The Yangshan Port.
The State Council has announced the launch of a cargo relay pilot at the Yangshan port in Shanghai, a step toward opening up the maritime industry in China, and the move was considered by foreign stakeholders an important policy breakthrough.
The announcement last Thursday said cargo relay will be allowed on a trial basis through December 31, 2024. During the period, foreign, Hong Kong and Macau flagged vessels will be allowed to carry out international cargo relay at Yangshan for containers originating from Dalian, Tianjin and Qingdao.
The European Union Chamber of Commerce in China lauded the significant policy breakthrough.
"At a time of significant stress in global supply chains, this is a very welcome step which may ease some of the bottlenecks exporters are experiencing," said Joerg Wuttke, president of the Chamber.
"This seems to be a meaningful step towards opening up the maritime industry in China to foreign participation, and creating more reciprocal market access terms between Chinese carriers in the EU and EU carriers in China. Furthermore, it will reduce the CO2 footprint of ocean transport."
Cargo relay refers to the practice of a company carrying cargo from one port in a country to an overseas destination on its own vessels, and then transferring the cargo from one vessel to another vessel owned by the same company in another port within that same country.
In China, cargo relay has historically been considered domestic transport – cabotage – and therefore strictly prohibited for foreign carriers.
Although detailed implementation guidelines have still not been issued, indications are that it will provide greater flexibility for carriers to optimize their networks, thereby reducing transit times and fuel consumption, enabling a better utilization of assets and allowing carriers to offer better service to customers in China.
The level of international transit shipment has always been an important indicator for the international first-class shipping hub ports.
By 2020, Shanghai had basically completed the construction of an international shipping center.
In 2020, Shanghai port saw its container throughput ranking top globally for the 11th straight year and Yangshan port, a highly automated container terminal, was busy with annual throughput exceeding 20 million 20-foot equivalent units for the first time last year.
To further the development of international transit shipment business and achieve the functional upgrading of the shipping hub, development of cargo relay as well as container trans-shipment and consolidation would be the key.
Lu Hongjun from the shipping department of the Administrative Committee of the Lingang Special Area said that the pilot program will draw the return of goods transit in a third country.
"There used to be a lot of containers in Qingdao that were going to Busan port in South Korea for transit shipment. Now with the new pilot policy, Yangshan Port is open for foreign vessels as an international transit port to conduct cargo relay business," he said.
"This allows some shipping companies to optimize their route design and conduct cargo transit in Shanghai, which will boost Yangshan Port's capacity to allocate shipping resources."
According to the city's 14th Five-Year Plan (2021-2025), its annual international container throughput will reach at least 47 million TEUs by 2025, the annual throughput of air-passenger travel will reach at least 130 million, and the annual throughput of cargo ships will reach at least 4.1 million tons.
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