China’s Engagement in Africa and a
New Development of International
Maritime Logistics
MPA Visiting Professor Paul T-W Lee...
I. Overview of growing China’s engagements in the world in
S-S trade routes
II. What is the impact of the China’s engageme...
3
Growing China’s Engagements in Trade Liberalization:
 China’s international trade volumes mostly relies on maritime
tra...
4
My Presentation aims
 First, to draw implications on China’s engagement in trade
liberalization from the perspective of...
Overview of Growing China’s
Engagement in the world
ChinAfrica (= China + Africa)
 Long history between China and Africa: 1421-
2008
 Exploitation and import of natural res...
Chindia is a portmanteau word that refers to
China and India together in general.
 Coinned by Indian Member of Parliament...
Chindia Rising:
 How China and India will benefit the global
economy?
 Why the Rise of China and India is
Inevitable?
 ...
CHINNOVATION:
How Chinese Innovators are
Changing the World.
Yinglan Tan (2011)
China’s Engagement in the Globalised Econo...
10
 Freer South-South trade has been recognized as a vital engine
for the globalised economy:
 to cause a substantial ch...
11
 Recent development of BRICS (Brazil, Russia, India, China
and South Africa), in particular with China’s impact on the...
Exports to China
US$ 26.0 billions
5.5 million tons
Imports from China
US$ 4.7 millions
0.9 million tons
Imports from othe...
13
 International politics and international trade
 China’s scheme of Free Trade Agreements with ASEAN
 P-TPT led by US...
Shipping in China by T-W Lee et al
(2003)
 How has China’s state-owned shipping
lines, COSCO, been restructured
owing to ...
 How has Chinese logistics service providers been coping with
South-South trade developments, i.e., between China and Afr...
Methodology:
How to convert trade value into trade
volume (container TEUs)
(Lee & Lee’s Approach)
17
Literature on Forecasting Seaborne Cargo Volumes (1/2)
 From the methodological viewpoint, the forecast tools in the
l...
18
 Fung (2002):
 a three-player oligopoly model to analyze the strategic interaction
among the terminals and midstream ...
19
 The above literature survey shows that the cargo flow forecasts are
mainly based on econometric analysis with histori...
20
A Comparison between Current Literature and Lee & Lee’s Approach
Item
Literature on forecasting
maritime cargo volumes
...
21
 Although the CGE or GTAP models are widely adopted to
analyze the economic impacts of trade liberalization, the
appli...
Introduction of Global Trade Analysis Project (GTAP)
 Major Features:
 Computable (Applied) General Equilibrium Model
 ...
23
 This paper adopts the latest version (version 7
with 2004 as the base year) of the GTAP
database, which has
 113 reg...
24
 Global Trade Analysis Project (GTAP) model is adopted to forecast the
impacts of the IBSA on cargo value flows
 a gl...
Analysis on Trade Flows using
Global Trade Analysis Project
Model
26
Flow Chart of Analysis on Trade Flows
Data Aggregation
Simulation Design
Trade Flows Analysis
Identification of Relevan...
Converting the GTAP Trade
Value Flows into Volume Flows
Lee & Lee’s Approach (2009~)
- Index -
 Projecting Trade Value Flows with GTAP Model
 UNCOMTRADE Data for the Conversion of Trade
Value Flows into Vo...
Projecting Trade Value Flows with GTAP Model
 Three Scenarios:
1. Gateway Cargoes (Import & Export) of South Africa
2. Tr...
Converting Trade Value Flows into Volume Flows
United Nations COMTRADE Data
used in the Conversion of Trade
Value into Tra...
 UN COMTRADE Data
United Nations Commodity Trade Statistics Database
http://comtrade.un.org/
 Use UN COMTRADE Data in 20...
 Commodities in UN COMTRADE Data are classified
based on HS codes (Harmonized System codes) or
SITC codes (Standard Inter...
Mappings b/w HS Code and GTAP Sectors
HS HS02 Description GTAP GTAP Description
10110 Live purebred breeding horses and as...
34
Flow Chart for Historic Data Conversion in South Africa and
Sub-Saharan Africa (2001 and 2004)
Trade Value (USD) and
We...
35
Flow Chart for Projected Data Conversion in South Africa and
Sub-Saharan Africa (2015 and 2020)
TEU before considering
...
 Four Major Assumptions:
 Average Weight ton/TEU
Source: Data from Korean Custom Office and Stellenbosch Report
 Contai...
My Joint Publications related to the Conversion
37
1. Lee, T-C, Wu, C-H, and Lee, Paul T-W (2011b), “Impacts of the ECFA
o...
38
South Africa: Change in Exports of Containerisable General
Commodities from 2001 to 2004 (Million USD in 2004 (%))
SSA:...
39
South Africa: Change in Imports of Containerisable General
Commodities from 2001 to 2004 (Million USD in 2004 (%))
SSA:...
40
Sub-Saharan Africa: Change in Exports of Containerisable General
Commodities from 2001 to 2004 (Million USD in 2004 (%)...
41
China: Change in Exports of Containerisable General
Commodities from 2001 to 2004 (Million USD in 2004 (%))
ZAF: South ...
42
China: Change in Imports of Containerisable General
Commodities from 2001 to 2004 (Million USD in 2004 (%))
ZAF: South ...
IBSA Case
Outputs excerpted from
Lee, T-C and Lee, Paul T-W (2012), “South-South Trade
Liberalisation and Shipping Geograp...
IBSA Trade Liberalisation
The IBSA trade liberalization draws considerable attention,
given the facts that:
• India, Brazi...
Regional Aggregation of GTAP Version 7 Database
Source: TC Lee and Paul TW Lee (20112)
45
Regional description Comprising ...
Sectoral Aggregation of GTAP Version 7 Database
Note : Lee and Lee (2011a) develops a scenario of removing trade barriers ...
Routes/Commodities Containerizable general Containerizable
agriculture
Major bulk Break bulk and minor
bulk
Liquid Automob...
Numerical Results: Volume Flows among IBSA
Source: TC Lee and Paul TW Lee (2011a) 48
Routes/Commodities Containerizable ge...
49
Note: 1. On the numerical results of value flows among IBSA, see TC Lee and Paul TW Lee (2011a)
2. * indicates a change...
50
 IBSA trade liberalization will increase the loaded
container shipping in the six IBSA trade routes by
2.39 million TE...
Numerical Results: Volume Flows between China and
IBSA Countries
51
Routes/Commodities
Containerizable
general
Containeriz...
Summary (1) : South Africa’s Case
 Gateway Cargoes of South Africa
 Our estimate of gateway cargoes in South Africa is 1...
 Transshipment Cargoes from Sub-Saharan Africa
 Our estimates of transshipment cargoes from Sub-Saharan
Africa represent...
 Interlining Cargoes
 Our estimates of interlining cargoes represent the
maximum volume, i.e., the trade flows between S...
International Maritime Logistics
and
China’s Engagement in South (North)-
South Trade
56
 Maritime Logistics, as the primary means of transporting parts and finished goods
(viz., outbound logistics) on a glo...
57
 Studies on Logistics and Supply Chain tends to pay little
attention to maritime transport aspects in the internationa...
China – India Route:
: China (Shanghai, Ningbo) - Hong Kong - Singapore - India - Sri
Lanka – Malaysia - Thailand , taking...
China’s Extra Asian Maritime Logistics
 COSCO Container Shipping is a key player to expand and promote maritime
logistics...
YEAR 1990: China – West Africa Route (Skipping S. Africa)
1. Shanghai & Hong Kong are dominant international hubs bounding...
YEAR 2000/2010: China – South Africa Route
Container liner service between China and South Africa, taking 26 – 33 days fro...
YEAR 2011: China – South America Route
Emerging new service line between China – Singapore – South America
: 3 ports in S....
 International Maritime Logistics in Africa are organized along key trade and
transport corridors originating from the po...
