China maritime and logistics players eye Belt and Road opportunities

Xi Jinping

One Belt One Road is a centrepiece of China president Xi Jinping’s foreign policy and domestic economic strategy. Credit: PA

 

 

China’s Belt and Road initiative means opportunities for maritime and logistics players despite inherent risks with investing in some of the markets along the planned routes, according to top executives from three leading China-based logistics and port companies.

“In 2014 China’s trade with the One Belt One Road countries was USD1 trillion, a figure expected to double in the next ten years. This is a big opportunity and I see growing demand for contract logistics, storage and delivery services,” said Zhao Huxiang, chairman of Sinotrans and CSC Holdings, a key state-owned enterprise in China and the country’s largest logistics service provider.

Sinotrans is expanding its operations along Belt and Road routes including the launch of new rail services from Guangdong and Gansu to Central Asia; new sea routes to the Philippines and Indonesia, and what Zhao called ‘heavy’ investment in hubs in the western Chinese cities of Chengdu and Chongqing.

“Before the initiative was raised a lot of our growth had been happening along these routes. We were growing fast but now expect to grow even faster” said Zhao, who was participating in a panel discussion on the Belt and Road initiative at the Hong Kong Asia Logistics and Maritime Conference.

“Some of the countries are very underdeveloped. There are risks, but we try to control them by working with local partners and other means. Generally speaking, the opportunities are bigger than the risks.

A centerpiece of Chinese president Xi Jinping’s foreign policy and domestic economic strategy, One Belt One Road is a planned network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects that will stretch from Xi’an in central China, through Central Asia, and reach as far as Moscow, Rotterdam, and Venice. The initiative also includes a network of planned port and other coastal infrastructure projects from South and Southeast Asia to East Africa and the northern Mediterranean.

“I think it will mean a second wave of growth for Southeast Asia due to the opening up of so many transport links and increasing integration with China,” said George Yeo, chairman of Hong Kong-based Kerry Logistics Network.

Eric Ip, group managing director with Hutchison Port Holdings (HPH), believes the initiative will spur investment in intermodal and port infrastructure projects and motivate companies to explore opportunities in new markets. HPH, which has operations in 56 ports in 26 countries, has 19 operations along the Belt and Road routes, including deep sea, shallow and inland ports.

“Certainly there are risks. We invested in Myanmar and had to wait 20 years before anything happened. Excluding China and Europe the countries along the routes account for just 13% of global imports and 14% of global exports. This is a big opportunity.”

Contact Turloch Mooney at turloch.mooney@ihs.com and follow him on Twitter: @TurlochMooney.