Transport Intelligence Ltd. economist David Buckby, “but I think given what the Chinese government has said following the 19th [Communist] Party congress – that it will be switching focus from meeting long-run economic growth targets to other objectives – coupled with recent comments on trying to manage down debt, there is a real chance that Chinese growth will stutter.”

Buckby said the slowdown might not occur in 2018, but it will likely happen over the next few years.

“As the linchpin of so many global supply chains, what affects China is going to impact the rest of the world. I don’t know exactly when that’s coming, but when it does, I think it will adversely impact global port volumes quite significantly.”

McKinsey & Co.’s Container Shipping: The Next 50 Years also points to warning signs about China’s retooled economic development model. It estimates that the swing away from exports of goods to a model based on consumption and services has coincided with a drop in China’s real gross domestic product to between 6% and 7% from more than 10%.

Asia, and China especially, are major containerised-shipping drivers. Asia accounted for 64% of the world’s container throughput in 2016, and McKinsey notes that China imported and exported 52 million 20-foot equivalent units (TEUs) in 2015 compared with 13 million in 2000. It also maintained that China’s dramatic growth and the resultant boom in container trade over the past three decades is unlikely to be repeated elsewhere in the world.

But John Murnane, a partner in McKinsey’s travel, transport and logistics practice, noted in an email response to Business in Vancouver that in the near term, continued growth in container-shipping demand is likely.

“The U.S. and Canada continue to grow strongly, and volumes in 2017 outpaced expectations. This is good news for all ports and terminals. We expect 2018 to continue this strong volume growth.”

Oxford Economics agrees. The U.K.-based economic research company raised its global GDP growth forecast to 3.2% in 2018 from 2.9% in 2017 based on what it sees as a continuing strong performance of the world economy and positive “omens for 2018.” Its December 4 global outlook research briefing pointed to four key reasons for that optimism: strong trade growth, low inflation, robust emerging markets and resilience to political uncertainty.

In a November brief, it also revised its world trade forecast up 0.5 percentage points to 4.2%.

Oxford Economics’ forecast for Canada predicts that exports will rise 2.9% in 2017 and 4% in 2018. It sees imports up 3.7% in 2017 and 2.4% in 2018, but Canada’s GDP growth slipping to 2.1% in 2018 from 3% in 2017.

The International Monetary Fund’s World Economic Outlook, meanwhile, projects global economic growth of 3.6% for 2017 and 3.7% in 2018.

In its 2017 nine-month financials, Hapag-Lloyd (ETR:HLAG), the world’s fifth-largest ocean container company, noted that global container-shipping volume from 2018 through to 2021 is projected to increase between 4.8% and 5.1%.

The United Nations Conference on Trade and Development’s Review of Maritime Transport 2017, meanwhile, pointed to CETA and the economic partnership agreement concluded between Japan and the EU in July as positive developments for global trade and shipping. It added that the growth of cross-border e-commerce could also drive long-term container-shipping demand.

However, it noted that a sustained recovery will require a strong commitment to “coherent and co-ordinated multilateral policies.” It also red-flagged the growing cybersecurity threats to world shipping supply chains.

While Buckby agreed that CETA will benefit port volumes, he doubted that it would significantly increase cargo through Vancouver and other Canadian ports.

“The dirty secret of many free-trade deals is that they don’t tend to have a substantial economic impact, especially if they just address tariffs, which tend to be low anyway, and don’t focus much on breaking down non-tariff barriers.”

Buckby added that port volumes would drop if NAFTA collapses.“And even if it is successfully renegotiated, supply chains still face disruption, thanks to possible changes to rules of origin.”

The newly widened Panama Canal has also opened the way for larger transpacific ships to reach East Coast ports directly. Infrastructure and operations in those ports consequently face similar pressures.

Port productivity suffers because a mega-container ship can take up to five days to unload. “Some ports are rising to the challenge and investing, but smaller ports and constrained ports risk losing some mainline services.”

Source: Hellenic Shipping News