GET-China freight Jul19

With World Bank support, China is taking steps to address the connectivity problems that have dogged its logistics network. Gordon Feller reports.

Over the past few decades, China’s large transport infrastructure network has grown to an impressive scale: 123,500 kilometres of expressway; 121,500 kilometres of railway; 127,000 kilometres of navigable inland waterway. 

Realising an operation of this size has required trillions of dollars in investment. Foreign investment has played a role, but to date it has been a small one. The primary source of capital has come from the central government’s domestic budget. 

The wrong route

Despite the evident progress, 76% of China freight is still moved solely by road. Mindful of the national climate change goals, the central government is becoming concerned with the fact that roadway freight haulage is much more carbon intensive than moving freight by rail or on waterways. 

But there is one major impediment to progress: China’s freight transport sector suffers from underdeveloped intermodal transport nodes and intermodal hubs. Despite the fact that there are good infrastructure networks by mode, there is a missing link between the various modes. This is especially true for efficient freight hubs. The lack of these within the country is glaring, given that they facilitate seamless intermodal transport linking sea and rail, waterway and rail, rail and road. 

In addition, all of the key elements in each mode vary by mode: the transport units, the equipment, the operational rules and the documentation. None are standardised, an essential prerequisite when interconnecting modes. 

Freight fragments

Persistent barriers are criticised for keeping different mode operators operated and unconnected. For each mode to work together, across modes, China's system is lacking incentives. 

Information about intermodal transport is fragmented. It is not shared among various stakeholders, such as the infrastructure operators, logistics services providers and logistics customers. As a result, trans-shipment costs inside China, between various modes, now account for one-third of total freight transport cost.

The Chinese government has repeatedly said, at the highest levels, that it recognises the fact that significant financial resources have to be focused on solving these problems. But money alone may not be enough to ease the intermodal freight transport system’s major bottlenecks. 

Pressing the accelerator

Beijing’s 13th Five-Year Plan for Economic and Social Development (2016-2020) calls for accelerated development in intermodal transport. It prioritises the construction of intermodal freight hubs. The Mid- to Long-Term Logistics Development Plan (2014-2020), issued by the powerful State Council, emphasises intermodal transport, calling it one of the most important areas for Chinese development. In response, local governments accelerated planning and investment in intermodal freight hubs and logistics parks. 

In 2015, the State Council and the ministry of transport jointly launched a national intermodal pilot demonstration programme, which provided financial incentives to 16 selected intermodal transport projects across the country.

With the adoption of development strategies including the Belt and Road Initiative and the Yangtze River Economic Belt, China identified a number of freight and logistics corridors (both domestic and international) to support new trade routes and industrial development locations. However, the current corridor plans are considered by many experts to be very crude. These same experts think that detailed development strategies, and the associated investment plans, need to be based on a realistic review of existing infrastructure; detailed surveys of commodities flowing along various potential freight corridors; and an understanding of major impediments (policies, regulations, infrastructure, operations). Only then will it be possible to truly improve the efficiency of freight movement along such corridors.

A four-point plan

A new World Bank-funded programme is focused on developing what it calls the “key national elements”: policies, strategies and standards. The core goal is “to improve the efficiency and environmental sustainability of freight transport”. Pilots in five selected cities are testing each element. 

The new programme has four key components:

Developing the low carbon intermodal freight transportation system: New national policies, strategy and standards are aimed at improving the efficiency of long-distance intermodal freight transport. The aim is to encourage modal shift of road freight to railways and inland waterways, reducing deadhead mileage.

• Developing the national strategy for low-carbon intermodal freight transportation development in China: A detailed research project is focused on existing weaknesses and impediments in China's intermodal transportation system. It is to review international best practice through case studies, and develop a comprehensive national strategy for promoting efficient intermodal freight transportation systems. This will facilitate physical, operational and technological interconnections among the different modes, across the entire freight logistic chain; harmonise standards for equipment; offer documentation and information systems to move freight across different modes; and strengthen institutions and stakeholder participation. 

• Developing the intermodal freight strategy for the Yangtze River Economic Belt: This programme will conduct commodity flow surveys; assess the capacity at intermodal transport hubs, and within the larger transport infrastructure; develop a freight transport strategy for different modes; identify infrastructure and operational intermodal transport bottlenecks; and recommend policy, investment strategies and IT to improve freight transport.

• Developing an action plan for efficient and green freight corridor improvement: This will review infrastructure and operational bottlenecks at major national and international freight corridors; at key intermodal nodes and hubs; and at land border port nodes. It aims to improve the capacity and efficiency of the selected freight corridors. At the same time, it will aim to upgrade service levels and integration at selected intermodal freight nodes/hubs. The major corridors are linked to the vital freight corridors being developed under the Belt and Road Initiative. If successful, this component will improve freight corridors in some sections of its corridor system.

This article is sourced from fDi Magazine
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