Shanghai’s free trade zone (FTZ) is launching a challenge to free port Hong Kong. “But it won’t be a serious threat to Hong Kong in the next five years,” Samuel Lau, Director of Kerry Logistics said. DHL expects that the establishment of the free trade zone will facilitate links between existing ports and airports in Shanghai and increase the efficiency of cargo flow. Bond-to-bond transfer of goods without the need to pay import tax between the existing custom-bond areas in Waigaoqiao port, Yangshan port and Pudong airport could reduce declaration times by about a day, said Victor Mok, Chief Executive of DHL’s supply chain in North Asia. The “fast clearance” channel of goods from Pudong airport also will save half a day. The zone allows value-added services that have been mainly carried out in Hong Kong to be performed in Shanghai. But Hong Kong could still edge out Shanghai in flexibility and productivity, Lau said. “The front-line workers in Hong Kong are still more productive than those in Shanghai,” he added. But in terms of logistics hardware, Hong Kong is at a disadvantage. The logistics centers in Shanghai are low-rise buildings spanning huge areas so that all the products from one company can be consolidated and processed more effectively on the same floor. Most of the logistics centers in Hong Kong are often in industrial buildings of more than 20 stories.

Shinan district, the central district of Qingdao, has mapped out a grand plan to become an international shipping service center in Northeast Asia. After years of development, Shinan district is now the center of the city’s politics, economy, culture and finance. In 2012, Shinan’s trade volume reached USD14.7 billion, ranking first among all districts of the coastal city in Shandong province. More than 80% of shipping and logistics companies in Qingdao are located in Shinan district. More than 3,000 logistics companies have either headquarters or subsidiaries in Shinan. Qingdao’s construction of a free trade zone (FTZ) with South Korea and Japan will create unprecedented opportunities within the district. The shipping industry will be high on the agenda for the future development of Shinan. The district hopes to attract a large number of international shipping companies to set up headquarters. The goal is to introduce 10 top shipping companies with global influence and 20 large shipping service companies by 2016. The district has implemented preferential policies to improve its investment environment and attract companies. It set up a credit-rating system for logistics companies. Those with a higher rating will gain more government support in their brand building. Qingdao has more than 450 shipping lanes to all parts of the world. It is also home to about a quarter of the marine science institutes in China with more than 80% of academicians in the marine field, which gives the city a strong lead in marine technology. Qingdao port handled 410 million metric tons of cargo last year, making it the seventh largest in the world.

The shift of manufacturing and outsourcing to China, which started after the country joined the World Trade Organization (WTO) in 2001, has probably ended. But the scale of the move back to production in Europe and the Americas has been exaggerated, a senior shipping executive said. Andy Tung, Chief Executive of Orient Overseas Container Line, said: “China will still remain competitive, at least for a period of time.” “There is a supply chain infrastructure in China which is not easily replicated [in other markets’],” Tung told shipping executives at the Sea Asia conference in Singapore. Onshoring – the relocation of manufacturing back to countries closer to key Western markets – “is a bit overhyped”. Tung’s views were echoed by other container shipping industry executives. Teo Siong Seng, Managing Director of Pacific International Lines, said a meeting of company managers in Shanghai two weeks ago found some cargo production was returning to China after being shifted outside the country. This was because the total cost in terms of logistics and shipment reliability was cheaper in China. But Kenneth Glenn, President of Singapore’s APL, said: “I think Latin America is already [benefiting] and will continue to benefit from near-sourcing. Manufacturing in Latin America for North America and some domestic markets is clearly on the rise. The Middle East near-sourcing market is also developing.” The executives also voiced concerns about weak cargo growth, a possible oversupply of new ships and mounting environmental issues. Teo said intra-Asia container traffic had already outstripped transpacific volumes. He forecast that container volumes within Asia and between Asia and the Middle East would grow to six times current levels by 2030. “China will put more emphasis on trade between Asia and Africa,” he said. Thomas Riber Knudsen, Chief Executive of Maersk Line Asia Pacific, said the outlook for trade growth on Asia-Europe and transpacific routes remained gloomy. “There will be no return to a 5% trade growth,” he said. Instead, he forecast “low single-digit growth in the Pacific [this year], picking up in 2014”. He said the conditions facing container shipping were the “least bad” compared with the dry bulk or tanker markets, but that the sector was still fragile. Trade patterns were also changing, Riber Knudsen said. He said that in recent years 10% of container volumes from Asia to the U.S. east coast had gone via the Panama Canal. “By the end of this year, about half of all Maersk’s services will use the Panama Canal to the U.S. east coast,” with about 50% via Suez, he said, as reported in the South China Morning Post.