Corridors
West Africa Central Africa East Africa Southern Africa
Main Ports of
entry
Abidjan,
Tema,
Lome,
Cotonou,
Dakar
D...
65
Fundamental Impediments to Maritime Logistics in Africa
 Extremely high port congestion in West African ports
 Poor i...
 Asia-South Africa (SA) trade routes are the most important
ones, totaling 48% of the whole market share in SA;
 There a...
Policy Implications from China’s
Perspective and
China’s Challenges and Responses
68
Policy Implications from China’s Engagement Perspective (1/3)
68
 Trade liberalisation contributes to increasing marit...
6969
 As for a container hub port as
well as logistics distribution
centre in South Africa, e.g.
Ngqura, China (COSCO &
L...
70
China’s Strategic Options:
Towards a new South America Route?
= typical nodes for transhipment / relay / interlining
Sh...
China’s Strategic Options: Competition with Major Shipping Liners -
SAEC
West Africa
Oceania
East Africa
India/Pakistan
SE...
72
 Asia’s increasing involvement in Africa with China’s engagement with trade
liberalization on South (north)-South trad...
73
 Port attractiveness index: Application on African ports (Caschili and
Medda, 2013 IAME Conference, Marseilles)
 Thre...
CONCLUDING REMARKS:
 China’s Challenges and Responses
 Singapore’s Challenges and Responses
 Future Agenda for Promotin...
 Optimizing ship size deploying on South (North)-South
tra`ding routes with short sea shipping network development
for Su...
76
 Investment in marine terminals, container depots & service
companies in Africa for South (North) – South trade
 Esta...
77
 To make S-S trade route profitable, interplay between extra-
Asian and intra-Asian traffic is required to capture mor...
78
Structural Changes in Major Container Ports
Notes: Containerisation International (several issues). Numbers in parenthe...
79
 Where a container hub port in Sub-Sharan region?
 Location of logistics distribution centre for Sub-Saharan Region
...
Singapore’s Challenges and Responses
80
 Singapore’s Hinterland: “The World”
 Impact of China’s engagement on S-S trade ...
Thank you for your attention!
Professor Paul T-W Lee
Department of Business Administration
Soochow University, Taipei, Tai...
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China’s Engagement in Africa and a New Development of International Maritime Logistics

  1. 1. China’s Engagement in Africa and a New Development of International Maritime Logistics MPA Visiting Professor Paul T-W Lee Professor(客座敎授), Dept. of Business Administration Soochow University, Taipei, Taiwan paultwlee2030@gmail.com; paultwlee@scu.edu.tw MPA Visiting Professor Public Lecture NTU, 22 August 2013
  2. 2. I. Overview of growing China’s engagements in the world in S-S trade routes II. What is the impact of the China’s engagement on international maritime logistics in association with trade liberalisation, focusing on an emerging maritime logistics in the southern hemisphere? III. How to convert trade value into trade volume in container boxes, reflecting liberalisation trade • Lee & Lee’s Novel Approach (2008~present) • Empirical Tests with South-South Trades IV. Implications and discussions V. Concluding remarks VI. Q & A Time 2 My Presentation Outlines
  3. 3. 3 Growing China’s Engagements in Trade Liberalization:  China’s international trade volumes mostly relies on maritime transport in South (North)-South trading routes.  Since growing China’s engagement in trade liberalization and free trade agreements would cause a structural change in commodity trade, the derived demand for shipping services change, and international logistics structure and services accordingly.  Why COSCO active in S-S trade?  Understanding of legacy of former state-owned shipping company (eg Soviet Shipping, NYK during 1st and 2nd WW, COSCO)  Maritime economists (industry) are hungry for accurate and reliable forecasts of Container TEUs), NOT in trade value.  Lee & Lee’s Approach (2009~2011): A method to convert trade value into trade volume with help of GTAP model and UN COMTRADE database Research Motivation & Background
  4. 4. 4 My Presentation aims  First, to draw implications on China’s engagement in trade liberalization from the perspective of international maritime logistics;  Second, to discuss about how to maximise the effect of China’s engagement in South (North)-South trade by developing international maritime logistics system in Africa; and  Third, to explore where is the best place to develop international maritime logistic system in Sub-Saharan Region connecting South America.
  5. 5. Overview of Growing China’s Engagement in the world
  6. 6. ChinAfrica (= China + Africa)  Long history between China and Africa: 1421- 2008  Exploitation and import of natural resources  Increasing export and import trade volume  China as a locomotive to develop African economy  China as a “new” lender  In 2006, China pledged to double its aid to Africa during the period of 2006 to 2009.  Number of Chinese leaders’ visiting in Africa, including New President of China, Mr Xi Jin-Ping in March 2013. Michel Beuret and Serge Michel (2008) China’s Engagement in the Globalised Economy (1/8) 6
  7. 7. Chindia is a portmanteau word that refers to China and India together in general.  Coinned by Indian Member of Parliament Jairam Ramesh.  Chindia: How China and India Are Revolutionizing Global Business by Pete Engardio (2006)  Understanding the combined impacts of the two giants (Engardio’s speech, March 17, 2007)  “The Exponential Power of ‘Chindia’”:  “New joint ventures between Indian IT service firms and their Chinese counterparts hint at the formidable bilateral economy” (by Partha Iyengar and Jamie Popkin, Business Week, Sept. 6, 2007) Pete Engardio (ed) (2006) China’s Engagement in the Globalised Economy (2/8) 7
  8. 8. Chindia Rising:  How China and India will benefit the global economy?  Why the Rise of China and India is Inevitable?  The rise of Chindia is not only inevitable, but it will be beneficial to the world economy.  Consequently, the global integration of China and India will impact global supply chain. Jagdish N Sheth (2008) China’s Engagement in the Globalised Economy (3/8) 8
  9. 9. CHINNOVATION: How Chinese Innovators are Changing the World. Yinglan Tan (2011) China’s Engagement in the Globalised Economy (4/8) 9
  10. 10. 10  Freer South-South trade has been recognized as a vital engine for the globalised economy:  to cause a substantial change in the move of cargoes, consequently changing the derived demand for shipping and container port services, and international logistics services.  ChinAfrica and Chindia has accelerated China’s engagement in South (North)-South trades:  The IBSA (India, Brazil and South Africa) trade liberalization draws considerable attention since:  The three countries, IBSA, are respectively the leading economies in the continents of East Asia, South America, and Africa  The formation of IBSA is emblematic of new geography of international trade China’s Engagement and IBSA (5/8)
  11. 11. 11  Recent development of BRICS (Brazil, Russia, India, China and South Africa), in particular with China’s impact on the African Continent, is expected to further China’s engagement in several fields such as: China’s Engagement and BRICS (6/8)  establishment of manufacturing centre within and outside free trade zone,  container hub port development and mega-carrier services in Africa,  Inland transportation networking (corridors) connecting sea ports,  transshipment networking, and  logistics distribution centre for Sub- Saharan Region. 26-27 March, 2013 in Durban South Africa
  12. 12. Exports to China US$ 26.0 billions 5.5 million tons Imports from China US$ 4.7 millions 0.9 million tons Imports from other countries US$ 6.6 billions 1.5 million tons Exports to other countries -US$ 13.4 billions; -1.8 mil. tons China’s Engagement and ECFA (7/8)  Economic integration agreement between Taiwan and mainland China, known as “Economic Cooperation Framework Agreement” (ECFA) in 2010.  Core Elements of ECFA  Liberalization in Trade and Investment  Early Harvest : referred to as an earlier or immediate tariff concession on some particular products and services at the initial stage of trade liberalization.  Promotion of tree direct-links between Taiwan and China 12 Source: Lee et al (2011), Maritime Policy Management, 38(2)
  13. 13. 13  International politics and international trade  China’s scheme of Free Trade Agreements with ASEAN  P-TPT led by USA  FTA between Korea and China, China and Japan, Japan and Korea.  Growing influence in Myanmar among USA, China, and Japan  Sea power in East China Sea China’s Engagement in ASEAN (8/8)
  14. 14. Shipping in China by T-W Lee et al (2003)  How has China’s state-owned shipping lines, COSCO, been restructured owing to her government’s open policy?  How has China’s container logistics routes been transformed to meet increasing cargo flow on South (North)-South trade routes?  Understanding of legacy of former state-owned shipping line to promote and support economic and foreign policies of ChinaLee, T-W et al (2003) Restructuring of State-Owned Shipping Lines in China, COSCO 14
  15. 15.  How has Chinese logistics service providers been coping with South-South trade developments, i.e., between China and Africa and South America?  Where is the best location of logistics distribution centre to serve the Sub-Saharan region, trying to relay service between Africa and South America with Asian economies?  Looking ahead, what are the likely challenges & responses China is facing?  To accelerate and promote the Economic and Strategic Rise of China in Africa and S. America  To keep sustainability of historical legacy of China in Africa  What about Singapore’s position?  What about S. Africa’s port policy?  What bout shipping liners’ business options? Questions raised by China’s engagement in South (North) - South Trade 15
  16. 16. Methodology: How to convert trade value into trade volume (container TEUs) (Lee & Lee’s Approach)
  17. 17. 17 Literature on Forecasting Seaborne Cargo Volumes (1/2)  From the methodological viewpoint, the forecast tools in the literature include, among others, econometrics with regression analysis and time series technique/data; neural networks; port input-output model; and etc  Fung (2001): a vector error correction model to forecast container throughput in Hong Kong.  Veenstra & Haralambides (2001): multivariate autoregressive time series model to produce long-term predictions.  Seabrooke et al. (2003): a regression analysis to predict cargo growth.  Zhang et al. (2005): regression analysis to examine the contribution of regional economic growth to container throughput in the Pearl River Delta region of China.  Mak & Yang (2007): approximate least squares support vector machines to forecast the monthly container throughput in Hong Kong.
