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CLOSE TIES Africa is on course to be China’s number one trading partner
Focus on Africa Jason Jiang canvasses leading breakbulk players in China
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or those involved in breakbulk and project shipping 2012 was unquestionably a tough year. Nevertheless, massively increasing trade between China and Africa is providing solace. China’s Ministry of Commerce has noted recently that Africa will surpass the European Union and the United States as China’s largest trading partner in the near future. “Chinese companies are increasingly being encouraged to invest abroad and now it is not only the larger corporations such as Chinalco and ZTE, but also more and more middle sized companies,” comments Bo Drewsen, chairman of CLC Projects. CLC stands for China Logistics Club. The projects network was founded a year ago. Africa is already a huge market for Chinese contractors especially in road, power plants, airports, railways and wind turbine plant constructions. By providing soft loans on favourable terms to African countries, China gets more easy access to the continent’s vast mineral wealth. Infrastructure demands for Africa remain enormous, with Chinese contractors to the fore in tendering. For instance, the continent needs to spend over $52bn on 4,000 km of railways in order to exploit planned African iron ore projects, according to International Finance Corp. The IFC
estimates that up to $13.6bn needs to be spent in Guinea alone to develop two railways and a port. South America is another growing market for Chinese businesses. “This all means a big demand for project cargo shipping out of China to Africa and South America in particular,” says CLC’s Drewsen. Shipowners are introducing bigger breakbulk tonnage to Africa to cater for this demand. One project alone requires some 1m freight tons for all the equipment and mining wagons, railway cars, sleepers, camps for housing for the big China Aluminum/Rio Tinto project at Simandou in Guinea. Recently some 600 railway wagons, in total five charter vessels with some 12,000 tons in total, were shipped from China to an iron ore project in Sierra Leone. “China will continue to be the big dragon in 2013 when it comes to sourcing of machinery, steel, infrastructure equipment, not only by foreign companies but also by Chinese contractors,” Drewsen says.
Around the country Looking at the local scene Juergen Kuntz, managing director of BBC Chartering Shanghai, notes that smaller ports along the Yangtze river have been more active in canvassing project cargoes. “Some of these ports encounter
congestion,” Kuntz says, “which shows their shortages in turnover capacities for breakbulk cargo, there’s still room for improvement on this end.” “We see our breakbulk business in 2012 as being a little bit worse than the year before,” comments a spokesperson from Sino-Polish shipping joint venture Chipolbrok. “Higher fuel prices and operating costs as well as tougher market competition have brought some challenges to us. However, demands from project cargo and machinery cargo are still strong, stimulated by increasing growing offshore projects and large-scale construction projects.” The extreme competition in the market is something BBC’s Kuntz is well aware of. “We expect the market to continue to be very competitive. It’s a buyer’s market, clearly price driven,” he says. “At the same time we see a lot of cargoes being recirculated as operators and carriers often fail to perform in this fast-paced dynamic.” Meanwhile, a representative from Rickmers’ Dalian office tells SinoShip: “Despite the overall depressed shipping market, we do see some breakbulk development in the past year. The ongoing breakbulk berth expansion project in Dalian port will enhance the handling capacity and operations in the port. For the past year, we have seen a good trend in project cargoes and large scale machinery shipping to South Asia countries including India.” Concluding, CLC’s Drewsen has some advice for local project firms. Chinese companies need to make a greater impact overseas, Drewsen urges. “Chinese forwarders need to gain an international foothold,” Drewsen says. “Chinese forwarders have been slow to realize this and that is a big weakness.”
NEED TO KNOW NEED TO KNOW
CLC PROJECTS CLC Projects is a network founded a year ago which now has 84 members, who are generally small or mid-sized companies. CLC Projects nominates one member per province in China and one per country abroad only. The grouping is actively looking for more members across China. CLC stands for China Logistics Club.
Sinoship SPRING 2013
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