Eight of the world’s 17 largest and busiest shipping ports are located in China, including the Port of Shanghai, the Port of Shenzhen and the Port of Ningbo, which are the top three ports moving more than 92 million TEUs annually, reportsBecky Harris of ArcBest. Greater China, including China, Hong Kong, S.A.R and Taiwan, is responsible for more than 28 percent of all global trade, reports the World Shipping Council.
The sheer volume and flurry of activity in the world’s leading ports mean greater difficulty for shippers moving Asia-Europe freight. Knowing how the biggest ports compare and what it means for shippers can help reduce ocean freight spend, improve supply chain efficiencies, and enhance carrier selection. Also, awareness breeds better understanding of ocean freight rates and how to keep costs under control.
What Are the Top Challenges in the Busiest Ports in China
The challenges in the top three ports in China reflect the typical growing pains in international trade.
- The Port of Shanghai has experienced nearly 5-percent year-on-year growth with stronger demand from Asia-Europe trade lanes, reports Customs Today. Strong growth contributes to higher per-day volume, higher freight rates and greater use of available capacity. This translates into struggles in securing container spacing and demand for error-proof documentation. The sheer volume and size of the Port of Shanghai is its primary problem.
- The Port of Shenzen situated north of Hong Kong, and its namesake city, Shenzhen, is home to more than 10 million people. Known for its manufacturing prowess, the deep-water Port of Shenzen features 140 berths and plays host to 39 shipping companies. The intense focus on manufacturing in the area makes shipping from the Port of Shenzhen impractical for companies shipping from manufacturing centers in other parts of China. The fast development of the Port of Shenzen also leads to confusion in processing paperwork and managing freight.
- The Port of Ningbo, located in the Zhejiang province, is one of the main North Chinese Ports, and it’s known for its crude oil and ore terminals. This port has the distinction of having a history of over 7,000 years. It handles a variety of goods, including textiles, footwear, consumer electronics, and construction goods. Shipping a TEU from the Port of Ningbo is typically less costly than the larger ports, but it comes with a caveat. The spread of congestion from other Chinese ports, i.e., the Port of Shanghai, has led to additional charges for spot rates and denials for small infractions. Significant companies, like Maersk, CMA CGM, Shell and MSC, are working to offer app-based documentation and processing in the Port of Ningbo via the Rotterdam-developed Pronto. Unfortunately, state-owned entities operating the Port of Ningbo complicate the use of new apps and technology, explains Seatrade-Maritime.com.
How to Get the Most from China’s Biggest and Busiest Ports.
Selecting the right ports in China can make or break your shipping strategy. Some of the top China shipping ports may have extensive congestion and require mountains of paperwork. Others may offer digitalized management to reduce delays. Instead of trying to navigate the complexities and congestion of the top ports, shippers should follow a few simple tips to get the most from ports in China.
- Define the right contractual and service terms, also known as Incoterms, noted in a past FreightHub blog. Which Incoterm you select can leave suppliers to handle the transport of goods, manage paperwork and inspection processes. Incoterm selection applies to purchasing cargo or marine insurance, container type used, and shipment designation. Shipment designation includes full container loads and less than container load. In general, rates for the top three Chinese ports will be similar, if not identical, for full container loads. However, prices for less than container loads can vary significantly.
- Leverage ocean shipping carrier alliances. With multiple carriers canceling shipping lanes following higher fuel rates and demand, shippers must know available carrier alliances and which ones offer the best prices. Of course, the best prices are not always the right rates. Demurrage fees, added costs, and delays increase the costs of shipping ocean freight. Alliances offer an opportunity to take advantage of lower prices.
- Diversify carrier and alliance use. Spot and contracted ocean freight rates are subject to change. In some cases, shippers may be incapable of meeting ocean freight minimum volumes. Failure to achieve volume and quantity minimums invalidates discounted or waived freight fees, increasing costs. Even Alliance rates are subject to change. So, never rely on a single alliance to provide all shipping options. Some carriers may offer significantly lower surcharges. For example, Hapag-Lloyd stands out with the lowest freight rate EBS increase of only 1 USD. Other possibilities for diversifying shipping strategies include working with smaller ports and smaller carriers.