  18. 18. 18  Fung (2002):  a three-player oligopoly model to analyze the strategic interaction among the terminals and midstream in Hong Kong as well as the terminals in Singapore.  The game-theoretical model is then estimated with structural error- correction method and is used to forecast the container throughput.  Zachcial (2002): a modal split model is developed and estimated with linear regression technique.  Regarding studies adopting predictive tools rather than econometric analysis  Lam et al. (2004): forecast 37 types of freight movements and cargo throughput of Hong Kong port using neural networks approach.  Moon (1995): port input-output model as a predictive tool to project the growth of maritime traffic and to provide information for future planning of ports, taking a Korean case. Literature on Forecasting Seaborne Cargo Volumes (2/2)
  19. 19. 19  The above literature survey shows that the cargo flow forecasts are mainly based on econometric analysis with historic time series data and business-as-usual assumption.  None attempts to forecast the variations in cargo volumes resulting from asymmetric shocks of tariff removal caused by trade liberalization.  As far as the increasing container trade is concerned, the forecasts should also provide the details about routes (origin/destination) of commodity trade flows for a better planning on maritime transport capacity and international logistics services and integrated transportation, including dry port, dedicated berth capacity, logistics distribution centre.  To authors’ best knowledge, few forecasts have been conducted with these features. This fact stimulates Lee & Lee’s approach to fill such a gap in the literature. Lee & Lee’s first attempt to fill the research gap
  20. 20. 20 A Comparison between Current Literature and Lee & Lee’s Approach Item Literature on forecasting maritime cargo volumes Literature on economy- wide impacts of trade liberalization Lee & Lee’s Approach Methodologies Econometrics; neural networks; port input-output model Mainly CGE models A global CGE model, GTAP, and external computation based on the official statistics Features of the studies  Particular attention is paid to the forecasts of cargo volumes under the business-as-usual circumstance, assuming unchanged structure of commodity trade.  The asymmetric structural changes in commodity trade arising from trade liberalization and economy-wide adjustment are usually neglected.  Special focus is placed on the economy-wide impacts of the reduction in trade barriers.  The results are usually provided in value terms, thus give limited understandings on the variations in cargo volumes.  Lee & Lee’s approach fills the gap between the two literatures by extending the CGE applications to forecast variations in cargo flows due to trade liberalization and by providing an alternative predicting methodology in the field of transportation planning. Source: TC Lee and Paul TW Lee (2012)
  21. 21. 21  Although the CGE or GTAP models are widely adopted to analyze the economic impacts of trade liberalization, the application in maritime shipping studies concerning trade liberalization is sparse.  Lee & Lee’s approach makes a quantitative contribution by integrating the GTAP model with the worldwide known, publicly available United Nations COMTRADE database.  Lee & Lee’s approach highlights the significance of high tariff rates in determining the South-South trade geography, and sheds light on the new trade geography and container port and shipping developments in the south hemisphere after the IBSA trade liberalization. (on-going research on BRICS and ASEAN region) Contribution of Lee & Lee’s Approach 21
  22. 22. Introduction of Global Trade Analysis Project (GTAP)  Major Features:  Computable (Applied) General Equilibrium Model  Multi-regions & Multi-sectors Incorporated  Main Assumptions:  Perfectly competitive markets, i.e., price taking behavior for all economic agents  Constant-returns-to-scale technology  Demand for primary factors are determined based on Constant Elasticity of Substitution (CES) functions  Leontief functions are specified to determine the demands for intermediate inputs and the primary factor composite  “Armington Approach” (Armington, 1969) is adopted to determine the optimal mix of imported and domestic goods 22
  23. 23. 23  This paper adopts the latest version (version 7 with 2004 as the base year) of the GTAP database, which has  113 regions  5 primary factors (land, capital, nature resource, unskilled labour, and skilled labour)  57 production sectors (agricultural and food processing sectors (sectors 1-25), the manufacturing sectors (sectors 26-42) and the service sectors (sectors 43-57)) GTAP Version 7 Database
  24. 24. 24  Global Trade Analysis Project (GTAP) model is adopted to forecast the impacts of the IBSA on cargo value flows  a global computable general equilibrium (CGE) model widely used in the negotiation of trade liberalization under World Trade Organization (WTO) or other free trade agreements (FTAs)  Then a scientific approach is developed to convert the estimated cargo value flows into volume flows Methodology: Integration of GTAP and UN Database IBSA Tariff Removal Simulation by the GTAP model Statistics on Trade Value and Weights from UN COMTRADE Database Mapping Concordance (HS Codes) GTAP Forecasts on Trade Value Flows Calibrated Conversion Factors Volume Forecasts and Validation Source: TC Lee and Paul TW Lee (2012)
  25. 25. Analysis on Trade Flows using Global Trade Analysis Project Model
  26. 26. 26 Flow Chart of Analysis on Trade Flows Data Aggregation Simulation Design Trade Flows Analysis Identification of Relevant Trading Countries (Routes) S-2 T/S Cargoes from Sub-Saharan Africa S-3 Interlining Cargoes to/from Brazil and Rest of South America S-1 Gateway Cargoes of South Africa
  27. 27. Converting the GTAP Trade Value Flows into Volume Flows Lee & Lee’s Approach (2009~)
  28. 28. - Index -  Projecting Trade Value Flows with GTAP Model  UNCOMTRADE Data for the Conversion of Trade Value Flows into Volume Flows  Mappings between UNCOMTRADE Data and GTAP Data  Assumptions made for Conversion for gateway, T/S and interlining cargoes  Comparison of Historical data with Converted data in 2001 and 2004  Projected Trade Volume Flows in 2015 and 2020 Converting the GTAP Trade Value Flows into Volume Flows 28
  29. 29. Projecting Trade Value Flows with GTAP Model  Three Scenarios: 1. Gateway Cargoes (Import & Export) of South Africa 2. Transshipment Cargoes from Sub-Saharan Africa 3. Interlining Cargoes (from/to China, India, Rest of Asia, Oceania) to/from Brazil & Rest of South America  Evaluating the change in trade value flows by shocking the expected changes in macro economic variables, comprising the growth of real GDP, capital, and labour  Providing the changes in trade value flows not only in terms of total value, but also in terms of detailed components (i.e., by commodity types & by routes)  Details and results of trade value flows are provided in final report.  The focus of this presentation will be on the conversion of trade value flows into trade volume flows. 29
