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Opportunities in Qingdao’s Modern Logistics Sector

Advantages of Sea-Rail Intermodal Transport

The city of Qingdao has grown to become China’s top-ranking port, partly supported by sea-rail intermodal transport services and efficient customs clearance facilities. As early as 1998 the city launched sea-rail intermodal transport services linking with Xi’an. As an industry leader, Qingdao port has topped the national league of sea-rail multimodal transport volume for four consecutive years, starting in 2015, handling 1.15 million TEUs to and from the rest of the world in 2018.

The port of Qingdao tops the country in both shipping route density and cargo throughput. Today, Qingdao port offers sea routes to more than 700 ports in 180 countries and regions around the world, and is one of northern China’s ports with the highest container shipping route density. Moreover, according to the January-November 2018 figures released by the Ministry of Transport, Qingdao port is not only the port in Shandong province with the highest cargo throughput, but its throughput also ranks fifth in the country, trailing the ports of Ningbo-Zhoushan, Shanghai, Tangshan and Guangzhou.

Qingdao plays the role of an international transport hub in Shandong’s railway system. According to figures provided by the Qingdao Multimodal Transport Customs Supervision Center, in 2018 over 80% of the international freight routes running to and from Shandong province end in and start from Qingdao. Currently, the city is the terminal of five international freight lines, including:

  • Central Asia Rail: from Qingdao to Almaty in Kazakhstan via Alashankou or Khorgas in Xinjiang, and onward to the capital of Kyrgyzstan, or to the capitals of Uzbekistan and Turkmenistan.
  • China-South Korea Express: from Incheon in South Korea to Qingdao port, change trains, and onward to Dongguan city in Guangdong province.
  • China-Mongolia Rail: from Qingdao city to Ulaanbaatar in Mongolia via Erenhot in Inner Mongolia.
  • ASEAN Line: from Incheon in South Korea to Qingdao port, change trains, and onward to Hanoi in Vietnam via Pingxiang port in Guangxi.
  • China-Europe Railway Express (CR Express): from Qingdao city to Moscow in Russia via Manzhouli in Inner Mongolia.
Picture: Five international freight lines starting from Qingdao.
Five international freight lines starting from Qingdao.
Picture: Five international freight lines starting from Qingdao.
Five international freight lines starting from Qingdao.

As Qingdao lies across the sea from Japan and South Korea, sea freight between the city and these two countries normally takes only one to two days. As such, Qingdao can leverage its geographical advantages and sea-rail multimodal transport services to develop into a logistics hub for the shipment of goods from Japan and South Korea to the Central Asia and Central Europe regions.

Picture: Location of Qingdao
Picture: Location of Qingdao

Currently, both the China-South Korea Express and ASEAN Line start or end in South Korea, transiting in Qingdao port. The China-South Korea Express is mainly used for the transportation of electronic products and daily necessities from Japan and South Korea destined for Guangdong province, as well as garments and electrical appliances from Guangdong destined for Japan and South Korea. Meanwhile, the ASEAN Line is mainly used for the transportation of electronic products from Japan and South Korea destined for ASEAN countries.

The other three international freight lines (from Qingdao city to and from Central Asia, Mongolia and Russia) are eligible to make use of the Qingdao Multimodal Transport Customs Supervision Center to connect to Qingdao port where goods from Japan and South Korea are handled. Many goods exported from Japan and South Korea to the inland countries in Central Asia and Mongolia are delivered by international trains to their destinations by using the sea-rail multimodal transport services offered by Qingdao. Such goods mainly include automobiles, auto parts and components, and electronic parts destined for Central Asia, as well as automobiles, auto parts and components and rubber products destined for Mongolia.

Compared with sea freight, using sea-rail intermodal transport services offered by Qingdao to deliver Japanese and South Korean goods to their destinations can shorten both distance and delivery time. Taking the CR Express as an example, goods shipped from Japan and South Korea to Qingdao port by sea and changed to rail for delivery to Moscow in Russia only takes about 17 days, whereas by sea transport it normally takes more than a month. In other words, nearly half the transport time can be saved.

Moreover, the incentive policy introduced by Qingdao also encourages logistics agents to capture business opportunities arising from the city’s international railway lines. According to the Opinions of Qingdao City on the Implementation of Fiscal Policy in Support of Major Old-New Growth Driver Conversion Projects, the city government offers rewards of RMB3,000, RMB2,000 and RMB1,000 to logistics agents for every TEU they handle in the course of their Central Asia, China-Mongolia and ASEAN, and China-South Korea businesses respectively. The city government also grants rewards of up to RMB2 million to modern logistics projects, such as smart storage projects.

Opportunities for Hong Kong Freight Forwarders

As Shandong’s international transport platform, Qingdao has already forged close ties with Hong Kong in the logistics sector. For instance, the goods of many enterprises in Shandong are delivered to Hong Kong via Qingdao before being re-exported to Europe and Southeast Asia. These include electronic parts and textile products. Shandong enterprises also export some products directly to Hong Kong for the local market by sea freight, including electronic products such as headsets. Nevertheless, Hong Kong freight forwarders have still not made full use of Qingdao’s sea-rail multimodal transport.

Since 2015 Qingdao has opened cross-border sea-rail multimodal transport services including the Central Asia Rail, China-South Korea Express, China-Mongolia Rail, CR Express, and ASEAN Line. Many freight forwarders in Japan and South Korea have already made use of the logistics solutions offered by Qingdao’s sea-rail multimodal transport. Hong Kong freight forwarders handling export goods from Japan and South Korea should proactively consider using the same solutions and better respond to demand for various types of value-added logistics services, such as warehousing, distribution, integrated logistics, and supply chain management.

Content provided by Picture: Charlotte Man
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