Liuzhou Iron and Steel forces shipping industry reshuffle

Guangzhou: Liuzhou Iron and Steel Group, a major steel producer in Guangxi province, has sent out notice to about 20 local shipping companies that has been providing shipping services for the group, asking them to pay a RMB8m risk deposit before November 30, otherwise the group will cancel the partnerships with them.

An official from a local shipping company reckons the move is unfair and unreasonable, and it will have a negative influence on the local shipping market. “The shipping companies are all suffering from difficulties, it’s a huge cost for us and it will only make our lives more difficult,” the official said.

Liuzhou Port completed an annual cargo handling volume of 2.38m tons in 2013, 80% of the cargo from Liuzhou Iron and Steel. 

In August, Liuzhou Iron and Steel established its own logistics company Liugang Logistics. An official from Liuzhou Transport Association said the move would reshuffle the local shipping market, some smaller private shipping companies might be squeezed out of the market, and Liugang Logistics might monopolise the market.

A spokesperson from Liugang Logistics explained that the risk deposit is to avoid shipping risk and make shipping companies conduct business according to the group’s standards, and greatly enhance the efficiency of operation. For smaller companies which can’t afford the deposit, Liugang Logistics also offered to set up joint ventures with them. [27/11/14]

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