Numerous foreign companies
remain heavily reliant on exporting
goods out of China; those that
establish production away from the
coast, therefore, should carefully
assess export options. This will
require analysis of intermodal con-
straints, transit times, the likelihood
of delays, variations in customs
activities among different provinces,
and the availability of special trad-
ing zones.
Port of Shanghai is the second largest in
the world (behind Singapore), with a
throughput of 11. 7 million TEUs (20-
foot equivalent units) in the first half of
2009. Its huge scale makes frequent sailings and timely deliveries possible. In
contrast, the Port of Ningbo had a
throughput of 4. 6 million TEUs in the
first half of 2009, and therefore outbound
sailings are less frequent. Although
Ningbo has an advantage with its simplified and agile export processing, the
lower sailing frequency can translate to
delivery delays. Both Shanghai and
Ningbo have their strengths and weak-nesses, and detailed planning is essential
for shipping from the Western provinces
through any of the coastal seaports.
Transportation costs in China are
among the highest in the world.
Hinterland shipments, for instance, face
higher toll charges and greater probability of damage. Extending transport distances will also result in higher rates
charged by third-party logistics providers
(3PLs), also referred to as logistics service
providers (LSPs). Not everyone employs
3PLs in China. Most are still small-scale
and function-specific; therefore, they
cannot provide a full supply chain service
from raw-material procurement to final
product delivery. It is very likely that
most foreign companies will seek a familiar or incumbent 3PL from their home
countries. In turn, these third parties
often rely on partner logistics entities,
commonly local freight forwarders and
carriers, to actually manage the freight
movement.
Although more than 80 percent of
freight within China moves over the road,
companies that are producing in the interior might want to consider the feasibility
of using China’s underdeveloped rail and
barge networks. Rail is an attractive alternative to truck transport for similarly
long distances in many Western countries,
but the government-run rail system in
China makes it difficult to ensure efficiency or adherence to delivery timetables.
Furthermore, the lack of intermodal
ramps at critical logistics junctions and
ports has so far kept trucking the dominant mode of freight transport throughout China.
