Building on the Yangtze

Building on the Yangtze

If there is a window on a key source of growth in container shipping, it might be found at a noisy remote construction site along the banks of the Yangtze River near Chongqing, central China’s largest city. Here in the midst of a rural hamlet, the forest is being cleared for what by 2011 will be the newest container terminal on the section of navigable river upstream from the Three Gorges Dam, known as the Upper Reaches.

Called Cha Yuen, the terminal, 55 percent owned by Shanghai International Port Corp., will be capable of handing 1.5 million TEUs a year, with a transit time of seven to eight days to Shanghai. But it is just one of several examples of new container capacity under construction in the Upper Reaches.

The reason for the investments is easily identified: Serious about narrowing the income disparity spawned by the two-decade export boom in coastal regions, China is pushing manufacturers to relocate into the deep interior under policies known variably as Go West or Booming Central.

While some of what gets made will invariable stay in China as it grows as a consumer nation, much still will be exported, and the Yangtze River, what China calls its Golden Waterway, will be the artery for much of that trade.

Spending five days in late October visiting the river port cities of Luzhou, Chongqing, Yichang and Wuhan was to witness the early stages of what will likely be a large new source of container volume spilling out into the world market.

Jon Monroe and Cynthia Shen of Jon Monroe Consulting organized this trip as part of an interactive research report the JoC and JMC will jointly publish early next year (see www.yangtzeriverports.com). They believe Yangtze River volumes will grow exponentially from the 5.5 million TEUs generated by all of Yangtze ports in 2008, and could reach 30 million TEUs by 2020.

The facilities under construction are being built to fulfill such growth. But along with the terminal expansion observed in Chongqing and Luzhou, questions emerged about how this outpouring of containerized cargo will be managed logistically. The Three Gorges Dam, which divides the Upper and Middle Reaches at Yichang, was built primarily for hydroelectric power and flood control, yet is a potential bottleneck to cargo movements. Ships require five to six hours to transit the dam’s five lock chambers and are waiting seven to eight hours to enter. We were told, however, those times are being reduced by the use of GPS and a required standardization of ship sizes to conform to lock dimensions.

But we were also told the dam may be reaching 90 percent of capacity. If this were anywhere else in the world, it would be a potential disaster. What we heard, however, was not alarm, but rather suggestions that the issue is well-known and that planners from municipal, regional and central government entities are coordinating their planning for how cargo will be shifted to other modes to avoid a damming up of cargo.

Containers, we were told, are a priority for river traffic. Trucks moving on river ro-ro vessels are expected to be in long-term decline as east-west highways are completed. Portions of coal movements, a major river cargo, may shift to railroads. The same may be true of containers, although it seemed clear that, like the decades it took to build a viable intermodal system in North America, the timeframe in China might not be much different.

That aside, the takeaway was clear: China’s unique abilities to accomplish much in a short time will focus on the development of the interior, and the Yangtze and its ports will reap the harvest.

Peter Tirschwell is senior vice president of strategy. He can be contacted at 973-848-7158, or at ptirschwell@joc.com.