- Let someone else handle Asia-Europe ocean freight forwarding and management. Asia-Europe trade is evolving and becoming more expensive. With rising fuel rates, emergency bunker surcharges (EBS) will become more prominent aspects of ocean freight rate determination. Instead of trying to monitor all EBS and fees in all of China’s ports and their hundreds of trade lanes and routes, use digital freight forwarding services or outsource freight management and forwarding to an expert, like Freight Hub. Digital freight forwarders or you may call them online freight forwarders, create rate-transparency for shippers and increase management of freight spend and processing. For example, instead of waiting days for freight quoting and freight booking, a few clicks give shippers the ability to streamline freight management. This lowers the time freight spends in limbo and effectively lowers overhead for each shipment. — Another critical component of navigating the complexities of numerous ports and cities.
The top three ports are great for a variety of products but know a bit more about the geography of the area and its free trade zones (FTZs) can further reduce congestion of your shipments in ports in China.
Eleven FTZs exist as treaty ports in China and they serve as a go-between for shippers struggling with congestion in the busiest ports and demand for same-day shipping. That’s part of what makes shipping ports in China unique. No matter what you want or when you need it, China shipping ports can make it happen.
In fact, Freight Hub opened its Hong Kong location July 31, 2018, allowing shippers to leverage Asia-Europe digital freight forwarding and management with a local office in both regions.
Knowing the characteristics of the FTZs can help with selecting ports in China, leveraging new technology for ocean shipping and building international trade relationships. Furthermore, FTZs have distinct advantages, like growing free trade, increasing foreign investment and using new legal pathways to move more product for less.
Shippers that take the time to understand the FTZs of China can put the final piece of the puzzle together in selecting ports in China for international trade. The following table details the size and products/ purpose for each of the 11 FTZs:
1 Chongqing Free Trade Zone: 120 km²
- An important hub to connect “One Belt, One Road”, “Western Development” and the “Yangtze River Economic Belt”
- Open for high-end manufacturing and tariff-free services
2 Fujian Free Trade Zone: 118 km²
- To promote investment in, and trade with, Taiwan
- Develop tourism and shipping
- Build the key area for “Maritime Silk Road”
3 Guangdong Free Trade Zone: 116 km²
- Act as a pilot zone for financial opening-up, cultural education and high technology
- Act as a key location for the “Maritime Silk Road”
4 Henan Free Trade Zone: 120 km²
- Develop the traffic and logistics system for “One Belt, One Road” and cultivate emerging industries
5 Hubei Free Trade Zone: 120 km²
- Enhance the development of Central China and support industrial transfer
- Promote the development of the “Yangtze River Economic Belt”
6 Liaoning Free Trade Zone: 120 km²
- Launch new industrialization, improve the North East’s economic development and attract talent
- Build sea-rail intermodalism
7 Shaanxi Free Trade Zone: 120 km²
- Support high technology, agriculture technology, cultural and educational exchanges
- Drive “One Belt, One Road” and “Western Development”
8 Shanghai Free Trade Zone: 121 km²
- Grow free trade, foreign investment, international shipping and financial services
- Transform government functions and improve the legal system
- Explore a new approach for reform & opening-up and research an offshore tax system
9 Sichuan Free Trade Zone: 120 km²
- Deepen “Western Development”
- Lead the South West to develop foreign trade, advanced manufacturing, and modern services
10 Tianjin Free Trade Zone: 120 km²
- Develop manufacturing and shipping & logistics services
- Speed up the synergetic development of Beijing, Tianjin, and Hebei
11 Zhejiang Free Trade Zone: 120 km²
- Develop foreign trade in bulk commodities, especially oils
- Develop relevant marine industries
Know Where You Stand with China’s Biggest and Busiest Ports
The size of the major ports in China will continue to grow, and in time, the most significant ports will begin to merge more with smaller, nearby ports. Since growth is inevitable, shippers should consider outsourcing the processes of importing, exporting, and the management of China’s shipping ports to an accredited freight forwarder. Things are changing, and shippers that adapt to changes will be better able to streamline supply chains and stay competitive. Further, better control over Asia-Europe shipping will have resounding effects across the globe, lowering costs for business-to-business supply chain partners, consumers, and manufacturers. In fact, companies are turning to digital freight forwarders, like FreightHub, for this specific reason and tapping into better value and savings as the Asia-Europe ocean trade routes grow in complexity and come under more scrutiny.