End of a Shipping Era in China

chinaIt was a common sight for the major seaports in China to be considered the center of the international freight shipping world. Every year, it seems that more and more cargo is transported from China. However, the annual growth of cargo at the ports, while growing, is beginning to slow down a bit. For example, in 2011, those ports in China experienced an impressive 10.4% growth. In 2014, despite over 16 million 20-foot containers traveling through Chinese Ports, there was only a 7% year-over-year growth.

The Journal of Commerce recently ran a story on this very issue. In their report, the Journal of Commerce quoted the chairman of Qingdao port, saying that days of double-digit growth at these ports are now over, and this single-digit growth will indeed be considered the “new normal” in China. For a leader at a major port like Qingdao to admit this new truth, says how real it really is. In addition, two of the largest port operators, China Merchants Holdings and Cosco Pacific, also predict slower trade and only single digit growth in the coming years. What impact this slower growth will have on ocean freight shipping rates has yet to be noticed. What is for sure is that slower growth rates at the ports are interesting.

Even if there is slower container growth at the ports, the focus on supply chains in China needs to shift to rail. It turns out that less 2% of businesses in China use rail transportation after the port. There is demand in China for rail. Speak to your trusted freight forwarder if you ship to China.

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