WORKING WATERFRONT

California Ag “Task Force” to Evaluate China’s Transport Infrastructure

By Patrick Burson 
Published: May, 2007 

San Francisco – A unique perishables task force charged with gathering market intelligence on China’s transport infrastructure for Bay Area shippers is about to launch a fact-finding visit this June.

To our mind, there really isn’t anything quite like it, said Fred Klose, executive director, California Export Council in Sacramento. This is the first time a state agency has worked this closely with like-minded people in China.

Working with the China Federation of Logistics & Purchasing (CFLP) in Beijing, a small group comprising shippers, forwarders, port authorities and industry analysts will tour a variety of transport facilities to assess opportunities for California’s agricultural exporters.

For us, this means getting a good look at the inland surface network and seeing how goods move after inbound delivery, said Joseph Wong, deputy executive director for the Port of Oakland.
Chris Peterson, the port’s chief wharfinger is on a somewhat different mission: I’m going to observe the innovations being put into place at the major gateways, and hope that we may generate an exchange of ideas, he said.

That exchange began last year when CFLP research director, Dengcai He, led a delegation to San Francisco for a day-long US-China Supply Chain Management Conference.

Robert Tse, director of trade for the state’s Department of Food and Agriculture, noted that because California has the largest food industry in the nation, this kind of forum was long overdue.

Tse also pointed out that if California were to be ranked as a nation in this regard, we’d be number five in the entire world.

For Lily Noon, one of the state’s most prominent shippers of high-end perishables, the China visit represents an opportunity to observe the changing dynamics of a rapidly emerging middle class.

It’s absolutely essential for us to understand the cultural barriers that might still exist for California exporters, she said. We want to know, for example, if there are any fruits and vegetables that are winning new acceptance with consumers, so that we may anticipate demand.

The founding president of Lily Noon International, she built the business through establishing strong, long-term relationships overseas.

We have a firm commitment to market healthy and nutritional foods, Noon said. As a consequence, we represent many frozen and canned food manufacturers on an exclusive basis.

Dennis Lee, vice president of marketing and customer development GSC Logistics in Oakland, is also keen on learning if warehousing and chill facilities in China are keeping pace with new exports.

The continuity of the cold-chain has been something of a concern, he said. In some regions, it is really very good, but in others, there’s a lot of work to be done.

The Chinese hosts, meanwhile, hope to update the task force on progress being made regarding plans to build a logistics hub on borders between China and Thailand, Burma and India. A Pan-Asian Railway running into Vietnam was also discussed.

Foreign investment is encouraged, said Dengcai, and we expect many California-based companies to take advantage of the opportunities.

The timing of the visit could not be better, task force members agreed. According to Research & Markets, China plans to increase its port handling capacity by 80 percent to 6.1 billion tons by the year 2010.

In its China Port Industry Report, 2006-2007, analysts at the Dublin, Ireland-based think tank report that for last year alone China’s port handling capacity had risen 17.7 percent to 4.91 billion tons. At the same time, container handling capacity had increased by 23 percent to 75.8 million TEU*.

At the end of 2005, China owned 1,030 production berths, and had ten ports join the global ‘Top 10 ports’ comprising throughput of 100 million tons or more, said analysts.

The report notes that by 2010, the container handing capacity will be 120-140 million TEU.

Shanghai, the busiest cargo port in the world, has a freight handling capacity of 443 million-tons. Combine that with Shenzhen, said analysts, and they’ve achieved 18 million TEU and 16.18 million TEU respectively. This puts the gateways into third and fourth place accordingly.
During 2005, another 129 berths were built, including 76 deep water berths (over 10,000 tons); handling capacity increased by 190 million tons; development around Bohai bay, the Yangtze River Delta and Pearl River Delta is being done in a more professional way; and China was ranked first in the world for the third consecutive year in handling capacity of freight and containers.

Analysts noted that there will be accelerated construction of Shanghai International Shipping Center and large-sized container docks in the hub ports of Dalian, Tianjin, Qingdao, Xiamen, Shenzhen, Guangzhou. Construction of related feed ports is also said to be ramping up.

This is all good news for California ag shippers, said Alan Davis, a consultant with Strategic Solutions Partners, LLC in Danville, California. But in order for us appreciate the full extent of the progress, we have to see it ourselves. This is especially true when it comes to evaluating the warehousing and railroads. If similar progress is not being made in those areas, we’ll still have problems.