Growth in China’s imports of fruit and vegetables is spurring demand for seaborne transport in refrigerated containers. China’s fruit imports are up 26% over the past five years to USD4 billion last year, with exotic fruit such as longan and durian, as well as grapes, showing the biggest increases, according to the International Trade Center (ITC). The sources of the imports are becoming more diverse, extending from its Southeast Asian neighbors to countries in the southern hemisphere. For example, 82% of China’s imports of cherries – popular around Lunar New Year – are from Chile, with which China signed a free trade agreement (FTA) in 2005. Cold chain logistics, historically a weak point for domestic distribution of perishable goods, has attracted significant investment over the past five years. “Cold storage capacity has greatly improved in China. Before it was pretty basic – brick warehouse, chain link fence and a padlock. But now investments are coming, which enables China to handle more perishable imports,” Michael Britton, Asia-Pacific Region General Manager at Hamburg Süd, the world’s fourth-largest refrigerated, or reefer, container carrier by fleet size. For shipping lines, reefer trade is a growing niche market that offers higher returns, but with higher upfront investment. A new reefer container is priced at between USD15,000 to USD20,000 per TEU, eight to 10 times the cost of a dry freight container of the same size, the South China Morning Post reports.

Logistics conglomerate China Merchants has won approval to operate phase two of Sri Lanka’s largest container terminals in a deal signed during President Xi Jinping’s trip. The Hong Kong-listed firm has been granted a 35-year lease to manage the Hambantota Port Development Project in a joint venture with the Sri Lanka Ports Authority and China Harbor Engineering Co. The two Chinese partners will invest a combined HKD3 billion into the project in return for a 64.98% stake. Hambantota is on Sri Lanka’s southern coast and is billed as a future transit hub for goods moving around Southeast Asia. Xi also inaugurated a USD1.5 billion project to build a port city on reclaimed land in the Sri Lankan capital Colombo.

China Cosco Holdings Co, the container shipping line that posted three annual operating losses, said adding more fuel-efficient vessels will help cut costs enough to revive profits amid a capacity glut. “The ships need to be filled for the cost savings to be achieved,” said Guo Huawei, Board Secretary. COSCO ordered five fuel-efficient container transports that carry up to 14,500 TEU for delivery between 2017 and 2018. The ships are slightly smaller than the industry’s largest on order by rivals including China Shipping Container Lines Co and AP Moeller-Maersk, which are betting on economies of scale from vessels large enough to carry as many as 19,100 containers. “Reducing container line costs is probably the only thing COSCO can do right now,” Lawrence Li, Shanghai-based Analyst with UOB-Kay Hian Holdings, said. “Other things like refining its branding and operational know-how takes a longer time.” COSCO’s container arm cut fuel spending by 18% in the first half of the year by sailing ships more slowly, which boosts efficiency. Containers used to deliver consumer goods such as clothing, bicycles and televisions accounted for about 73% of revenue last year. Dry bulk shipping, including grain and ore, accounted for about 21%.

Qingdao Port International Co said that shipments from the port would not be disrupted due to an ongoing investigation in financing irregularities. The operator of the world’s seventh-biggest port in terms of output said it was investigating instances of financial irregularity involving some traders. There were reports that the port had halted shipments of aluminum and copper as authorities look into whether the metals warehoused at the port have been used repeatedly as collaterals to borrow money from different banks. “We were told we can’t ship any material out while they carry out the investigation,” the South China Morning Post quoted a source at a trading house as saying. Metals, especially copper and iron ore, are among the commodities most commonly used as collateral to obtain loans. Up to USD160 billion of outstanding loans in China are borrowed using commodities as collateral, about 31% of the country’s short-term foreign exchange loans, according to Goldman Sachs. According to a report by the Metal Bulletin, the total value of the metals involved in the investigation could be in excess of USD1 billion. Due to the scale involved, any default is likely to threaten the stability of the country’s banking system, experts said. Offering evidence that it didn’t halt shipments, the port of Qingdao said that 184 ships, including four big ore carriers, sailed out of the port in the three days between May 31 and June 2. The port handled a total of 125,000 TEU during the three days.

The China Insurance Regulatory Commission (CIRC) is using the Shanghai free trade zone (FTZ) as a testing ground for more flexibility in marine insurance. The recent move would streamline the supervision and operation of the marine insurance business in the trade zone, according to Chen Xingyu, Shanghai-based Analyst at Phillip Securities. The regulator announced last month that insurance companies could apply for approvals for new marine insurance products from the Shanghai Institute of Marine Insurance, for the first time allowing insurers to file applications with an industry association rather than the regulator. The Institute was set up in December last year with 31 members, including insurance and shipping companies. Other measures that apply to insurers in the FTZ include allowing marine insurance centers and reinsurance companies to set up branches in the zone without prior approval, which is also no longer required for the appointment of senior executives in branches in the zone. “The move is a clear step to cutting red tape and delegating power, which is positive to the marine insurance business, as more flexibility is allowed,” Chen said. Insurers were now able to freely provide customized products, which would help boost their profitability, he added. Outstanding premiums on marine insurance in Shanghai reached CNY3.3 trillion in September last year, a rise of 12.1% from the previous year, the Shanghai Bureau of the China Insurance Regulatory Commission said. The city accounted for 46% of the national market in the marine sector in October last year.