  30. 30. Converting Trade Value Flows into Volume Flows United Nations COMTRADE Data used in the Conversion of Trade Value into Trade Volume
  31. 31.  UN COMTRADE Data United Nations Commodity Trade Statistics Database http://comtrade.un.org/  Use UN COMTRADE Data in 2001 and 2004 (i.e., the base year of GTAP V6 and V7 Database) for Conversion  Both Trade Value (USD) and Weight (Kg) are provided in UN COMTRADE data. UNCOMTRADE Data for the Conversion 31
  32. 32.  Commodities in UN COMTRADE Data are classified based on HS codes (Harmonized System codes) or SITC codes (Standard International Trade Classification codes)  Mappings b/w commodities in HS2002 codes and GTAP sectors are available on the GTAP website https://www.gtap.agecon.purdue.edu/resources/res_dis play.asp?RecordID=1916 Mappings between UNCOMTRADE Data and GTAP Data 32
  33. 33. Mappings b/w HS Code and GTAP Sectors HS HS02 Description GTAP GTAP Description 10110 Live purebred breeding horses and asses 9 Bovine cattle, sheep and goats, 10190 Live horses other than purebred breeding horses 9 Bovine cattle, sheep and goats, 10210 Live purebred bovine breeding animals 9 Bovine cattle, sheep and goats, 10290 Cows imported specially for dairy purposes 9 Bovine cattle, sheep and goats, 10310 Live purebred breeding swine 10 Animal products nec 10391 Live swine, other than purebred breeding swine, weighing less than 50 kg 10 Animal products nec 10392 Live swine, other than purebred breeding swine, weighing 50 kg or more 10 Animal products nec 10410 Live sheep 9 Bovine cattle, sheep and goats, 10420 Live goats 9 Bovine cattle, sheep and goats, 10511 Live chickens weighing not over 185 g each 10 Animal products nec 10512 Live turkeys weighing not more than over 185 g each 10 Animal products nec 10519 Live ducks, geese and guineas, weighing not more than 185 g each 10 Animal products nec … … … … 970400 Postage or revenue stamps, stamp-postmarks, first-day covers, postal stationery, and the like, used or unused, other than heading 4907 41 Machinery and equipment nec 970500 Collections and collectors' pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological etc. interest 42 Manufactures nec 970600 Antiques of an age exceeding one hundred years 42 Manufactures nec 33
  34. 34. 34 Flow Chart for Historic Data Conversion in South Africa and Sub-Saharan Africa (2001 and 2004) Trade Value (USD) and Weight (kg) in 2004 from UN COMTRADE Data TEU before considering Containerisation Ratio (CR) TEU after considering Containerisation Ratio (CR) TEU including Empty Container Total Estimated TEU Average Weight ton/Million USD Average Weight ton/TEU Containerisation Ratio of the total export and import Empty Container % of the total export and import Transshipment Container Cargo % of the total throughout Additional Assumptions for Converting Projected T rade Value Data Converting Weight into TEU Considering Containerisation Ratio Considering Empty Container Considering T/S Container Cargo Assumptions
  35. 35. 35 Flow Chart for Projected Data Conversion in South Africa and Sub-Saharan Africa (2015 and 2020) TEU before considering Containerisation Ratio (CR) TEU after considering Containerisation Ratio (CR) TEU including Empty Container Total Estimated TEU Average Weight ton/TEU Containerisation Ratio of the total export and import Empty Container % of the total export and import Transshipment Container Cargo % of the total throughout Converting Weight into TEU Considering Containerisation Ratio Considering Empty Container Considering T/S Container Cargo Projected Trade Value Flows (USD) in 2015 and 2020 Average Weight ton/Million USD Based on UN COMTRADE DataProjected Trade Weight Flows (kg) in 2015 and 2020 Converting Value into Weight Assumptions
  36. 36.  Four Major Assumptions:  Average Weight ton/TEU Source: Data from Korean Custom Office and Stellenbosch Report  Containerisation Ratio (CR) of the total export and import Source: UNCTAD Maritime Report  Empty Container % of the total export and import Source: South Africa NPA Data  Transshipment Container Cargo % of the total throughput (T/S Container Cargo Volume) Source: South Africa NPA Data  Additional Assumption made for Converting Projected Trade Value Flows into Volume Flows  Average Weight ton/Million USD Source: UN COMTRADE Data Assumptions for Conversion in South Africa and Sub-Saharan Africa 36
  37. 37. My Joint Publications related to the Conversion 37 1. Lee, T-C, Wu, C-H, and Lee, Paul T-W (2011b), “Impacts of the ECFA on Seaborne Trade Volume and Policy Development for Shipping and Port Industry in Taiwan”, Maritime Policy and Management, 38(2), pp. 1-21. 2. Lee, T-C and Lee, Paul T-W (2012), “South-South Trade Liberalisation and Shipping Geography: A Case Study on India, Brazil, and South Africa”, International Journal of Shipping and Transport Logistic, 4(4), pp.323-338. 3. Lee, T-C, Lee, Paul T-W, and Chen, T. (2012), “Economic Impact Analysis of Port Development on the South African Economy”, South African Journal of Economics, 80(2), pp.228-245. 4. Paul T-W Lee, Tsung-Chen Lee and Tzu-Han Yang (2013), “Korea- ASEAN Free Trade Agreement: The Implications on Seaborne Trade Volume and Maritime Logistics Policy Development in Korea,” Journal of International Logistics and Trade, 11(1), pp.43-65.
  38. 38. 38 South Africa: Change in Exports of Containerisable General Commodities from 2001 to 2004 (Million USD in 2004 (%)) SSA: Sub-Saharan Africa; NEU: North Europe; ASIA: The Asian Countries MDE: Middle East; NAM: North America; SAM: South America; MET: Mediterranean NAM
  39. 39. 39 South Africa: Change in Imports of Containerisable General Commodities from 2001 to 2004 (Million USD in 2004 (%)) SSA: Sub-Saharan Africa; NEU: North Europe; ASIA: The Asian Countries MDE: Middle East; NAM: North America; SAM: South America; MET: Mediterranean
  40. 40. 40 Sub-Saharan Africa: Change in Exports of Containerisable General Commodities from 2001 to 2004 (Million USD in 2004 (%) ZAF: South Africa; NAM: North America; SAM: South America EU: Europe; NCA: Non-China Asia; CHN: China
  41. 41. 41 China: Change in Exports of Containerisable General Commodities from 2001 to 2004 (Million USD in 2004 (%)) ZAF: South Africa; BRZ: Brazil; IND: India; RASIA: Rest of Asia; OCE: Oceania; RSA: Rest of South America 1,194(130%) Arrows in pink correspond to interlining cargoes and those in cyan correspond to non-interlining cargoes.
  42. 42. 42 China: Change in Imports of Containerisable General Commodities from 2001 to 2004 (Million USD in 2004 (%)) ZAF: South Africa; BRZ: Brazil; IND: India; RASIA: Rest of Asia OCE: Oceania; RSA: Rest of South America -57(-19%) Arrows in pink correspond to interlining cargoes and those in cyan correspond to non-interlining cargoes.
