In the face of the global economic slowdown, China has continued to be one of the few countries in the world to show continuing economic growth and the freight forwarding and freight transport sector operating in China has benefited as a result. The leading American analytical service HIS Global Insight has forecast that in 2011 China will rank first in the world in industrial production, overtaking the United States.This will knock the United States out of the leadership position it has held for the past 110 years! This spectacular achievement by the Chinese economy is one to be celebrated by the freight services industry as it is a milestone in the growth of international freight from China and of course this success story is one which benefits many shipping companies and freight fowarders.
This exciting milestone is being encountered in the context of some concern as in the last months of 2010 there was fear about the economy in China overheating as a result of the economic stimulus introduced by the government as a response to the crisis in 2008. This is because growth of GDP in the last quarter of 2010 was above the average GDP growth of 9.7% per year over the last 30 years. Although inflation stayed at the average rate of 4.6% consumer price increases,This has raised some fears from investors in China regarding prospects for 2011 (or the Year of the Rabbit)
However, there is no need to worry about the economy overheating as there will be a slowdown in construction in 2011 as some key infrastructure stimulus projects reach completion. So it is most likely that the economy will continue to be robust and the shipping company and freight company have no need to fear the possible impact of monetary tightening as an attempt to control inflation in an overheated economy.
Although China has of course experienced a decline in demand for China imports in the United States, Europe and Japan since 2008, there has been growth overall in economic activity throughout the period of the recession and China's economic outlook remains highly favourable looking to the years ahead. This is of course highly encouraging for the freight forwarders operating in China as it means they are able to invest in their businesses, confident that there will be good returns for shipping companies in the future. It is also in turn good news for those involved in China import and export as the continued investment helps secure better and more cost effective freight services for them over time.
As a result, there is continuing evidence of improvements to the transport infrastructure that underpins the freight services sector in China, whereas in many other countries, such vital investment to facilitate international freight and domestic freight forwarding is currently being postponed or cancelled due to government cutbacks, as economies worldwide struggle to rebalance their books.
China, in contrast to many other countries, is in the midst of a huge upgrade to its transport infrastructure, Until recently, the China economy was able to grow in spite of failings in infrastructure development. This is now recognised as no longer valid by the China government. They now recognise that in order to move people and freight transport effectively across the 9 billion square kilometre land mass, there needs to be an efficient transport system in place. According to World Bank statistics, goods lost due to deficiencies in the transport infrastructure amounted to 1% of GDP in the last survey. Meanwhile, the logistics costs account for 20% of a product's price in China, compared to 10% in the United States. Statistics such as these are very important to the freight services sector, which always aims for maximum efficiencies.
The quality of the sea-rail intermodal service, the Coastal Express set up by a partnership between the Shanghai Railway Administration, Ningbo Port group and China Railway Container Transport Corp is a great example of continuing innovation and investment in the freight services sector in China. The service runs between Ningbo Beilun Port Area Station and Wenzhou West. It runs at a speedy 100 km/ hr and reduces the journey time to less than four hours. Throughout China, rail tracks are now being doubled to alleviate freight train conflicts.
However, even this innovation will soon be overtaken by the new railway link between Jinhua and Wenzhou which is also due to be upgraded to a high speed link by 2015, with speeds reaching 200km/hr.
Meanwhile, a new logistics hub for interational freight services has been built at Hangzhou Airport and there are also plans underway fora new transfer centre at Shenzhen Airport. A brand new airport to be established at Kunming will create a major hub for international freight transport to South East Asia.
Roads are also being upgraded, and the China government is adding about 3000 km of expressways a year to the existing network of 30,000 km, second in size only to the United States.
China has sixteen major shipping ports with a capacity of over 50 million tons per year. Around 35% of the world's shipping is thought to originate from China. The port of Shanghai is undergoing a massive upgrade. Shanghai Model Port Alliance is responsible for many of the upgrades that are expected to make Shanghai port more automated, cutting the loss of goods and time to a minimum while helping Customs collect more accurate tariffs.
So as China is in the Year of the Rabbit, the outlook for international freight and freight forwarders looks buoyant.
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