Cosco Shipping Holding’s strategy to extend its supply chain reach beyond ocean transport and ports is accelerating and coming more into focus.
While rivals Maersk and CMA CGM have garnered more attention for their efforts to become fully integrated logistics providers, Cosco and its fellow Asia-based carriers are slowly revealing plans that tilt toward deeper logistics services beyond conventional ocean shipping, with a distinctive Asian focus.
Cosco — in line with the Chinese government’s mission of supporting its importers and exporters — aims to further tap emerging markets along the Belt and Road Initiative and extend its reach further into warehousing and final-mile delivery of goods.
Bolstered by its acquisition of the ocean shipping and logistics units of OOIL, Cosco chairman Xu Lirong said this year would be crucial for focusing less on building scale and more on operating precision and improving service. Cosco said it will accelerate the reach of its global rail services, building on 112 existing lines and 152 domestic ocean services, and connecting more than 20,000 to-door-service points.
Since March 2016, Cosco Shipping has boosted the percentage of its deployed shipping capacity to emerging markets from 12 percent to 18 percent, and from 30 percent to 37 percent in intra-Asia markets. In cooperation with China Railway, Cosco said it operated several China-Europe containerized rail trains last year.
Aiming to increase profitability, Cosco Ports said it’s speeding up the development of its logistics business, reaching beyond marine terminals. Cosco Ports in April announced plans to invest in a supply chain project based in the Nansha district of Guangzhou, a fast-growing technology hub.
Cosco said it aims to “develop a port supply chain platform and high-end warehousing business, and extend the upstream and downstream industries.” OOIL Logistics will create and manage the “end-to-end service channels and solve the ‘last one kilometer’ issues,” Xu wrote.
Cosco’s drive to provide Chinese shippers deeper access into intra-Asia and emerging markets parallels and feeds off Belt and Road, China’s multiyear, multibillion-dollar initiative linking Asia with Europe and Africa and the countries in between via a string of ports and containerized rail connections.
“All rivers eventually flow into the sea despite of different sources,” Xu Lirong wrote in his March 29 statement.
Even so, the European Union wants to have a larger role in how the water flows, as reflected by an April 25 call from European Commission Vice President Maros Sefcovic for more transparency on how China will invest further in European infrastructure. China has had to make a more compelling case for Belt and Road amid criticism that the initiative has ensnared developing countries in so-called debt traps and has security implications, in terms of both technology and military power.
The impact China investment can have on freight infrastructure, however, is forcing European and other countries to consider accepting the help. Cosco’s investment in the port of Piraeus and the supporting rail network, begun in 2014, has transformed the port into a gateway into Central Europe.
Cash-strapped Italy on March 25 reached an agreement with China paving the way for infrastructure investment, including the rail network from the port of Trieste stretching into the central European market.