  43. 43. IBSA Case Outputs excerpted from Lee, T-C and Lee, Paul T-W (2012), “South-South Trade Liberalisation and Shipping Geography: A Case Study on India, Brazil, and South Africa”, International Journal of Shipping and Transport Logistic, 4(4), pp.323-338. Analysis on Trade Flows in the V7 Database
  44. 44. IBSA Trade Liberalisation The IBSA trade liberalization draws considerable attention, given the facts that: • India, Brazil, and South Africa are the leading economies in the continents of South Asia, South America, and Africa, respectively. • IBSA cooperation acts as an excellent role model for the South-South cooperation. • IBSA countries have become influential players in international trade, and the formation of IBSA is emblematic of new geography of international trade.
  45. 45. Regional Aggregation of GTAP Version 7 Database Source: TC Lee and Paul TW Lee (20112) 45 Regional description Comprising the GTAP version 7 countries/regions India India Brazil Brazil South Africa South Africa China China Rest of Hong Kong; Japan; Korea; Taiwan; Rest of East Asia; Cambodia; Indonesia; Lao People's Democratic Republic; Myanmar; Malaysia; Philippines; Singapore; Thailand; Viet Nam; Rest of Southeast Asia; Bangladesh; Pakistan; Sri Lanka; Rest of South Asia Oceania Australia; New Zealand Rest of Argentina; Bolivia; Chile; Colombia; Ecuador; Paraguay; Peru; Uruguay; Venezuela; Rest of South America Rest of the World Rest of Oceania; Canada; United States of America; Mexico; Rest of North America; Costa Rica; Guatemala; Nicaragua; Panama; Rest of Central America; Caribbean; Austria; Belgium; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Poland; Portugal; Slovakia; Slovenia; Spain; Sweden; United Kingdom; Switzerland; Norway; Rest of EFTA; Albania; Bulgaria; Belarus; Croatia; Romania; Russian Federation; Ukraine; Rest of Eastern Europe; Rest of Europe; Kazakhstan; Kyrgyztan; Rest of Former Soviet Union; Armenia; Azerbaijan; Georgia; Iran Islamic Republic of; Turkey; Rest of Western Asia; Egypt; Morocco; Tunisia; Rest of North Africa; Nigeria; Senegal; Rest of Western Africa; Central Africa; South Central Africa; Ethiopia; Madagascar; Malawi; Mauritius; Mozambique; Tanzania; Uganda; Zambia; Zimbabwe; Rest of Eastern Africa; Botswana; Rest of South African Customs
  46. 46. Sectoral Aggregation of GTAP Version 7 Database Note : Lee and Lee (2011a) develops a scenario of removing trade barriers among India, Brazil, and South Africa (IBSA). * : Crude oil is not traded among the IBSA countries. Source: TC Lee and Paul TW Lee (2012) 46 Sectoral descriptions Comprising the GTAP version 7 sectors Tariff rates (%) India – Brazil Brazil - India Brazil - South Africa South Africa - Brazil India – South Africa South Africa - India Water transport water transport Containerizable general commodities gas; textiles; wearing apparel; leather products; wood products; paper products, publishing; transport equipment nec; electronic equipment; machinery and equipment nec; manufactures nec 15.69 14.61 5.26 13.61 15.27 10.16 Containerizable Agriculture commodities vegetables, fruit, nuts; oil seeds; sugar cane, sugar beet; plant-based fibers; crops nec; bovine cattle, sheep and goats, horses; animal products nec; raw milk; wool, silk-worm cocoons; fishing; bovine meat products; meat products nec; vegetable oils and fats; dairy products; processed rice; food products nec; beverages and tobacco products 10.66 108.17 14.30 12.59 3.16 44.77 Major bulk paddy rice; wheat; cereal grains nec; coal; minerals nec 3.63 6.54 0.05 0.77 0.25 16.55 Break bulk and minor bulk forestry; sugar; mineral products nec; ferrous metals; metals nec; metal products 13.45 83.62 8.59 8.57 5.55 15.80 Liquid petroleum, coal products; chemical, rubber, plastic products 5.53 15.31 4.06 8.08 2.96 14.96 Crude oil* oil — — — — — — Automobile motor vehicles and parts 16.59 58.78 19.10 17.13 18.69 16.20 Others electricity; gas manufacture, distribution; water; construction; trade; transport nec; air transport; communications; financial services nec; insurance; business services nec; recreational and other services; public administration, defense, education, health; dwellings
  47. 47. Routes/Commodities Containerizable general Containerizable agriculture Major bulk Break bulk and minor bulk Liquid Automobile Trade within IBSA countries 1. India-Brazil 118 (361)** 8 (7)* 1 (0) 20 (37)** 419 (184) 4 (6)** 2. Brazil-India 104 (165)** 361 (5,419)** 95 (14) 219 (7,831)** 77 (89)** 25 (239)** 3. Brazil-South Africa 291 (76) 288 (176)* 32 (-2) 98 (51)* 85 (14) 305 (387)** 4. South Africa-Brazil 43 (89)** 6 (5)* 47 (4) 120 (102)* 74 (44)* 16 (25)** 5. India-South Africa 251 (678)** 77 (14) 6 (0) 126 (76)* 213 (47) 51 (84)** 6. South Africa-India 128 (150)** 13 (28)** 42 (30)* 1,747 (1,205)* 244 (305)** 10 (11)** Trade between IBSA countries and other countries/regions 7. India-China 783 (70) 184 (11) 2,958 (89) 614 (61) 688 (7) 10 (1) 8. India-Rest of Asia 6,240 (562) 2,868 (143) 1,204 (36) 2,085 (209) 4,527 (45) 327 (16) 9. India-Oceania 523 (47) 97 (4) 20 (0) 140 (13) 113 (1) 21 (1) 10. India-Rest of South America 268 (29) 10 (1) 3 (0) 37 (5) 278 (8) 49 (4) 11. China-India 4,072 (-122) 73 (-33) 265 (-5) 712 (-263) 1,463 (-29) 24 (-3) 12. Rest of Asia-India 9,102 (-182) 2,023 (-910) 398 (-8) 2,335 (-864) 3,154 (-63) 834 (-92) 13. Oceania-India 265 (-3) 211 (-95) 1,075 (-11) 3,241 (-1,167) 80 (-1) 7 (-1) 14. Rest of South America-India 56 (-2) 422 (-194) 487 (-10) 34 (-13) 29 (-1) 1 (0) 15. Brazil-China 1,089 (-196) 2,353 (-235) 2,449 (-147) 522 (-78) 202 (-16) 161 (-18) 16. Brazil-Rest of Asia 1,304 (-235) 3,410 (-409) 1,802 (-126) 2,063 (-309) 495 (-45) 245 (-27) 17. Brazil-Oceania 181 (-34) 132 (-17) 13 (-1) 49 (-7) 64 (-6) 75 (-8) 18. Brazil-Rest of South America 5,326 (-905) 1,202 (-132) 257 (-15) 1,714 (-223) 3,100 (-248) 3,496 (-280) 19. China-Brazil 2,206 (110) 37 (3) 27 (2) 191 (15) 939 (19) 18 (1) 20. Rest of Asia-Brazil 4,652 (279) 131 (10) 35 (2) 276 (22) 1,181 (24) 620 (31) 21. Oceania-Brazil 46 (3) 13 (1) 326 (23) 50 (5) 28 (1) 16 (1) 22. Rest of South America-Brazil 1,457 (58) 1,236 (99) 1,473 (88) 931 (65) 2,517 (25) 941 (38) 23. South Africa-China 238 (-10) 31 (0) 772 (-8) 566 (-23) 144 (-3) 35 (0) 24. South Africa-Rest of Asia 1,017 (-41) 574 (-11) 692 (-7) 4,579 (-183) 475 (-10) 989 (-10) 25. South Africa-Oceania 338 (-14) 64 (-1) 15 (0) 158 (-6) 112 (-2) 408 (-4) 26. South Africa-Rest of South America 64 (-1) 15 (0) 23 (0) 76 (-1) 50 (-1) 4 (0) 27. China-South Africa 2,116 (-21) 72 (-2) 23 (0) 256 (0) 286 (0) 57 (-2) 28. Rest of Asia-South Africa 3,202 (-32) 433 (-13) 11 (0) 423 (0) 824 (0) 2,080 (-83) 29. Oceania-South Africa 222 (0) 108 (-2) 118 (2) 616 (6) 78 (1) 53 (-2) 30. Rest of South America-South Africa 48 (-1) 357 (-11) 154 (2) 34 (0) 26 (0) 35 (-2) 47 Numerical Results: Volume Flows among IBSA
