Barging in

The Pearl River Delta (PRD) could be a liquid superhighway. Its 12,000-kilometre network of waterways spreads across one of China’s most economically dynamic regions. The river connects the major inland ports of Zhaoqing, Foshan, Guangzhou, Nanning, Guigang, and Wuzhou to international gateways in Shenzhen and Hong Kong, and to each other. But while Guangdong’s economic output rivals that of some European countries, the development of its inland waterway transport has not caught up.

"In terms of freight, something like 10 percent of traffic goes through the rivers in comparison to 17-23 percent in European countries. It is a very small market with big potential to improve," says Dr James Wang, a professor of transport geography at the University of Hong Kong, who recently completed a study with the Guangdong government on inland waterway transport in the greater PRD.

The 15,000-word report, released last month, examined the reasons why river transport was lagging behind other modes and outlined policy recommendation for the future. It found that from 2001 to 2005 investments in highways totaled US$17.87 billion (€11.9) compared to a mere US$340 million of investment in river channel development. Furthermore, Guangdong’s 11th five-year plan for transport investment for the period from 2006 to 2010 only allocated 1 percent of funding to inland ports and waterways, with the majority going to highways, railways, and urban rail projects.

Wang explains that part of the reason for this is economic incentives. "Unlike highways, which can collect toll charges, the government can’t accumulate any money from developing river channels," he says. According to Wang, over the past 20 years, the once-dominant train barges in the PRD estuaries have disappeared as freight has shifted onto the roads. "You still see very short shuttles between coastal and near-river-mouth terminals to places like Hong Kong and Shekou, but anything longer and they use trucks because of the timing."

Rebound

Road beats inland waterway transport in terms of speed, but with development moving inland, shipping on the rivers is likely to rebound. Still, taking market share from the trucks will be a challenge. Currently, most of the PRD’s cargo comes from the eastern PRD in Dongguan and Shenzhen where factories lack direct and immediate access to river transport, and trucking is likely to remain dominant in those areas. But even factories with access to water usually prefer roads.

"A good road network exists and for distance below 300 kilometres it is invariably a competitive option," says Jonathan Beard, managing director of GHK Hong Kong, a consultancy that specialises in logistics and supply chain issues in China. "It typically provides a more reliable and quick, point-to-point connection. Using river barges usually involves at least one extra handling move."

However, as manufacturing has grown in the western PRD, barge traffic has nevertheless picked up, says Beard. He explains that barging is becoming more attractive with the introduction of more streamlined customs procedures, options for calling at multiple ports, higher capacity on motorised barges, and the improvement of handling facilities at the container terminals.

Strategically located container terminals are hoping to leverage this advantage. Located on the western side of Shenzhen with the closest access to the inland waterway network, the Da Chan Bay Container Terminal hopes to encourage and capture river traffic. "Our goal is to convert current truck traffic from those inland locations travelling to other Shenzhen ports to waterway barge traffic travelling to Da Chan Bay," says Alan Au, a general manger at Da Chan Bay and a 30-year veteran in the shipping industry.

The terminal, which received its first vessel at the beginning of 2008, has been working on strategies to offset the current drop in container traffic. Though the Shenzhen terminals officially try to complement one another in service offerings, the competition has been fierce as cargo flows have dried up.

Da Chan Bay has had its eye on diversifying and getting traffic where it can. "Currently 13 percent of our export cargo is delivered by barge versus 28 percent on average for the other two western Shenzhen Ports," says Au. The terminal’s goal over the next two years is to develop more daily barge services between Da Chan Bay and other major western Pearl River ports like Huangpu, Zhangshan, Zhuhai and Nanhai.

As far as Beijing is concerned, inland waterway transport in the PRD has a future. In the National Plan for Inland Waterways and Ports Layout issued in 2007, the Ministry of Commerce calls for the construction of high-class waterway transport to aid facilitate improve intermodal transport and support progress toward sustainable logistics.

Green river

Water transport is one of the most energy-efficient means of transport and worldwide accounts for only 3-5 percent of energy used in transport. A European Union study, which factored in impacts on urban areas, landscape, climate change, air pollution, associated business costs, noise and accidents, found that water-borne transport costs roughly €22 per tonne per kilometre, compared to €86 for road.

Likewise, Wang’s study concluded that "inland waterway transport is the ‘greenest’ among all modes of transport, and should be promoted and incorporated wherever possible". The study made policy recommendations that priority be given to inland waterway transport development strategies, incentives be given to companies in the sector, and that industries should be encouraged to locate or relocate along the rivers.

In 2006, the "Green Lane" was introduced as a transhipment model for trucking between the mainland and Hong Kong. The model expedited customs procedures, allowing the trucks to pass directly without time-consuming de-vanning procedures. But according to industry insiders, the stricter customs procedures and charges futher increased the costs of inland waterway transport, reducing its viability for certain international shipments.

Additionally, cost is not always the primary concern, says Beard. "Handling reliability and security is also another important factor. Hence, shippers often do not prefer transferring the container from one mode to another."

While road transport will continue to eclipse river transport in the PRD in the short term, if developments follow along the lines of the European model, the mode has potential. Much rests, however, on the government implementation policies so that businesses can utilise the rivers for low-cost, timely deliveries.