Hefei is 500 kilometers inland from Shanghai, but the provincial capital of Anhui province has ambitions to become a player in the business world. Over the past year, it has defied the national decline in foreign direct investment (FDI), and already attracted multinationals such as Unilever, Coca-Cola and Hitachi Construction Machinery to set up shop, thanks to lower wage and land costs, according to city Mayor Zhang Qingjun. Now it plans to build on those gains by rolling out an infrastructure program of road, water, power and rail networks to lure more business from the coast. “The trend of businesses moving inland from coastal regions is becoming very clear,” the Mayor said. “Our priority is to establish high-end manufacturing as well as research and development facilities.” The migration of funds to Hefei is reflected in the CNY43.9 billion in direct investment in the city in the first two months of the year. That amounted to a 20% year-on-year increase, with 94% of the total coming from other provinces, he said. Over the same period, Hefei’s exports more than tripled year-on-year while China’s exports rose by less than a quarter.

The Xian International Trade and Logistics Park will play a vital role in the modernization of China’s western areas and will help close the gap with the more-developed eastern coastal regions, said Han Song, Deputy Mayor of Xian. It is set to become the largest inland port in West China and help build an open economy in the whole western area. Foreign trade volume in the park has been increasing at an annual rate of more than 50% since it was set up in 2008 with a planned area of 44.6 square kilometers. The inland port functions through the synergy of three projects – the Xian Railway Container Transport Center, the Xian Comprehensive Free Trade Zone and the Xian Highway Hub. The Xian Comprehensive Free Trade Zone enables northwestern China to have the same advantages in processing trade and free trade logistics that coastal ports have, which has reduced the cost of and time needed for foreign trade done in inland China. Meanwhile, it also provides favorable conditions for inland areas to develop an outbound economy and modern services, such as international trade and outsourcing. The Xian Railway Container Transport Center project is a key link that allows China to promote international container transport in inland China. The Xian Highway Hub project can integrate such functions as transportation management, shipment, logistics and information, and it can provide comprehensive services for logistics enterprises in the region. The park has also established strategic relations with some major coastal ports, such as those in Shanghai, Tianjin and Lianyungang in eastern China, and the border ports of Horgos and Alataw Pass in Xinjiang in western areas of China, the China Daily reports.

As of the end of August, total fixed-asset investment in the park had reached CNY10.3 billion, of which CNY4.2 billion was made during the first eight months of this year, an increase of 78.14% over last year. Total foreign trade volume reached USD519 million, of which USD235 million was made between January and August, an increase of 56.2%, compared with last year. About 58,000 containers were handled during the first eight months of the year at the railway container transport center that serves all of Shaanxi province and the surrounding provinces. Contracts have been signed involving a combined investment of CNY51 billion in a total of 58 projects of various types, including eight foreign invested projects with a total investment of USD350 million. By the end of August, 16 projects had been completed and 39 projects, with a total investment of CNY65 billion, were under construction. Activities to attract foreign investment were held in foreign countries, including Japan, Turkey and the Netherlands. By the end of August, investment worth a total of CNY2.4 billion had been poured into the park to develop infrastructure, including bridges, electricity and water treatment plants. To make up for the shortage of land, the area of the park may be enlarged to 120 square kilometers, according to the management committee.