Inland Waterway Transport Challenged by Cut-Price Competition (AI Translation)

【周刊提前读】内河水运“卷低价” 水运优势待发掘

The shipping market shows a rare polarization: international container shipping prices remain high while domestic freight rates have been falling. The domestic sector is seeing intense competition due to excess capacity and decreased demand, causing shipping companies to operate at a loss. Pan Asia Shipping, the largest domestic shipping company under COSCO, highlights this trend, reporting a drop in the Xinhua-Pan Asia Shipping China Domestic Container Freight Index (PDCI), reflecting continuous declines since December 2022. The domestic market is particularly suffering from weak demand, especially in materials related to the real estate sector, which has led to a significant reduction in transport volumes [para. 1][para. 2][para. 3][para. 4][para. 5][para. 6].

Efforts to combat weak demand by redirecting capacity to international markets have been partially successful, with around one-third of shipping capacity repurposed for foreign trade. However, ships engaged in domestic trade still struggle with low load rates, sometimes waiting days for cargo [para. 7][para. 8][para. 9]. The domestic market for transporting materials like furniture and building supplies—critical for the real estate industry—is severely affected by the sector's downturn, visible in the significant decreases in residential property sales and completions[para. 10]. The domestic shipping industry's development over two decades has seen major shifts, including bankruptcies and consolidations that have resulted in a high market concentration among top players, yet volatile pricing wars continue during downturns[para. 11][para. 12].

Contrastively, foreign trade maritime shipping is experiencing a surge in freight rates, creating a push for domestic companies to shift capacities abroad. Antong Holdings is transitioning part of its operations to international markets through a restructuring deal with COSCO Shipping. However, Chinese-registered ships face significant tax burdens, making them less competitive internationally unless demand is exceptionally high[para. 13][para. 14][para. 15].

Efforts by the government to promote rail-water intermodal transport and containerized bulk shipping acknowledge the limitations and need for improvement in domestic transport logistics. High logistics costs remain a challenge, and comprehensive reforms are needed to improve efficiency and cost-effectiveness of multimodal transport networks[para. 16][para. 17][para. 18]. The investment in port infrastructure and the push towards the development of high-grade national waterways is also part of the broader strategic initiative to boost domestic transportation efficiency. However, insufficient capacity at coastal ports and inadequate integration of domestic trade operations with other transport modes are identified as significant bottlenecks[para. 19][para. 20][para. 21][para. 22][para. 23].

Additionally, the focus on the modernization and expansion of waterways aims to reduce logistics costs and improve industrial chains by promoting the transportation of goods like grains and construction materials via low-cost water routes. Still, there's an observed dependency on government subsidies for some projects' viability, raising questions about long-term sustainability and effectiveness[para. 24][para. 25][para. 26]. The national government is also investing in upgrading ship technologies and encouraging the development of new energy-powered vessels to align with stricter emissions regulations in the future[para. 27][para. 28][para. 29][para. 30][para. 31]. This comprehensive approach aims to address both immediate pressures and future demands of the domestic shipping industry, reflecting the broader economic goals outlined in government policies and infrastructure plans[para. 32].