Untitled - China Europe International Business School

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Organization of the logistic chain in the Chinese international trade Freight Forwarders Freight forwarders are reaching a global scope through alliances or consolidation through M&A, becoming able to provide international logistic services required by more and more globalized shippers and allowing them to negotiate with shipping lines at a global level. So far, Chinese forwarders cannot compete with international forwarders as long as they don’t have a well established overseas network. Forwarding companies without an international network can’t ambition global customers. Moreover, Chinese logistic companies seem to lack of expertise to organize sophisticated logistics for complex supply chains. A high turnover in management positions and shortage of qualified professionals makes logistics capabilities in Chinese logistic service providers still limited. Shipping Lines Shipping lines are increasingly becoming key players in the logistic chain. As they extend services and increase their market share through consolidation, they are becoming more decisive in the organization of the logistic chain. In order to cope with container cargo growth in the international trade worldwide and especially in the East-West trade, shipping lines are going through a range of measures. To ensure customers need for more space while reducing operating costs, shipping lines are incorporating new and bigger vessels and reducing direct calls to ports therefore increasing ports competition. Moreover, to escape the shortage of port capacity and land infrastructure in Europe which often leads to congestion, shipping lines are increasingly investing in Ports terminals. In an environment of high competition, the involvement in terminal operations allows shipping lines to control operating costs while increasing efficiency for their customers’ logistic chains. Some of the strategies are: – Investments in neighboring ports to escape congestion in main ports (for example, investing in Antwerp to avoid Rotterdam) or create a network of ports that allow to make-up for any incident or delay occurred in former stops. – Investments in ports where return-cargo is secured. On the other hand, existing strategic alliances between shipping lines are also providing many synergies as shared use of terminals, common operating of liner services, vessel space exchange, etc. Finally, as seen before, shipping lines through subsidiaries are also extending their scope, enlarging their services from port-to-port to door-to-door services to add value and differentiate from their competitors. However, shipping lines still need to rely on forwarders to accomplish inland transportation for a while. CEIBS Port of Barcelona Chair of Logistics 59
Organization of the logistic chain in the Chinese international trade Ports and Terminal operators The surge of China-Europe trade is resulting in an increasing volume of containerized cargo directed to European ports. While Chinese ports are experiencing the fastest throughput growth in the world, they are able to increase their capacity at a similar pace and to achieve high terminal productivities. On the other hand, European ports have to balance port development with environmental protection, deal with security issues, government changes, and labor availability and cost. Therefore European ports capacity is being developed at an insufficient pace even if the flow of private investments within its scope is increasing and becoming also a key drive to improve efficiency within port operations. All the main players in the logistic chain manifest serious doubts about the capacity of European ports and their hinterland networks to absorb the increase of containerized cargo from China forecasted for the next years without causing disruptions to the logistic chains. On the other hand, competition between European ports is increasing. Attracting cargo volumes and cargo owners’ distribution centers, to maintain shipping lines calling, becoming first port of call, to achieve higher productivities in port operations (which is seen as a way to cut investments in infrastructure and to avoid overcapacity if demand slows down) are major concerns of European Ports. Therefore Port Authorities in Europe are working towards building a network to compete for logistic chains, not for hinterlands anymore in order to secure cargo volumes in the hands of increasingly powerful shipping lines. Terminal operators have become global players, building a network of ports in order to improve their service to shippers and carriers as well as improving the integration of the terminals with the hinterland. CEIBS Port of Barcelona Chair of Logistics 60
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Untitled - China Europe International Business School

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