China opens cabotage to international fleet

Container ship Merete Maersk (IMO 9632064) made the first transshipment of box containers from the port of Shanghai’s Yangshan terminal to Tianjin after China’s state council decided to permit foreign carriers to deliver cargo shipments between two Chinese ports – on a trial basis till 2024.

The change was made to promote the international shipping centre in Shanghai and is also expected to improve the supply chain bottlenecks in Chinese supply chains.

Historically the transshipment of cargo from one Chinese port to another has been governed by the state’s cabotage rules, and foreign carriers were precluded from transporting cargo through these routes. Even the international cargo in origin could not be relayed from one Chinese port to another.

Merete Maersk picked up 27 containers from Shanghai’s Yangshan terminal to deliver to Tianjin. These containers were recently delivered to Shanghai from Vancouver, Canada.

Soren Soku, CEO at AP Moller Maersk, stated that they were proud to be the first company to make the transshipment successfully. He also said they could contribute to the Chinese supply lines by removing the bottlenecks and reducing transit times using optimized routes. He welcomed the initiative by the Chinese authorities, and said that he hoped that this would inspire other economies where such transshipment remains restricted.

Maersk also noted that the network optimisation and shorter transit time would reduce the carbon dioxide footprint of the ocean transport.

China had been considering the liberalization of its coastal shipping policy for several years. The China State Council 2019 plan involved boosting the development of the international shipping centre in Shanghai. In November last year (published in December) the Ministry of Transport declared that qualified overseas container liner companies using international ships would be able to carry cargo between Dalian, Tianjin, Qingdao, and Shanghai-Yangshan until the end of December 2024, subject to being approved by the Ministry of Transport.

For permits to be granted:

  • the ships involved must be intercontinental trunk-line (i.e. mainline) ships
  • the container cargo must be foreign trade cargo for which the international liner company has issued a full bill of lading
  • the overseas shipping companies must demonstrate that the company’s actual controller, the actual registered business location, and the country where the operating ship is registered are all related to each other
  • the countries of overseas international container liner companies have clearly opened their coastal business to Chinese enterprises.

Shipping companies cannot then sub-lease their coastally-approved ships to others.

Overseas flagged vessels that are not approved by the Ministry of Transport to carry out coastal business under this scheme are prohibited from carrying out the transport of containerized goods between Chinese ports.

2014-built, Denmark-flagged, 194,849 gt Merete Maersk is owned and managed by Maersk AS of Copenhagen, Denmark.