Greater China

China’s breakbulk scene not set in stone

Thanks to the increasing number of infrastructure projects, offshore projects and power projects, as well as high growth in both exports and imports, China has taken the centre stage and been the global spotlight in recent years for breakbulk and project cargo shipments. Both international and domestic shipping firms have been working to improve their competitiveness in order to join the many players already in the market.

“China will still remain the key manufacturing and fabrication base and the main source of these cargoes, with India and Southeast Asia as secondary markets in Asia. There is no doubt China will continue to dominate,” maintains Kyriacos Panayides, managing director of AAL.

Panayides is cautiously optimistic that freight rates will recover this year.

“Clearly there are uncertainties, which could impact on the heavylift sector, particularly in relation to the oil and gas industry, where a number of projects could be postponed on the back of falling oil prices. However, the growth in renewables and the fact that many nations suffering from poor infrastructure with huge budgets are already placed on large projects, could act as a counterbalance to this,” Panayides reckons.

In December, China’s central government released a new development plan for the offshore wind power market, which encourages the development of renewable energy.

Juergen Kuntz, general manager of BBC Chartering China, says the company has seen some business potential for wind power equipment sourced in China and exported rather than for projects within China.

“We believe 2015 will still be a challenging year for most operators. Overall we expect more fluctuation of shipping rates, also due to the fact that the market can still mobilise much of its short term capacity – for instance, less slow steaming or lay-ups,” Kuntz says.

Shi Wenhe, general manager of Hansa Heavy Lift China, has seen new opportunities in the export of nuclear power plants from China, especially to Central Europe, Eastern Europe and South America.

“China will probably start to export nuclear power equipment in 2016,” Shi says, adding that the company will focus on petrochemical projects, mining equipment, floating cargoes, windmill equipment, harbour equipment and offshore modules this year.

Jeremy Sutton, general manager of Asia trades at Swire Shipping, says he has observed a strong upward trend in foreign direct investments by China. “We are expecting an increased level of investments on construction, infrastructure as well as energy projects into the areas we serve,” he says.

According to Sutton, Swire Shipping plans to further utilise and enhance its service network from China to the Pacific. At present, Swire Shipping offers 46 direct calls per year into Shanghai and Qingdao, and it plans to expand that coverage in 2015.

In order to compete with the international players, state-run Cosco Shipping has also been growing its heavylift vessel and semi-submersible fleets.
In January, Cosco Shipping announced a plan to raise RMB2.5bn funds via issuing new shares. RMB1.75bn of the funds will be used for the purchase of two semi-submersible vessels and seven heavylift vessels.

Shortly after the announcement of the plan, Cosco Shipping placed orders for four 28,000 dwt heavylift vessels at Hudong Zhonghua Shipbuilding plus two options.

A senior official from the line says Cosco Shipping has almost completed the company’s twelfth five-year (2011-2015) newbuild plan and further newbuilds in the future will be based on new shipping projects.

“The drop in oil prices will no doubt slow down the investment in the offshore market, which will give a gloomy outlook for the submersible vessel market, despite the drop in fuel costs,” says the official.

“We are making more efforts to improve our standards in safety management and technical management, which are seen as top priorities in the high-end market,” the official adds.

Chipolbrok, a Sino-Polish joint stock heavylift shipping company, took delivery of a 36,000 dwt heavy lift vessel from Jiangsu New Yangzi Shipbuilding in January. The vessel has become the largest heavylift vessel in the world. Another three vessels of the same type will be delivered within the year. Chipolbrok has deployed the vessel on the emerging South America market.

“There are certainly the traditional Chinese operators that have placed orders for new vessels to join their fleets, as well as new Chinese operators coming into the market by snapping up relatively cheap tonnage on long term charters. This puts pressure on freight rates, especially on intra-Asia business in both the multipurpose and heavylift sectors,” AAL’s Panayides concludes.


This article first appeared in SinoShip magazine, which readers can access for free by clicking here.

This week Splash reporters will be reporting from Asia’s top project shipping show, Breakbulk China.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.
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