Guangdong’s plan to spend billions of yuan to create a network of ports, railways and waterways will pose a competitive threat to Hong Kong, but it may benefit Hong Kong exporters. Guangdong ports are reaching the limits of their capacity. Guangzhou’s Nansha port can hardly handle more than 20% of Hong Kong’s cargo, so the province could use more port facilities. Over the next three years, the province will spend CNY55.4 billion on building port facilities, waterways and railways, according to the Shenzhen Ports Association’s website. About CNY28.7 billion of that will be spent on port projects, including the third phase of Nansha, container terminals at Yantian port in Shenzhen, container terminals in Gaolan port in Zhuhai and a coal terminal in Quanwan port in Huizhou. This will increase Guangdong’s annual container capacity by 10.5 million TEU to 50 million TEU and raise Guangdong’s annual cargo capacity to more than 1.3 billion tons. A further CNY8.2 billion will be invested in waterways in Guangdong in the next three years. The province will invest CNY18.5 billion in building railways over the next three years, linking various ports including Nansha, Maoming and Zhanjiang in southwest Guangdong, and Chaozhou and Shantou in northeast Guangdong. Creating rail links to ports would improve the hardware, efficiency and cost of Guangdong’s ports, said Anthony Wong, former President of the Hong Kong Logistics Association. “Guangdong’s ports will be more competitive, efficient and cost-effective. That will not be good for Hong Kong, which competes with them.” Guangdong ports were offering much lower fees than Shenzhen and Hong Kong to attract volume, Liu Boyong, Equity Analyst at investment bank Jefferies, said. He warned that the return on investment on some of these port facilities would probably be low. Guangzhou Port Group, the state-owned operator of Guangzhou’s ports, has been planning a listing since 2007, the South China Morning Post reports.

China Shipping, China’s second-biggest shipping group, is set to pay USD2.2 billion on a fleet of gas carriers and ultra-large container ships capable of carrying 18,000 TEU. China Shipping Container Lines (CSCL) will become only the second box line globally, after the Danish Maersk, to operate the 18,000 TEU vessels, which will be the biggest container ships in the world. Maersk is due to take delivery of its first 18,000 TEU Triple-E ship on June 28. South Korea’s Hyundai Heavy Industries has won the bid to build the container ships and discussions are taking place between CSCL and Hyundai to finalize shipbuilding contracts for five vessels. China Shipping management agreed to the order at a board meeting in April. The container ships will be deployed on the Asia-Europe route. Martin Rowe, Managing Director of Clarksons Asia in Hong Kong, estimated each ship would cost in “the region of USD130 million to USD140 million”, depending on specifications. Hyundai has already set up a China Shipping group within its container ship sales team to handle its involvement in the project. China Shipping Development, in partnership with Japan’s Mitsui OSK Lines, has also confirmed a USD1.51 billion order with Shanghai’s Hudong-Zhonghua Shipbuilding for six liquefied natural gas (LNG) carriers. The ships, with a capacity of 174,000 cubic meters, will be used by Sinopec to transport LNG from its Australia Pacific LNG project in Queensland to China, starting in 2016. China Shipping and Mitsui OSK Lines will provide 20% of the financing for the ships, while a Sino-Japanese banking syndicate including ICBC, Bank of China, Export-Import Bank of China and Sumitomo Mitsui Banking will provide the remaining 80%, equivalent to USD1.2 billion. China Shipping narrowed its financial loss to CNY689 million in the first quarter of this year from CNY1.45 billion a year ago. In 2012, the company delivered a profit of CNY523 million, compared with a loss of CNY2.74 billion the previous year.

In 2011, added value in Chengdu’s logistics industry reached CNY38.3 billion. The logistics fee to GDP ratio, a gauge of logistics efficiency, was 16.38%, well below the national average of 18%. But the logistics environment has been improving over the years, helping the city’s industries develop. In 2010, when Compal Electronics, one of the world’s largest computer manufacturers, was considering moving to Chengdu, they queried if Chengdu’s logistics system could support its gigantic export demand. Zhang Chi, Director of the Logistics Coordination Center of the Chengdu Logistics Office, together with his colleagues, produced a pamphlet detailing the logistics cost of the city’s railway, road and airport transportation, allowing Compal to make a logistics cost assessment. Compal was satisfied with the conditions and decided to move in. The arrival of Compal brought more than 50 suppliers to Chengdu. “During the discussion with Compal and Foxconn (in terms of settlement), I strongly felt that only if we can prepare enough room for the development of logistics beforehand, could we take the lead in grasping the growth opportunities for our industries,” Zhang said. Another example is the iPad. Two-thirds of the world’s iPads are made in Foxconn’s Chengdu plant. All of these iPads are transported to every corner of the world through Chengdu’s airport. In 2012, the city’s added value in the IT industry hit CNY58.27 billion, the largest among all industries. This would be unimaginable without the city’s air handling capacity. Looking ahead, Zhang said though the city’s infrastructure and logistics can satisfy its industrial demand as a whole, there is still room for improvement in terms of efficiency. By 2015, both the quantity and quality of the city’s logistics will be enhanced and lay a solid foundation for the city’s industries, the China Daily reports.

The Yangshan copper premium – which is paid on top of the benchmark London Metal Exchange cash copper price – has been launched as the first in a series of commodity prices under the “Yangshan Price” banner, designed by the Shanghai Free Trade Zones to develop the Yangshan bonded area into a bulk commodity trading platform. As China’s first physical price for nonferrous metal in bonded areas, the Yangshan copper premium will be published on authoritative and independent platforms including Bloomberg and Xinhua 08. Up to 63 leading commodity enterprises have established divisions in Yangshan port, with a combined registered capital of CNY3.5 billion, laying a solid foundation for the port to develop broader futures delivery businesses, said Wang Xinling, Deputy Director of the Management Committee of the Shanghai Free Trade Zones. “The launch of the Yangshan Price will create closer links between the domestic and international market, and help Chinese bulk commodities enterprises gain more of a say in international pricing,” said Chen Quanxun, Chairman of the China Nonferrous Metals Industry Association. Fan Xin, President of the Shanghai Metals Market website, a leading metals information provider, said: “The release of the Yangshan copper premium is backed by the rapid growth in copper imports and exports via Yangshan port, as well as huge inventories in the port.” Around USD10 billion worth of electrolytic copper was imported through the Shanghai Free Trade Zones in 2012, accounting for a third of the nation’s total imports. It is expected the Yangshan Price will become a benchmark with international influence on copper trading in the future, said Wang. Shanghai will add 80,000 to 90,000 square meters of storage capacity for metals by the middle of this year to the existing 50,000 sq m, the China Daily reports.

Tom Group, which narrowed its net loss last year, has started to ramp up the mobile retail capabilities of its e-commerce venture with China Post after the operation saw sales volume double. Tom’s Chief Executive Ken Yeung said he agreed with Jack Ma, Chairman of Alibaba Group, that e-commerce in China was entering a golden age and that online transactions would make up about 30% of the country’s total retail sales in the next five years. Beijing Ule E-Commerce, which Tom and China Post rolled out in 2010, provides an e-commerce platform that supports online and offline store integration, distribution and logistics, and marketing and promotion to merchants. Unlike Alibaba’s market-leading Taobao online retail operations, which rely on third-party logistics service providers, Ule.com is backed by the resources of China Post. This infrastructure includes 52,000 postal outlets, 150,000 postal delivery workers, 80,000 postal vehicles, 433 train carriages, 16 cargo aircraft and three ships. Ule.com’s gross merchandise value, the total worth of goods sold, reached CNY500 million.