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Slow ports in China
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June 11, 1998: 12:32 p.m. ET
Western carriers frustrated in moving cargo through Chinese ports
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NEW YORK (CNNfn) - Western shipping lines are hitting choppy bureaucratic waters in China's ports and, if the economic weather doesn't clear up soon, their business may hit the rocks.
European and North American shipping lines are encountering bureaucratic and regulatory barriers in setting up distribution operations in the country, according to government officials and industry executives doing business there. As a result, they are losing the chance to get on the ground floor of the shipping bonanza promised by China's ongoing trade boom.
"Our continuing and ongoing monitoring does indicate that Chinese ports are less than fully open," said Harold Creel, chairman of the Federal Maritime Commission, the U.S. agency responsible for overseeing maritime policy. "We are continuing to assess what's going on over there and its impact on U.S. carriers and commerce…. The fundamental problem appears to be an access issue -- U.S. carriers can't do things there that their carriers can do here."
Already China's ports, including Hong Kong's mammoth transshipment center, account for roughly 13 percent of the world's general cargo activity, according to statistics from Drewry Shipping Consultants in London. That puts it on a par with the United States, which controls 13.1 percent of world port activity. China's market share, despite current slowdowns resulting from Asia's current financial problems, is expected to grow over the next several years.
"Clearly China is going to be a primary cargo generator for shipping -- it's in the cards," said Mark Page, a senior consultant for Drewry Shipping. "That means competitive access in China's ports is a very serious issue for lines carrying cargo in and out of the country."
Modern day shipping goes well beyond the dock. Typically ship lines have dedicated train and truck operations that take shipments to and from interior points. In addition, ship lines also set up their own consolidation and brokerage operations to garner local freight.
In China, such distribution and brokerage operations require an assortment of government approvals and licenses. But these regulatory go-aheads have not been forthcoming.
Some executives, who asked to remain anonymous for fear of retribution, believe the Chinese government is throwing up barriers to give the national, government-owned Chinese line, China Ocean Shipping Co., a competitive advantage in the marketplace.
"It's a frustrating situation," said one executive with a non-Chinese ship line that moves cargo in and out of the country.
And the situation is beginning to attract the attention of the businesses that use ship lines to move supplies to and from factories in China.
"If U.S. companies don't have competitive options going in and out of China, it definitely affects their ability to do business there," said Peter Gatti, director of policy for the National Industrial Transportation League, a U.S. lobby group that monitors transportation issues.
The situation is reminiscent of a shipping scuffle with Japan last year. The Federal Maritime Commission threatened to ban Japanese ships from U.S. ports in retaliation for restrictive port practices there. The FMC dropped the threat after the Japanese government promised to make changes. Shipping executives report those changes still have not been implemented.
Compounding the issue is a recent U.S. government action removing Cold War restrictions on China Ocean Shipping Co. Because it is a Communist government-controlled carrier, the shipping line was required to give 30 days notice before entering a U.S. port. That robbed the carrier of schedule flexibility in providing service to and from the United States. In early 1998 that notice requirement was lifted.
Negotiations are currently under way between the United States and China for a new bilateral treaty covering maritime services.
To date, however, no progress has been made in the talks, which are being conducted through the Department of Transportation. U.S. officials are reluctant to push the access issue too much in advance of President Clinton's upcoming summit with Chinese leaders in Beijing.
Officials at the Chinese consulate in New York were not immediately available for comment.
-- by staff writer Allen Wastler
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