New entrant on China trade?

The liner trades industry is rife with rumours that the Le Kelin-led Grand China Logistics (GCL) outfit is planning a foray into the local market, using five CV1100-type 19-knot containerships on a rotation of Shanghai, Ningbo, Shenzhen, Hong Kong, Melbourne, Sydney, Brisbane (to be confirmed) and possibly beginning as soon as July.
The news comes at a particularly delicate time for existing carriers, three groups of which (AAUS, NEAX and AANA) have just rolled over capacity-reduction arrangements implemented earlier this year.
The decisions – AAUS to maintain its one-string operation and NEAX and AANA to continue the temporary merger of their services – will take rationalisation through to mid-August when it is hoped peak season volumes will begin to kick in.
Mr Le, a former president of Cosco and later the founder of China Shipping, is now chairman of the HNA Group, a diversified state-approved corporation embracing airlines, airports, finance, logistics, property and retail evolved from Hainan Airlines.
According to the company website, Grand China Logistics Holding Co Ltd was registered in Shanghai on January 13, 2004 with capital of RMB245m and aims at becoming “a China-based integrated comprehensive logistic provider of sea, land and air transportation for global customers with seamless and door-to-door quality services”.
It “focuses on the air business and marine business and expanding the general network of ground transportation centring on ports, docks and the existing outlets. The company is planning to build branches in 14 major cities like Shanghai, Beijing, Xi’an and Tianjin and the final expansion shall be in 160 cities,” the company says.
Overseas reports indicate Mr Le is following a similar business model to that he used in developing China Shipping: gathering a number of smaller regional shipping companies under a corporate umbrella that then has the financial strength and resources to expand in regional and international trades.
GCL was last year touted as the buyer of the troubled Shandong Yantai International Marine Services – better known as SYMS – which was introduced to the China-Australia trade by CP Ships in mid 2005 but withdrew in the last quarter of 2007 after encountering financial difficulties.
In the end GCL did not proceed with the SYMS purchase, instead simply taking over some of the company’s routes and chartered vessels.
Executives of carriers in the China-Australia trade fear GCL may be a “son of SYMS” and cause havoc with rates in an already depressed market.
It is suggested GCL may appear in the guise of one of its subsidiaries, Tanjin Marine Shipping Co (TMSC), which has hitherto operated international shorthaul container services but is said to be expanding into deepsea.
Observers believe GCL’s timing might have nothing to do with shipper demand but everything to do with ship supply: charter rates.
CV1100s are now around US$4,100 a day, compared with c.US$13,600 a day when the short-lived State Shipping pulled the plug on its Australian coastal service last July.
While local sources have named Melbourne-based freight forwarder Priority Cargo – at one time a close associate of China Shipping – as the likely Australian representative for the GCL operation, a spokesperson said they knew nothing about the new service.
Should the GCL rumour become reality it will be the fourth carrier to join the Australian container trades, following Cosco in 1978, China Shipping in 1998 and Sinolines last year.
The latter is about to expand its presence by adding Heung-A’s share of the CKA consortium to its own.