Continuous Improvement

In addition to traditional northern and southern hubs, China is focused on providing export-processing zones both in central and western China, which complement its coastal developments.
        This in turn is complemented by an investment in the road, rail and air infrastructure. One element of this plan is to address customs and regulatory inefficiencies by creating secure and bonded production areas with bonded road and rail feeder systems.
        Additionally, a significant investment is being made in the physical infrastructure to enable these locations to participate as part of an efficient supply chain.

Airfreight

The central government has a proposed investment of $600 million for new or expanded airports in Western China, in addition to the expansion of capabilities at existing locations.
        Other developments include the new $2.4-billion Guangzhou Baiyun Airport, which would be suitable for the creation of a Central Asian express freight hub.

Beijing Airport a Magnet for Investment According to Chinese news sources, during the first 10 months of 2003, the Beijing Airport Industrial Zone (BAIZ) attracted more than 60 businesses, with a total investment of more than US$843 million. Altogether, some 284 companies operate in the zone, with a heavy concentration of electronics firms.

        A further trend is the provision of additional direct links for the movement of intercontinental airfreight, including FedEx's direct flights from Shenzhen to Anchorage, Alaska, which move 80 tons of freight per day in each direction five times a week.
        The need for the movement of time-sensitive freight is motivated by an increase of exports by foreign invested firms in Guangdong province, increasing by 33 percent to more than $48.1 billion in the first seven months of 2003.
        The expanded express freight capability provided in China is illustrated by the fact that FedEx presently operates direct flights to three hubs (Beijing, Shanghai, Shenzhen), from which it serves 220 mainland cities. In announcing a new regional headquarters in Shanghai in the fall of 2003, FedEx officials said they hope to increase that number of cities by 100 in the next five years.

Road and Rail Transportation

The Chinese government is presently involved in the construction over the period 2001 to 2010 of eight principal highways with a value of $3.6 billion. This is in addition to a $12-billion investment in rail infrastructure, aimed at creating a more efficient mainland network.
        In the private sector, DHL-Sinotrans recently reported investment of $200 million to expand the cargo distribution network and improve cargo-processing times. This will involve the expansion of its mainland hubs in Beijing, Shanghai, Guangzhou and Shenzhen, together with the acquisition of a fleet of 1,200 vehicles. The investment aims to shrink cargo-processing time by 350 percent.
        Notwithstanding the fact that all foreign express operators are restricted from carrying packages or letters within China with a weight of less than 500 grams in order not to compete with the China Post, DHL-Sinotrans has reported a growth of the mainland market by 35 to 65 percent per annum.

Port Development

In addition to the significant investments in the Hong Kong/Pearl River Delta and the Shanghai Yangtze River Region, additional capability is being provided in the Northern ports and offshore, by Kaohsiung in Taiwan. Examples of locations on the mainland includes the ports of Tianjin, Quingdao and Dalian.
        The Tianjin municipal government has announced its intention to raise $3.3 billion in order to quadruple its existing annual throughput of approximately 1.45 million TEUs per annum.
        Quingdao, a principal port serving Beijing, has reached a throughput of over 2 million TEUs per annum and is consequently embarking on an expansion plan by building eight new berths by 2010, with an estimated investment of approximately $500 million.
        An indication of the increased growth achieved in the movement of containers in the Northern ports is provided by Dalian. While Dalian Port handled 213,000 TEUs in 1996, this figure increased to 1.3 million TEUs in 2002.

Advanced Logistics Applications

While expanding its traditional sea, air and land infrastructure, China is implementing new techniques to improve its logistics capabilities. These include the creation of bonded and secure zones with associated "green" transportation pipelines.
        These have the objective of improving efficiency in the movement of component parts and finished product destined for export. This requires the use of electronic manifest systems and a real-time track-and-trace capability.
        The export-focused capability also creates the logistics infrastructure to enable the increased movement of imported product to China, a result of the country's accelerated economic development.
        This enhanced logistics infrastructure therefore enables China to provide new and improved opportunities and locations for the establishment of new enterprises for the local or export markets.
        It also is creating the logistics capability required for it to become an efficient part of the global supply chain.