Inland importers favor coastal regions as procedures in western China have proved less efficient

Source:Global Times Published: 2018/4/16 18:28:39

A container truck enters a port zone in Xiamen, East China's Fujian Province. Photo: VCG

Although some places in western China now enjoy port infrastructure and related policies that imitate those at major ports in coastal regions, local companies in the imports business seem unconvinced - they continue to favor customs clearance procedures at ports thousands of miles away in eastern China, the Economic Information Daily (EID), a Beijing-based newspaper run by China's official Xinhua, reported on April 2.

One agricultural products importer based in a city in western China imports about 1,500 tons of meat annually, which it sells on the local market. The company is located just 3 kilometers away from a State-level inland river port, where products can be cleared through customs.

However, the company has chosen to undergo clearance procedures in Shanghai and Qinzhou in South China's Guangxi Zhuang Autonomous Region, and then transport goods over thousands of kilometers to its local processing plant.

"We tried to clear customs at nearby ports, but we now basically choose to stay away from them," said a company executive, who prefers to remain anonymous.

But this is not an isolated case, according to the EID report. Such a phenomenon means extra logistics costs for importers, leaving import passages and port infrastructure to sit idly, and creating barriers for local opening-up efforts, the report said.

One western province, which was unnamed in the report, boasts as many as eight State-level ports and has established multiple international logistics passages and comprehensive bonded zones. However, in 2017, its imports volume of fruits and frozen seafood actually saw stagnant or declining growth, albeit there was some growth in its meat and autos volumes.

Underlying problems

Importers said that in coastal areas, cargo information is sent to the port authority long before the cargo reaches the port.

By contrast, at inland ports, it has become common for the cargo to arrive first. And customs officials at many inland ports in western China don't work 24 hours a day like their coastal peers, resulting in long waiting times. Sometimes, cargoes are stranded at local ports for as long as seven days.

"With our cargoes stranded within bonded zones, the company has to pay parking fees each day," a manager from a meat-processing company also in a western province said on condition of anonymity.

"It costs about 6,000 yuan [$956.55] to 8,000 yuan to run each container on one trip at local ports. The cost can even surge to over 10,000 yuan. It is simply more economical to use coastal ports plus road transport; it is a method that is faster and cheaper."

Guo Xin, general manager of Nanning Xinjinhang Logistics Co, said that the phenomenon described in the EID report is apparent in many places.

"One reason for such a situation is the low efficiency at inland ports, as port officials there prioritize mistake-free operations over efficiency," Guo told the Global Times over the weekend.

"When they see new things or run into new situations in their work, they dare not make decisions without consulting other departments first, as they are less experienced. Amid those predicaments, efficiency is put aside."

"Other reasons for inefficiencies are the lack of talent and the weak auxiliary organs servicing and supporting the port's main business," Guo noted.

Lack of certain equipment and cold chain storage facilities at some western ports have also made matters worse.

In 2016, about six tons of imported seafood from Norway rotted away amid slow unpacking procedures, bureaucracy and repetitious paperwork across several departments at a port in western China.

As the central government has approved the establishment of new national-level development areas, national innovation demonstration zones and free trade pilot zones in western China, provinces there nowadays enjoy the same policy support as their coastal peers have received.

However, such policies are not fully exploited, preventing the provinces from reaping all the benefits, the EID report said.

A person in charge of port supervisory affairs at a port in western China said on condition of anonymity that a lack of integration kept overlapping preferential policies from ensuring full-blown benefits.

When the port obtained State approval to import assembled vehicles - a promising business - the commercial department, railway authority and related local administrative departments rushed to grab a share of the cargoes, diluting policy dividends, according to the anonymous source.

Wang Chunrui, a customs expert with the University of International Business and Economics in Beijing, told the Global Times over the weekend that this is a complicated matter.

"Different ports are to some extent competitors, as customs clearance is related to tax collection," Wang said. "Also, [China's] reform and opening-up policy started from coastal ports, and there, they indeed have better mechanisms to cater to the needs of importers."

"The level of hardware, geography and the sense of trade facilitation are all behind the phenomenon," Wang said.

Improvements needed

There seems to have been no prolonged support to help tackle the thorny issue of financing in western China, experts said.

Companies need more financial support than just fiscal subsidies and land fee discounts, especially since financing costs in hinterland areas far exceed those in coastal areas.

Some places in western China concentrate their preferential policies on traditional manufacturing companies and skip logistics and trading firms.

"To develop an open economy, logistics and trading companies should hold the same importance as manufacturing companies," another unnamed company executive said.

Multiple government officials have said that different departments in western regions lack integration, despite working in the same building.

The infrastructure at ports in some western regions also needs to be completed, especially in terms of informatization, storage and clearance capacities.

Experts have said that for a long time, ports in western China have been copying their eastern counterparts in terms of infrastructure and they have worked hard to secure the same policies, but they have paid less attention to studying the soft environment of their eastern counterparts. Administrative efficiency, financing costs and market environments should be of the same importance as infrastructure hardware and policy support, experts noted.

Guo said that the lack of logistics talent geared with global vision is probably going to last for another 30 years.

"The logistics business is a fully competitive one. No one can monopolize it. If you are not doing a good job, firms will choose coastal ports over yours, even if yours is much closer," Guo said.

This article is based on a story published by the Economic Information Daily.
Newspaper headline: Port service gap


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