Abstract
Amid fears over the consequences of the global financial crisis in October, the first signs were beginning
to come through that Chinese economic growth was cooling in the last quarter of the year, with the
indications of a slow-down in the freight transport sector, particularly in shipping. Dow Jones news
agency quoted Pang Ying, an analyst at Shenzhen Rongtop, noting that 'Chinese demand for metals isn't
picking up significantly after the Olympics as some overseas analysts had expected'. Customs data
showed copper imports were down by 10.6% in the first nine months of the year, to 1.9mn tons. On the
other hand, iron ore, scrap copper and scrap alumina all showed continuing healthy import growth. Iron
ore imports were up by 22% to 346.1mn tonnes in the first nine months. Although they continued up in
September, because some steel mills were cutting their output, there was uncertainty over whether import
growth would be maintained in the remaining months of 2008 and early 2009. Underlining this were
reports of iron ore stocks beginning to build up at some ports, such as Tianjin. Some buyers were reported
to be taking a 'wait and see' attitude amid signs of weakening external demand, a cooling property sector,
and falling automobile sales. Another analyst, Tao Chen of Louis Dreyfus in Beijing said 'China is in
much better shape than other countries, but a slowdown is still coming'. Certainly shipping freight rates
to China measured by the Baltic Dry Index continued to fall. There were also indications that coal imports
would ease back, given reports of rising stocks at Chinese ports. In October the four main shipping ports
in the north (Qinhuangdao, Tianjin, Tangshan and Huanghua were reported to be holding 14mn tonnes of
coal, almost double normal levels. In our latest China Freight Transport Report, even taking this slow
down into account, we are still predicting average annual growth of sea freight of 10.4% over the 2009-
2013 forecast period, measured in million tonnes-km (mntkm).
China's economy continues to grow, albeit at a slower rate, driving trade and demand for freight
transport. Our latest estimates put GDP growth at 10.1% in 2008, easing a fraction to 9.7% in 2009.
China's foreign trade will ease from 24.2% growth in 2008 to 20.1% in 2009 and 18.4% in 2010. This
double-digit trade growth continues to create massive demands on the country's transport and
infrastructure capacity. Underpinning the optimistic outlook is a supportive operating environment. BMI
has given China's freight industry a rating of 67.2 (out of a theoretical maximum of 100), which places it
right up at the top of the Asia Pacific region.
Based on available data, we have recently trimmed down both rail freight and river and sea-cargo growth.
Our forecast for freight carried across all modes in 2009-2013 now stands at annual average growth of
10.9%, expressed in bntkm. According to our latest estimates, transport and communications GDP will
have risen by 12.0% in 2008, 1.9 percentage points (pps) faster than overall GDP, which we estimate will
have expanded by 10.1%. For the 2009-2013 forecast period, we expect the transport and
communications sector to continue outpacing the economy as a whole. It will achieve average annual
growth of 10.0%, versus 9.1% for overall GDP. The total value of transport and communications GDP
will rise to US$559bn in nominal terms by 2013, representing 6.3% of China's GDP. The transport and
communications sector employed 22.27mn people, or 2.7% of the labour force, in 2007. We see the figure
rising to 23.37mn by 2013.
Prospects for the freight-transport industry remain encouraging. As our figures indicate, the freight sector
will continue to grow at a significantly faster rate than the economy as a whole, in line with intensifying
demand for transport at this stage in the Chinese economy's development. By transport modes, growth
will be led by oil and gas pipelines (at an average rate of 16.1% a year), road haulage (13.1%), rail freight
(also 11.0%), shipping and inland waterways (10.4%) , and airfreight (8.9%).
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