China transport sector has ranked among the strategic sectors of China economy. And she does not hesitate to support its major shipowners, as shown by two recent cases. *
China attaches importance to maritime transport for two reasons.
The first is strategic, and refers to the fact that this country is very dependent on foreign trade – in terms of supplies, as well as due to the importance of its exports – does not want to entirely rely on foreign carriers. The second which is more immediate, is the fact that the “world factory” believes she got only a small part of the enormous logistical activity associated with its foreign trade. In this context, to maintain its major shipowners afloat in a highly competitive environment, Beijing does not hesitate to put pressure on their competitors to support China transport sector.
The first example was provided in the container transport, which primarily concerns the huge Chinese exports.
In the summer of 2013, the top three global containerized shipping companies, the Danish Maersk, the Swiss MSC and the French CMA CGM, announced the P3 alliance that aimed to coordinate their services, especially on Europe – Asia lines. But a year later, the project ran into an issue: in summer 2014, the Chinese Ministry of Commerce putted an opposition to its monopolistic pattern.
The three potential partners accumulating 38% of the world container carrying capacity and a combined market share exceeding 50% on China connections – Europe, the argument seemed admissible. But this decision will also be extremely in favor of the China transport sector.
A welcome alternative
In fact following the Chinese refusal in July 2014, Maersk and MSC, announce Alliance reduced to two, and named M2. They leave number three CMA CGM, which find an alternative with the creation of the alliance Ocean with the United Arab Shipping Company (UASC) and … Chinese CSCL (China Shipping Container Lines).
CSCL, Chinese number two (and world number seven) container transport leave its outsider status to the one of a member of the alliances that will share more than half of China – Europe market.
Giant ships for determining market
The second example has found its epilogue in February 2015. It focuses this time on bulk shipping, and Chinese imports.
its origins are in the efforts of giant Vale to make his competitive iron ore supply in the Chinese market. This one accounts for 60% of world exports. In 2008, the Brazilian group launched a ship acquisition program, which will take the name of Valemax, the largest bulk carriers ever built.
360 meters long, with a capacity of 400,000 tons deadweight, these boats are designed to optimize the routing cost of iron ore from Brazil to China. These costs are indeed the main handicap Vale against its two major competitors, BHP Billiton and Rio Tinto. Those bulk ore cargoes comes from Australia, (relatively) much closer to China.
But in January 2012, eight months after their entry into operations, Valemax are also faced with an insurmountable obstacle. The Chinese authorities have forbidden the country’s ports to trade vessels over 300,000 tons of deadweight capacity, in the name of the fight against monopolistic situations. Forced to transfer its cargo to China in smaller vessels, Vale lost the cost benefit associated with its huge investment.
The standoff between the mining group and the Chinese authorities will last two and half years. Its solution was announced in September 2014, when the Brazilian … makes an agreement with COSCO (China Ocean Shipping Corp.).
China’s first actor (that is particularly present in the bulk) is buying four Valemax, with a charter party of twenty-five years with Vale. the Brazilian group announced a similar contract for ten new bulk carriers of the same size to be built by Chinese yards.
The expected result occurs in February 2015 when the Chinese Ministry of Transportation reports 300,000 to 400,000 tons deadweight gauge the limit allowed in Chinese ports. These can unlock adapted quay construction projects that had been committed, and suspended in the meantime.
China has become a major market for global players in the maritime transport, whether containerized or bulk. She is fully aware and has the means to recover some of the huge logistics benefited from this activity generates for China transport sector.