ClassNK Walks The Chinese Road

Shanghai, China

By MarEx 2015-12-30 19:29:12

The last two decades have seen China playing a very large part in the development of the maritime industry, generating some 41 percent of the growth in global seaborne trade in the last 11 years alone. China’s imports have reached 2 billion tons and exports of containerized goods are still a major driver of the container business.
However, after 15 years of sharp growth China’s trade development is slowing down as industrial output increases at a more modest annual rate of six percent per annum through 2015, against a trend growth of 14 percent per annum. 

The consequences have been felt across shipping, from container port throughput figures in North Europe and along the U.S. West Coast to the wet and dry bulk trades. Concerns have been particularly keen in the dry bulk sector, given that around half of the trade takes place in China. Imports by the world’s biggest coal consumer were 49.07m tons in the first quarter of the year, a fall of some 42 percent on the same period a year earlier according to data from the Chinese customs office. 

To date, even economists of the highest standing are ready to take diametrically opposed views, with some believing that the Chinese economy is simply undergoing an overdue correction, and others already concluding that it should no longer be considered the world’s engine for growth. 

Whether either of these scenarios is accurate remains to be seen, but in the meantime China’s mature economy retains significant growth opportunities for shipping activities, wherever the economists believe it sits in the macro cycle.

From within, China’s economy is in an acknowledged transition, a transition that falls entirely within the “one belt, one road” policies set out by Chinese president Xi Jinping. Planned as a network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects the Belt will stretch from Xi’an in central China, through Central Asia, and ultimately reach as far as Moscow, Rotterdam, and Venice.

The Road is its maritime equivalent: a network of planned port and other coastal infrastructure projects that dot the map from South and Southeast Asia to East Africa and the northern Mediterranean Sea. This vast infrastructure concept is intended to help exploit China’s enormous industrial overcapacity and ease the entry of Chinese goods into regional markets. 

Set in the context of these ambitious plans, western pessimism over future growth from China may be misplaced. Certainly, raw numbers from the first half of 2015 should not be taken at face value. The rate of growth in coal consumption, for example, may well be at its lowest for 25 years, but part of the explanation lies in Chinese government efforts to curb use of domestic high sulfur coal production.

While not materially related, plans to develop ECAs in major Chinese port areas and the official release by China’s Ministry of Transport of a scheme to control ship and port pollution for the next five years demonstrate comparable environmental intent in shipping as well as industry. According to the plan, by 2020 sulfur oxides and nitrogen oxides emissions in the regions of Pearl River Delta, Yangtze River Delta and Bohai Rim will be decreased by 65 percent, 20 percent and 30 percent respectively as compared with 2015. About 90 percent of ships will use shore power at major ports while about 50 percent of container terminals, passenger roro terminals and cruise terminals will be capable of providing shore power.
By 2020 all the major coastal and river ports and shipyards will be capable of disposing of waste water from tanks and ship sewage, while all of the coal and iron ore dockyards at major ports will need to have wind and dust suppression facilities.

Opportunities also exist as a result of other government actions. A new five-year plan aimed at developing China’s shipping industry has also been launched to help Chinese container lines and ports to become more competitive. The plan, which runs through 2020, includes tax and regulatory reforms while encouraging shipping companies to upgrade and modernize their fleets by retiring vessels early to reduce over-supply. The initiative also aims to improve port competitiveness. 

Short term, traffic figures for the first half of 2015 and attendant ship utilization figures can hardly be considered encouraging for a shipping world driven by Chinese growth. However, the longer view sees China on track to play the key role in global shipping by 2030 as the emerging superpower of the maritime world.

With seven exclusive survey offices across mainland China alone, ClassNK is actively supporting the operations of each sector of the local maritime industry. Since its establishment in 1991, the Shanghai Office has been at the center of ClassNK’s service network in China, working in cooperation with local offices to coordinate survey operations throughout the region. 

The Shanghai Office is also home to one of six Plan Approval Centers located at major regional offices in the ClassNK global service network. As ClassNK Plan Approval Centers hold the same authority as Head Office in regards to the review and approval of ship drawings, the Shanghai Office can work directly with shipyards and owners on newbuilding projects. This allows for an even higher degree of efficiency in newbuilding projects.

This theme of close cooperation is echoed in the ClassNK China Committee and China Technical Committee. Established in 1994 and 1995 respectively, these committees bring together some of the key players on both the operational side and technical side of the Chinese maritime industry with the goal of exchanging information and discussing any challenges facing the industry.

ClassNK also regularly holds technical seminars throughout the region. Presentations are delivered by ClassNK experts on a range of technical topics covering new technologies as well as incoming regulations. Through these seminars, ClassNK is able to disseminate the latest technical information to technical managers and engineers working in all sectors of the Chinese maritime industry.

With this extensive infrastructure in place and many years of experience in the Chinese market, ClassNK is in prime position to support the further growth of the Chinese maritime industry over the years to come.

Source: ClassNK

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.