  48. 48. Numerical Results: Volume Flows among IBSA Source: TC Lee and Paul TW Lee (2011a) 48 Routes/Commodities Containerizable general Containerizable agriculture Break bulk and minor bulk Sum Trade within IBSA countries 1. India-Brazil 2,134 (6,530)** 1,506 (1,265)* 2,103 (3,911)** 5,742 (11,705)** 2. Brazil-India 4,195 (6,670)** 77,114 (1,157,475)** 29,383 (1,050,718)** 110,691 (2,214,863)** 3. Brazil-South Africa 8,851 (2,301) 57,456 (35,048)* 17,142 (8,914)* 83,449 (46,263)* 4. South Africa-Brazil 2,001 (4,123)** 838 (721)* 7,340 (6,239)* 10,180 (11,083)** 5. India-South Africa 3,891 (10,504)** 14,639 (2,635) 17,997 (10,798)* 36,526 (23,937)* 6. South Africa-India 6,896 (8,068)** 2,024 (4,332)** 101,544 (70,066)* 110,465 (82,466)* Trade between IBSA countries and other countries/regions 7. India-China 13,800 (1,242) 36,851 (2,211) 79,871 (7,987) 130,523 (11,440) 8. India-Rest of 113,880 (10,249) 470,193 (23,510) 278,869 (27,887) 862,941 (61,646) 9. India-Oceania 8,368 (753) 13,224 (529) 16,403 (1,476) 37,996 (2,758) 10. India-Rest of 5,829 (641) 1,895 (114) 4,949 (643) 12,673 (1,398) 11. China-India 75,671 (-2,270) 11,291 (-5,081) 53,697 (-19,868) 140,659 (-27,219) 12. Rest of Asia-India 183,178 (-3,664) 752,668 (-338,701) 222,506 (-82,327) 1,158,352 (-424,692) 13. Oceania-India 4,660 (-47) 42,517 (-19,132) 100,471 (-36,170) 147,647 (-55,349) 14. Rest of South America-India 2,851 (-114) 86,955 (-40,000) 2,362 (-874) 92,168 (-40,987) 15. Brazil-China 35,438 (-6,379) 493,346 (-49,335) 84,651 (-12,698) 613,435 (-68,411) 16. Brazil-Rest of 43,249 (-7,785) 591,067 (-70,928) 342,114 (-51,317) 976,430 (-130,030) 17. Brazil-Oceania 5,596 (-1,063) 19,235 (-2,501) 7,313 (-1,097) 32,145 (-4,661) 18. Brazil-Rest of 195,287 (-33,199) 239,064 (-26,297) 284,238 (-36,951) 718,589 (-96,447) 19. China-Brazil 24,818 (1,241) 5,131 (410) 14,986 (1,199) 44,934 (2,850) 20. Rest of Asia-Brazil 59,507 (3,570) 46,643 (3,731) 27,140 (2,171) 133,290 (9,473) 21. Oceania-Brazil 472 (33) 2,412 (217) 1,702 (170) 4,585 (420) 22. Rest of South America-Brazil 63,501 (2,540) 234,909 (18,793) 67,498 (4,725) 365,907 (26,058) 23. South Africa-China 10,968 (-439) 4,705 (-47) 48,747 (-1,950) 64,420 (-2,436) 24. South Africa-Rest of 47,502 (-1,900) 66,265 (-1,325) 411,156 (-16,446) 524,924 (-19,672) 25. South Africa-Oceania 15,027 (-601) 5,621 (-112) 11,567 (-463) 32,215 (-1,176) 26. South Africa-Rest of 3,213 (-64) 2,115 (-21) 6,824 (-68) 12,153 (-154) 27. China-South Africa 18,339 (-183) 10,120 (-304) 29,739 (0) 58,197 (-487) 28. Rest of Asia-South 32,687 (-327) 154,990 (-4,650) 57,546 (0) 245,223 (-4,977) 29. Oceania- 1,702 (0) 20,238 (-405) 44,198 (442) 66,138 (37) 30. Rest of South America-South 1,968 (-39) 68,524 (-2,056) 3,747 (-37) 74,239 (-2,133) (Units: TEUs; numbers in ( ) are the changes in volume flows caused by IBSA liberalization)
  49. 49. 49 Note: 1. On the numerical results of value flows among IBSA, see TC Lee and Paul TW Lee (2011a) 2. * indicates a change exceeding 50%; ** indicates a change exceeding 100% Routes/Commodities Containerizable general Containerizable agriculture Break bulk and minor bulk Sum Trade within IBSA countries 1. India-Brazil 2,134 (6,530)** 1,506 (1,265)* 2,103 (3,911)** 5,742 (11,705)** 2. Brazil-India 4,195 (6,670)** 77,114 (1,157,475)** 29,383 (1,050,718)** 110,691 (2,214,863)** 3. Brazil-South Africa 8,851 (2,301) 57,456 (35,048)* 17,142 (8,914)* 83,449 (46,263)* 4. South Africa-Brazil 2,001 (4,123)** 838 (721)* 7,340 (6,239)* 10,180 (11,083)** 5. India-South Africa 3,891 (10,504)* * 14,639 (2,635) 17,997 (10,798)* 36,526 (23,937)* 6. South Africa-India 6,896 (8,068)** 2,024 (4,332)** 101,544 (70,066)* 110,465 (82,466)* (Units: TEUs; numbers in ( ) are the changes in volume flows caused by IBSA liberalization) Numerical Results: Volume Flows among IBSA
  50. 50. 50  IBSA trade liberalization will increase the loaded container shipping in the six IBSA trade routes by 2.39 million TEUs  In terms of routes:  A significant increase in the exports from Brazil to India (2.21 million TEUs)  In terms of commodity types:  the increase in containers mostly comes from containerizable agriculture commodities (1.20 million TEUs) and break bulk and minor bulk (1.15 million TEUs) Numerical Results: Volume Flows among IBSA
  51. 51. Numerical Results: Volume Flows between China and IBSA Countries 51 Routes/Commodities Containerizable general Containerizable agriculture Break bulk and minor bulk Sum 7. India-China 13,800 (1,242) 36,851 (2,211) 79,871 (7,987) 130,523 (11,440) 11. China-India 75,671 (-2,270) 11,291 (-5,081) 53,697 (-19,868) 140,659 (-27,219) 15. Brazil-China 35,438 (-6,379) 493,346 (-49,335) 84,651 (-12,698) 613,435 (-68,411) 19. China-Brazil 24,818 (1,241) 5,131 (410) 14,986 (1,199) 44,934 (2,850) 23. South Africa-China 10,968 (-439) 4,705 (-47) 48,747 (-1,950) 64,420 (-2,436) 27. China-South Africa 18,339 (-183) 10,120 (-304) 29,739 (0) 58,197 (-487) Note: On the numerical results of value flows among IBSA, see TC Lee and Paul TW Lee (2012). Numbers in ( ) are the changes in volume flows caused by IBSA liberalization. (Units: TEUs)
  52. 52. Summary (1) : South Africa’s Case  Gateway Cargoes of South Africa  Our estimate of gateway cargoes in South Africa is 1.68 million TEUs in 2001 and 2.12 million TEUs in 2004. The actual (historical) gateway cargoes in 2004 is 2.62 million TEUs.  Note that the estimate is sensitive to the major assumptions such as average weight, CR, % of empty and % of T/S cargoes. Given the fact that our major assumptions rely highly on real world data, the estimate is not significantly different from the historic data.  Our projected gateway cargoes for South Africa in 2015 and 2020 are respectively 5.49 million TEUs and 7.54 million TEUs. These figures are of no significant difference from those in Stellenbosch report version 14 (5.31 million TEUs in 2015 and 7.30 million TEUs in 2020, respectively). 52
  53. 53.  Transshipment Cargoes from Sub-Saharan Africa  Our estimates of transshipment cargoes from Sub-Saharan Africa represent the maximum volume of transshipment.  The projected volumes of trade (export + import), empty containers and T/S cargoes are 15.78 million TEUs in 2015, and 21.43 million TEUs in 2020, respectively. 53 Summary (2) : South Africa’s Case
  54. 54.  Interlining Cargoes  Our estimates of interlining cargoes represent the maximum volume, i.e., the trade flows between S. America and Asia, and between S. America and Middle east and India that might pass through South Africa.  The estimates are 7.81 million TEUs in 2015, and 11.09 million TEUs in 2020, respectively.  These figures are of no significant difference from those of interlining estimates by FC (6.52 million TEUs in 2015 and 10.04 million TEUs in 2020, respectively). 54 Summary (3) : South Africa’s Case
  55. 55. International Maritime Logistics and China’s Engagement in South (North)- South Trade
