Dalian: In the second of a series of articles to showcase the new issue of SinoShip magazine, we are in Dalian in northern China to talk to one of the country’s best known maritime economists.
As one of the major countries in the shipping world, China sees shipping as a cornerstone industry. In the past decade, China has been sparing no effort to develop the shipping industry. It has designated a few major port cities including Shanghai, Ningbo, Dalian and Xiamen for the development of international shipping centres. Plenty of other coastal cities have also made their own plans to develop international shipping centres.
As a shipping economist, Lv Jing, the dean of the Transportation Management College at Dalian Maritime University, has been dedicated to the research of shipping since the 1980s. He is also a member of the International Association of Maritime Economists and a director of the China Communications and Transportation Association.
The only maritime university in the country to be funded by central government DMU is one of the most prestigious names in maritime training worldwide. Alumni include Cosco’s former boss Wei Jiafu and Hosco head Gao Yanming. The current student population is around 17,000.
Lv says that blindly developing international shipping centres might not help the industry. On the contrary, he says, it could be a waste of resources.
“Currently lots of cities in China say they are developing so called international shipping centres,” he says. “I think it is misleading, a real international shipping centre should have advanced port infrastructures and use the international shipping industry as a bond that promotes the economic development of the region and the hinterland, and its operation should also be based on market mechanisms,” Lv says.
For Lv, the port is the basis for an international shipping centre, but by no means all of it. Now many cities only focus on the development of the port itself and ignore the development of soft infrastructures. The concept of an international shipping centre also advances with the times and it has different meanings at different development periods, Lv points out.
Located on the southern end of China’s Liaodong Peninsula, facing the Yellow Sea on the east and Bohai Sea on the west, Dalian is backed by the vast hinterland of northeast China. With 1,906 km of coastline, Dalian’s shipping network connects Bohai Bay and northeast China to ports across the world. Currently Dalian port operates one of the largest crude oil terminals in China, with annual handling capacity of 80m tons and it is the most important distribution centre for oil products and liquid chemicals in northeast China. It is also the largest container port in northeast China, its international container throughput accounts for nearly 97% of total throughput in the region. The city is currently working to develop itself into an international shipping centre for northeast Asia.
“Dalian has great advantages to become an international shipping centre,” Lv says, however he reckons Dalian should also enhance its soft environment including policy, culture, law and education in shipping. He points out what needs to be changed during the development is focusing more on theory than practical operation.
“To become a real international shipping centre, Dalian still has a long way to go,” Lv says.
In order to deal with the current shipping downturn, slow steaming has become common place, but Lv thinks this is not a clever solution for the industry grappling with overcapacity.
“I don’t think slow steaming is a sustainable solution,” he says, arguing it cannot meet market demands.
“The liners have their schedules to catch and slow steaming also requires shipping companies to deploy more ships and crew which will also add cost to the companies,” says Lv.
Lv reckons the best way for major Chinese shipping companies get through the current downturn is via capital injections and mergers and acquisitions. “The development pace is relatively slow if the major shipping companies in China, like Cosco and China Shipping, merely seek development through route cooperation,” Lv concludes. [20/05/14]