Impications of a Containerized Yangtze River

Monday, January 15, 2007 1:46

Over the last few months, I have been presenting my ideas on how China’s second tier cities and regions are going to change, and how this change is going to present huge opportunities for companies (foreign and domestic). I have done this with via regional and city reports, and occasionally, I find an article or two that support my hypothesis, but it was an ADB study that provided the strongest proof that I was on the right track. Until a couple weeks ago.

While back home for the holidays, I found a book called The Box: How Containerization changed the World, and I immediately knew it would be a book I would need to read twice. As I wrote in my review, it presented an interesting history of the cargo industry and how the efficiencies in time and money through the move from break bulk to containerization was one of the most important factors, if not the most important, of globalization.

When previously considering the impending move inland of foreign companies, I was focused on access to interior markets, advantageous government policies, lower costs of production, and a few other usual suspect reasons for moving inland. I even used the improvement of China’s long haul trucking network as a factor that would be important in any mass move inland.

However, it was not until after finishing the last page of The Box, that I realized that the move of freight from break bulk to containerization will again one of the most critical factors in this. I had previously heard that APL was looking to drive a container ship to Chongqing, and I found that interesting for manufacturers looking to export, but I did give it as much credit as I should have as I continued to look at Road haul as the major catalyst.

The second piece of support came from an article I found on 3PL Wire and Asia Logistics that summarized River of Opportunity in October’s Logistics Management magazine, an article looking at the development of the Yangtze River, and how containerization of cargo on the Yangtze would increase.

In the last week, I have found a lot of data and I am crunching it now. There is a lot of investment, river traffic is up (one report showed 25% growth on river containerization), foreign and domestic companies announcements are signaling the rolling up container operators along the river, and executive who once wondered where Nanjing was are starting to recognize the names of second tier cities like Wuhan, Yichang, and Chongqing.

My first sketch analysis, is that the development of China’s interior will not be possible without the containerization of the Yangtze, and that once container ships are offering service to the Yangtze ports, manufacturers will leave the east coast for areas along the Yangtze and within a one day truck of the Yangtze. In addition, the effect of policies like Go West will not be truly effective in creating Harmonious society until the number of containers floating on the Yangtze expands greatly… and the government knows this.

Why will the development of the Yangtze be important to you?

– For manufacturers, the ability to ship containers over the Yangtze will offer new sites for manufacturing that once were not economically feasible. Access to cheaper land, labor, and transportation will all be benefits.

– For sellers, new markets will develop as towns become cities and farmers become plant managers

– For investors, opportunities to invest in port, manufacturing facilities, residential, and retail locations will come onto market, and understanding the importance of the Yangtze will be critical to asset selection

So, for the next couple weeks, expect more on the above as we make our way through the data and some recent interviews.

As always, we hope you will share your comments

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2 Responses to “Impications of a Containerized Yangtze River”

  1. chris says:

    March 15th, 2007 at 8:50 am

    The containerization of the Yangze indeed poses a lot of new opportuinities, but it all depends on the freeing up of and making navigable of the yangze, plus huge investments in containerterminals and vessels that can carry these containers, currently a lot of measuring and experimenting is going on. I think that is a good sign, even though for the pollution of the river it might not be all that….

  2. rbrubaker says:

    March 15th, 2007 at 9:46 am

    Hi Chris,

    Actually, we are speaking to a number of the ports to try and understand that very point. I have fallen a bit behind on the recent updates, but I will catch up again soon.