  56. 56. 56  Maritime Logistics, as the primary means of transporting parts and finished goods (viz., outbound logistics) on a global scale, has recently attracted increasing attention from academics. (by DW Song and Paul TW Lee (2009), International Journal of Logistics: Research and Applications, Vol.12, No.2. )  Maritime Logistics, however, is a term which is not easy to define, and its precise definition, scopes and roles within the global supply chain network are yet to be established.  Logistics and Supply Chain Management generally relates to the co-ordinated management of the various functions responsible for the flow of materials from suppliers into an organisation through a number of operations within the organisation, and then reaching out to its customers. Hence, it consists of a series of activities along the network concerned, which in many cases will involve maritime activities.  There has been some convergence of Maritime Transport and Maritime Logistics, and this can be attributed to the physical integration of transport modes driven by containerisation and the evolving demands of end-users that require the application of logistics concepts to the use of these modes and the achievement of logistics goals. Defining Maritime Logistics in the Global Supply Chain
  57. 57. 57  Studies on Logistics and Supply Chain tends to pay little attention to maritime transport aspects in the international trade.  Maritime Logistics covers not only flows of cargo, information, idea, and money on the sea trading routes, but also maritime and inland transport and logistics activities among international trading partners, applying logistics and SCM concepts to the use of intermodal transport and the achievement of seamless and efficient logistics goals. (Paul T-W Lee. 2011) Defining Maritime Logistics in the Global Supply Chain
  58. 58. China – India Route: : China (Shanghai, Ningbo) - Hong Kong - Singapore - India - Sri Lanka – Malaysia - Thailand , taking 21 days, as of June 2011 YEAR 2011: Chindia Route India Source: http://www.coscon.com/home.screen 58
  59. 59. China’s Extra Asian Maritime Logistics  COSCO Container Shipping is a key player to expand and promote maritime logistics and catalyst to promote South-South trade liberalization thru IBSA and BRICS mechanism.  Development of China’s Extra Asian Maritime Logistics Network has contributed to promote China’s engagement in South (North) – South trade, where COSCO has been transforming from cosseted national player to global champion. [See Shipping in China by TW Lee et al (2003)]  Expansion of Maritime Logistics Network since 1990  China – Singapore – West Africa  China – Singapore – South Africa - West Africa  China – Singapore – West Africa – South Africa – South America 59
  60. 60. YEAR 1990: China – West Africa Route (Skipping S. Africa) 1. Shanghai & Hong Kong are dominant international hubs bounding for Europe and Intra-Asia and N. America. 2. China-West Africa route without calling at Durban and Cape Town in S Africa Skipping South Africa 60 West Africa China © Rimmer and Comtois, 2005; modified by the author (2011) N. America Oceania Europe
  61. 61. YEAR 2000/2010: China – South Africa Route Container liner service between China and South Africa, taking 26 – 33 days from Shanghai to Durban/Cape Town in South Africa, as of June 2011. South Africa Singapore © Rimmer and Comtois, 2005; modified by the author (2011) 61 Europe N. America Oceania
  62. 62. YEAR 2011: China – South America Route Emerging new service line between China – Singapore – South America : 3 ports in S. America, taking 29 to 35 days from Shanghai to S. America, as of June 2011. Brazil Source: http://www.coscon.com/home.screen 62
  63. 63.  International Maritime Logistics in Africa are organized along key trade and transport corridors originating from the ports of entry and exit to the hinterland.  The map shows a couple of corridors from the seaport Walvis Bay to neighboring countries by connecting corridors. The various transport corridors are characterized as follows:  geography (entry ports and landlocked areas served)  corridor institutional structure and the degree of competition between corridors and transport modes  shipping connections  regulatory regime and market structure Understanding of Maritime Logistics in Africa 63
  64. 64. Corridors West Africa Central Africa East Africa Southern Africa Main Ports of entry Abidjan, Tema, Lome, Cotonou, Dakar Douala Mombasa, Dar-es-Salaam Durban, Ngqura Maputo, Beira, Dar-es-Salaam Landlocked countries served Mali, Burkina, Niger Chad, Central African Republic Uganda, Rwanda, Burundi, Democratic Republic of Congo (east) Botswana, Malawi, Zambia, Zimbabwe, Democratic Republic of Congo (south) Four Key Transport Corridors in Africa: Ports & Countries 64
  65. 65. 65 Fundamental Impediments to Maritime Logistics in Africa  Extremely high port congestion in West African ports  Poor inland transportation network (rail and road)  low productivity of the trucking industry in Africa, notably because of infrastructure constraints; low levels of competition between service providers; and weak infrastructure  Under-developed Port MIS (cargo tracking system ) and RFID system  Bureaucratic customs office  Low port efficiency compared to major Asian container ports  Under-developed short sea shipping network in collaboration with and logistics providers and major liners Consequently,  highly logistics cost (time and freight cost) + surcharge  Higher doing business cost
  66. 66.  Asia-South Africa (SA) trade routes are the most important ones, totaling 48% of the whole market share in SA;  There are seven major trade routes in SA. Maersk is dominant in five major routes; another two, the Mediterranean–SA and the East/West-SA ones, are dominated by MSC shipping line;  Among the seven trade routes in SA, Asia-SA is a relatively competitive one; Key Findings about South Africa’s Maritime Logistics  The sea freight rates charged in Greater China-SA trade routes are located in the ‘low’ level, which represent the sea freight rates charged are similar to the East-West trade routes;  Around 85% of the space of the containership has been assigned to ports in Greater China; fewer supply of space of containership in South East ports, as a result, the sea freight rates in SE port range are maintained at higher level.  South Africa is seen as a hub for traffic emanating from and destined for Europe, Asia, South America and the east and west coast of Africa. Source: Paul T-W et al (2008), Port Economics Study on South Africa, Transnet Port Terminals, South Africa. 66
  67. 67. Policy Implications from China’s Perspective and China’s Challenges and Responses
  68. 68. 68 Policy Implications from China’s Engagement Perspective (1/3) 68  Trade liberalisation contributes to increasing maritime cargo flows. This has been supported by a series of maritime cargo flows analysis employing GTAP model + Lee & Lee approach.  China would be benefitted from her engagements in liberalization of South (North) – South trade, laying down a platform to promote merchandise exchange in the three countries, even though the South Africa and Brazil are far away from China.  The Exponential Power of ChinAfrica and Chindia will generate more cargo movements on the South (North)- South Trades.  Thus there will be increasing more demand for deep sea shipping and international logistics services.  Accordingly, opportunities are envisaged to create COSCO’s shipping lines to further increase the vessel size deployed for transshipment and relay activities on the route of India and South Africa and Brazil.
