SHENZHEN, China — The new Beijing leadership will likely unify transportation-related agencies under one office, providing more focused policy and regulation, but the transfer of power next month will also probably come with more protectionism, a close watcher of Chinese transport policy said on Thursday.
The major transportation question regarding the changing of the Politburo standing committee on Nov. 8 is whether they will push for more carrier privatization and allow foreign operators to provide inland and coastal service, said Tom Behrens-Sorensen, Navisino Advisors co-founder and partner. The top five shipping companies have roughly 75 percent of the market, and there are signs Beijing is trying to “prune” some of the state-operating carriers, the Beijing-based analyst said.
“The environment for private players has not been very friendly,” Behrens-Sorensen said at The Journal of Commerce’s 6th annual TPM Asia Conference in Shenzhen, China.
The “jury is still out" regarding the speculated merger between Chinese carriers Cosco and China Shipping, he said. The former A.P. Moller-Maersk Group executive expects there to be more cooperation between Chinese carriers, though.
Although it has made major strides in opening up its markets, China faces “massive challenges with logistics inefficiencies,” with logistics costs accounting for about 18 percent of GDP.
“Those numbers spell massive waste and great opportunity to make the Chinese economy more efficient,” Behrens-Sorensen said.
China has mirrored U.S cabotage law in allowing only Chinese-flag carriers to provide domestic services. Opening up the market to foreign carriers would result in billions of dollars in savings. With international container ports well developed, the government is shifting its attention toward feeder ports. The government is wary of the “mushrooming” of global trade-focused ports because of the threat of adding too much terminal capacity, he said.