The Chinese government is to take 8 measures to boost the logistics industry as reported by the Shanghai Daily:
1. Ease the tax burden on logistics firms by expanding a pilot program to exempt logistics companies from multiple collection of taxes and unify business tax rates on different steps of the supply chain;
2. Improve land use policies by guaranteeing land for logistics parks and allow expansion of
convenient warehouse siting;
3. Reduce highway tolls and extend an electronic toll system to allow trucks to pass through toll stations without stopping;
4. Improve management of logistics companies by simplifying approval procedures;
5. Encourage bigger logistics firms to integrate their resources and smaller companies to boost their market presence through mergers;
6. Boost technology innovation in the industry;
7. Urge local governments to increase investment in logistics infrastructure and help companies widen financing channels;
8. Encourage bigger logistics firms to focus on transport of agricultural products to help farmers get their produce to market as cheaply and efficiently as possible.

Shanghai’s Yangshan Deepwater Port may handle 12.3 million TEU of containers this year, up 21.7% year on year, as trade volume rebounds. The port will have an additional capacity of 4 million TEU annually once construction of the fourth phase is completed, said Wang Xuan, General Manager of Yangshan Tongsheng Port Construction Co. When fully operational by 2015, the port will have 10 kilometers of coastline with nearly 30 berths for container vessels. Capacity would be expanded by 40% in the fourth phase at a cost of more than CNY10 billion. The port accounts for about a third of the total throughput handled by Shanghai, which also includes terminals in the Waigaoqiao area and Baoshan district. Last year, Shanghai’s container throughput totaled 29.05 million TEU, while the Yangshan port handled 10.1 million TEU, exceeding its designed capacity of 9.3 million based on its three completed phases.  Shanghai may handle 30 million TEU this year, Chen Xuyuan, President of Shanghai International Port (Group) Co, said. Despite leapfrogging Singapore to become the world’s No1 container port last year, Shanghai has yet to transform itself into an international shipping hub because of the small volume of international transshipments via the city. “Shanghai Port has to fine-tune services and operations before it can really compete with foreign rivals to vie for transshipments,” said Shao Xiaoping, Director of the Yangshan Customs House. “We still have a long way to go.”

Shanghai is facing competition from neighboring ports such as Ningbo at home and Busan in South Korea to consolidate its role as a key shipping center in East Asia. Transshipments account for only 5% of the total container throughput in Shanghai. Shao said Shanghai would not be universally recognized as an international shipping hub unless 40% of the cargos were transported to other countries via the city. Throughput at Yangshan Port is planned to grow to 12.3 million TEU in 2011, up 21.78% from 10.1 million TEU in 2010. Yangshan’s target is to have a throughput volume of 15 million TEU by 2020. Chen Xuyuan, President of Shanghai International Port (Group) Co, said the container throughput of Shanghai Port will exceed 30 million TEU in 2011. About 1,425 international lines operated in the port of Shanghai in April, handling more than 90,000 TEU of containers. “Equipped with the latest technology and facilities, customs procedures have been greatly simplified”, Shao Xiaoping, Director of the Yangshan Customs said. “Customs clearance time has shortened to one or two hours from a full working day, and the cost of logistics has also been reduced by 30%.”

China’s domestic carmakers now have a new option to ship their vehicles to overseas markets, after a cargo vessel capable of carrying 5,000 cars – the MV COSCO Tengfei – began operations. The carrier will significantly cut shipping costs and reduce carmakers’ heavy reliance on foreign logistics companies, according to senior executives of China Ocean Shipping (Group) Co (COSCO). Designed by the Shanghai Design Institute and manufactured at COSCO’s Zhoushan shipyard south of Shanghai, COSCO Tengfei and COSCO Shengshi – put into service earlier – will deliver Chinese-made cars to South American countries and carry European cars on the return trip, Han Guomin, CEO and Director of COSCO Shipping, told China Daily. The carrier, 182.8 meters in length, 32.2 meters in width and 14.95 meters in depth, has a deadweight tonnage (DWT) of 14,500. Equipped with three adjustable decks, it can hold cars of different heights. According to Han, it will take COSCO Tengfei 28 days to reach its destination, Santos in Brazil, from Shanghai’s Pudong Port. More than 4,400 cars made by Chery Automobile, Anhui Jianghuai Automobile (JAC), Sany Heavy Industry, and Lonking Holdings are being shipped on the first journey. Shipping costs will fall once the company manages its own fleet, according to Han.  Each of the two ships costs USD53 million. According to Xu Lirong, Vice President of COSCO Group, the company started to develop its own carriers after signing a 15-year car shipping strategic cooperation agreement with 17 domestic carmakers, including Chery, JAC and Chang’an in 2006. Chinese car companies exported 72,100 units in May, a rise of 6.79% month-on-month and 53% year-on-year. During the first five months of 2011, China exported 225,400 cars, an increase of 56.7% over the same period in 2010.

Exporters and importers could face paying higher container freight rates on key trade lanes in the next few months as shippers such as Orient Overseas Container Line attempt to rebuild earnings following a weak first quarter. But these same manufacturers could also suffer a shortage of containers if trade rebounded in the second half of this year, Soren Karas, Maersk Vice President and Hong Kong-based head of South China, said. This was largely because, unlike last year, few carriers parked spare ships as demand dropped after Christmas and during the Lunar New Year holiday. Instead, container lines dropped freight rates to fill their ships with cargo, which put pressure on revenues and profit. He said that while container volumes on transpacific trades grew 4.4% and those on Asia-Europe routes 5.5%, there was 16% to 18% growth in capacity in the first quarter compared with a year earlier. Karas said about 10% of this increased capacity was because shipping lines did not idle their vessels. This oversupply of vessels was what had challenged container lines in the first quarter of this year, he told around 300 delegates to the Journal of Commerce shipping conference in Shanghai. Zhang Ye, President of the Shanghai Shipping Exchange, said container rates on Asia-Europe routes halved from USD1,500 per TEU to USD800 per TEU in eight months. He said ports in the east such as Shanghai and Ningbo saw a 15.7% rise in container volumes to 11.05 million TEU, while northern ports posted an 18.2% surge to 7.7 million TEU from January to March. Ports in the south only saw a 2.4% rise in volumes to 13.47 million TEU. Karas forecast that demand and capacity growth would be more balanced in the second half of this year, but he warned that with throughput volumes forecast to grow by 8% this year there could be a shortage of containers to move goods. He said the global container fleet totaled around 31.3 million TEU, but with the forecast growth this year a further 1.8 million TEU was needed, the South China Morning Post reports.

The Shanghai Shipping Freight Exchange Co started trading in China’s first forward freight futures, allowing cargo owners, export manufacturers and shipping companies to hedge risk amid fluctuating shipping rates. “The new derivative is a key step towards expand shipping financing in Shanghai, and that’s important for one of the world’s biggest ports,” said Zhi Guanglu, Vice Director of the Water Transportation Bureau of the Ministry of Transport. The Exchange, the first of its kind in China, provides forward freight rate contracts based on shipping rates on the China-Western American route and the China-European route. Freight derivative trading on each route has six contracts, maturing from July to December. The exchange requires a 10% margin for each trader. Zhang Ye, President of the Shanghai Shipping Exchange and Chairman of Shanghai Shipping Freight Exchange Co, rang the bell for trading in the new contracts on the opening day.