  69. 69. 6969  As for a container hub port as well as logistics distribution centre in South Africa, e.g. Ngqura, China (COSCO & Logistics Providers) needs  to develop short sea shipping network to provide feeder service for East and West Africa;  to secure integrated inland transportation network (corridors) in association with dry ports; and  to consider strategic options of maritime logistics, relaying services between S Africa and S. America Ngqura port in South Africa Ngqura Large deepsea call Feeders SA’s Load Centre Feeders Feeders Inland distribution Ngqura Large deepsea call Feeders SA’s Load Centre Feeders Feeders Inland distribution Policy Implications from China’s Engagement Perspective (2/3)
  70. 70. 70 China’s Strategic Options: Towards a new South America Route? = typical nodes for transhipment / relay / interlining Shanghai Santos Routing alternatives on the trade between China and Brazil Asia – Europe/Med Typical vessel size = 5000-13000 TEU Europe/Med – South-America Vessel size = 2000-3500 TEU Asia – Latin-America Typical vessel size = 3000-5000 TEU Latin America - ECSA Typical vessel size = 1500-4500 TEU Southern Africa - ECSA Typical vessel size = 1700-5500 TEU Asia - Southern Africa Average vessel size = 2500 TEU Maximum vessel size = 5500 TEU = 11270 nm, sailing time = 22 days (at 21 knots) = 13590 nm, sailing time = 27 days (at 21 knots), Suez Canal transit = 13130 nm, sailing time = 26 days (at 21 knots), Panama Canal transit Note: distances via Dataloy Distance Tables The hub potential of the South-African container port system: example of routing alternatives between China and Brazil (sailing time excludes port time and canal transit time) Source: Flynn Consulting (2011)
  71. 71. China’s Strategic Options: Competition with Major Shipping Liners - SAEC West Africa Oceania East Africa India/Pakistan SE Asia East Asia Northern Europe: interlining of Europe-Far East services and North Europe – West Africa/South America services Main interlining ports: Antwerp (mainly MSC), Le Havre (mainly CMA CGM), Rotterdam Straits of Gibraltar: interlining of Europe-Far East services and North Europe – West Africa/South America services Main interlining ports: Algeciras (mainly Maersk), Valencia (mainly MSC), Tanger Med, Sines (relation Portugal-Brazil only) Middle East: interlining of Europe-Far East services and Middle East – East Africa services Main interlining ports: Salalah (mainly Maersk), Dubai, Jeddah INDIA SA BRAZIL Source: Flynn Consulting (2011) CHINA 71 [Existing interlining regions (RED) which will compete with relay/interlining business via SA (BLUE) - Competing interlining regions indicated in red circles]
  72. 72. 72  Asia’s increasing involvement in Africa with China’s engagement with trade liberalization on South (north)-South trade encourages.  South Africa to develop a container-port hub as a transport node as well as to capture transshipment cargoes and/or interlining cargoes on this route. 72  Port competition: Ngqura (Durban) vs Maputo  Port Choice in Sub- Saharan region for distribution centre of Sub-Saharan region and relaying cargo for South America? Durban Ngqura Maputo Port Louis Cape Town South Africa Gauteng Policy Implications from China’s Engagement Perspective (3/3)
  73. 73. 73  Port attractiveness index: Application on African ports (Caschili and Medda, 2013 IAME Conference, Marseilles)  Three sets of determinants (endogenous, exogenous and subjective) that influence attractiveness.  Top ten positions in Africa out of 41 container ports in 23 African countries for average 2006-2010 (Port Said, Durban(2), Damietta, Tangier, Alexandria, Cape Town(6), El Dekheila, Port Elizabeth(8), Ngqura(9), Sokhna). Red ports in SA.  Nacala port in Mozambique jumped from 32nd position in 2006 to 8th in 2010: recent improvements of her multimodal transport infrastructure, due to her strategic position (corridor to landlocked neighbours such as Zimbabwe, Zambia and Malawi), reduction of transport costs, and logistics efficiency.  South Africa has been providing container port capacity and free trade zones nearby the ports, e.g. Ngqura.  Short sea shipping network and inland transportation in the Sub- Sahara region are easily to be connected in southern part of Africa.  S. African ports are well located in to capture T/S cargoes, and interlining and gate way cargoes. Which ports are most attractive in Africa? 73
  74. 74. CONCLUDING REMARKS:  China’s Challenges and Responses  Singapore’s Challenges and Responses  Future Agenda for Promoting International Maritime Logistics in South – South Trade
  75. 75.  Optimizing ship size deploying on South (North)-South tra`ding routes with short sea shipping network development for Sub-Saharan region  Seeking China’s own dedicated container berth in South Africa, as a gateway and transshipment port for Sub-Saharan region and a relaying port for South America  Finding dry ports in Africa in connection with inland transport system (corridors) to minimize transportation costs  Integrated and intermodal transportation system in Africa in collaboration with COSCO’s overseas schedules and logistics providers  COSCO’s Logistics integrating trucking, warehousing & barges, i.e. establishing International Maritime Logistics system. China’s Challenges and Responses (1/3) 75
  76. 76. 76  Investment in marine terminals, container depots & service companies in Africa for South (North) – South trade  Establishment Logistic Distribution Centre in South Africa for Sub-Saharan region, e.g. South Africa, and to relay cargoes to S. America  Integration of a container port in South Africa in alliance with shipping alliance members  Developing feeder North-South network services in West and East Africa and Transshipment Hub for relaying cargoes to and from South America responding to forecasting containerizable and containerized cargo flow [see a series of papers applying the Lee and Lee’s approach] China’s Challenges and Responses (2/3)
  77. 77. 77  To make S-S trade route profitable, interplay between extra- Asian and intra-Asian traffic is required to capture more cargoes for the route.  COSCO needs to co-operate with major shipping lines to expand frequencies to South (North)-South trade routes. (recent movement: One shipping alliance is to start services for S. Africa from September 2013.)  Logistics Providers in China need to establish logistics network in S. Africa, including dry ports, to serve the Sub-Saharan region. China’s Challenges and Responses (3/3)
  78. 78. 78 Structural Changes in Major Container Ports Notes: Containerisation International (several issues). Numbers in parentheses indicate million container throughputs in twenty-foot equivalent container unit (TEU). Lee and Flynn (2013), Transport Reviews. Los Angeles Long Beach New York/ New Jersey Hamburg Bremers/Bremerhaven Rotterdam Giola Tauro Dubai Antwerp Felixstowe Tokyo Hong Kong Singapore Tanjung Priok Busan Shanghai 20 15 10 5 TEUs (millions) Tianjin Cingdao Guangzhou Laem Chabang Port Klang Tanjung Pelepas Kachsiung Ningbo Year N. America Europe Asia Others Total 1970 7 14 2 2 25 1980 7 6 8 4 25 1990 6 6 11 2 25 2000 3 6 14 2 25 2010 3(19m) 5(32m) 15(211m) 2(16m) 25(278m)
  79. 79. 79  Where a container hub port in Sub-Sharan region?  Location of logistics distribution centre for Sub-Saharan Region  International maritime logistics network for Sub-Saharan Region  Establishment of hub-and-spoke system in Sub-Sahara region and S. America  Lowering doing business costs in Africa Future Agenda for Promoting International Maritime Logistics in South – South Trade 79
  80. 80. Singapore’s Challenges and Responses 80  Singapore’s Hinterland: “The World”  Impact of China’s engagement on S-S trade on Singapore maritime industry?  Singapore’s reaction to China’s engagement in S-S trade?
  81. 81. Thank you for your attention! Professor Paul T-W Lee Department of Business Administration Soochow University, Taipei, Taiwan Email: paultwlee2030@gmail.com; paultwlee@scu.edu.tw Q & A

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