ResearchontheFree TradeZonePolicy and theDevelopment of International Logistics at PortsLIUWei, WANGXue-feng(International Shipping Department, Shanghai Maritime University, Shanghai 200135)Abstract: The port is an important link in the transportation system of international logistics.The paper discusses the issue of a free trade zone policy and the development of international logisticsin ports, showing the positive effects of the performance of a free trade zone policy on constructinginternational logistics hubs, strengthening the transshipment functions of ports and enhancing thecompetitiveness ofthe port enterprises.Key words:free trade zone; policy,port, international logistics
Research on the Free Trade Zone Policy and the Development of International Logistics at Ports LIU Wei，WANG Xue-feng (International Shipping Department, Shanghai Maritime University, Shanghai 200135) Abstract: The port is an important link in the transportation system of international logistics. The paper discusses the issue of a free trade zone policy and the development of international logistics in ports, showing the positive effects of the performance of a free trade zone policy on constructing international logistics hubs, strengthening the transshipment functions of ports and enhancing the competitiveness of the port enterprises. Key words: free trade zone; policy; port; international logistics
In the transportation system ofcompetitiveness. With the developmentinternational logistics, sea transportationofeconomicglobalization,competitionisbeyonddisputethemost importantin East Asia and the Asia-Pacific regionmeans of transportation, with portsis intensifying. China faces an urgentbeing the point of convergence forchallenge to develop a number ofinternational logistics. Currently, withinternational to logistics hubs andthe rapid development in internationalcosmopolitan cities along the coastalcontainer logistics, the enlargement ofregions to play pivotal roles in China'svessels and convergence of sea routesengagement in regional economichave become two major trends incompetition.maritime container transportation.InGeographically, most of the bondedpursuit of scale based economiccanes in China are situated at theperformance, container vessels areconvergence point of internationalcontinuously being enlarged, withshipping logistics, including ShanghaiPanama-plus containerWai Gaoqiao Bonded Zone, Shenzhenvessels~8000TEU in operationBonded Zone, Tianjin Port Bonded one,Shipping companies, in order to operateZhan.iagang Bonded Zone, Ningbomore economically,need to reduce theBonded Zone, Xiamen Bonded Zonenumber of times that large vessels makeand Fuzhou Bonded Zone. They are allberth in ports; with the goal oflocated within or adjacent majoroccupying berths in only one hub ininternational trade ports and therebyeach shipping district. At the same time,have a geographic advantage in thecore routes need to be established indevelopment of international logisticskeeping with the enlargement ofIf China' bonded zones and portscontainer vessels.Therefore, thecan be integrated and free trade policyestablishment of hubs is an importantcan be exercised, the basis requirementsway for aofmoderninternational logistics,i.ecountry to increase itsopenness, completeness and uniqueness,competitiveness in sea transportationwould be met. This would provide theand increase its overall internationalprerequisite for the establishment of
In the transportation system of international logistics, sea transportation is beyond dispute the most important means of transportation, with ports being the point of convergence for international logistics. Currently, with the rapid development in international container logistics, the enlargement of vessels and convergence of sea routes have become two major trends in maritime container transportation. In pursuit of scale based economic performance, container vessels are continuously being enlarged, with Panama-plus container vessels~8000TEU in operation. Shipping companies, in order to operate more economically, need to reduce the number of times that large vessels make berth in ports; with the goal of occupying berths in only one hub in each shipping district. At the same time, core routes need to be established in keeping with the enlargement of container vessels. Therefore, the establishment of hubs is an important way for a country to increase its competitiveness in sea transportation and increase its overall international competitiveness. With the development of economic globalization, competition in East Asia and the Asia-Pacific region is intensifying. China faces an urgent challenge to develop a number of international to logistics hubs and cosmopolitan cities along the coastal regions to play pivotal roles in China's engagement in regional economic competition. Geographically, most of the bonded canes in China are situated at the convergence point of international shipping logistics, including Shanghai Wai Gaoqiao Bonded Zone, Shenzhen Bonded Zone, Tianjin Port Bonded one, Zhan.iagang Bonded Zone, Ningbo Bonded Zone, Xiamen Bonded Zone and Fuzhou Bonded Zone. They are all located within or adjacent major international trade ports and thereby have a geographic advantage in the development of international logistics. If China' bonded zones and ports can be integrated and free trade policy can be exercised, the basis requirements of modern international logistics, i.e. openness, completeness and uniqueness, would be met. This would provide the prerequisite for the establishment of
international logistics hubs in China1 The Free trade zone policy isOnly in this way can logistics focusingthe sine qua non in the establishmenton bonded zones and ports be trulyof international logistics hubsintegrated in to the international supplyFrom international practices wechain. The specific function and policymay conclude that major manufacturingdesignated to the ports by the Statecountries, such as Pusan in Korea,would undoubtedly promote theAntwerp in Belgium, Hamburg indevelopment of international trade andGermany, Tokyo and Yokohama inlogistics, increase international transitJapan, Long Beach and Los Angeles inthe US, all have or have had hubs.Twovolume, and significantly impact theroute network of China's linerof the leading ports in the world, Hongtransportation system. These wouldKong and Singapore, are bothpromote the development of Chinainternational logistic hubs, with a bigshare of transit volutes. They have aregular ship companies as well as thedevelopment of bonded zones alonghighly efficient free port system, whichChinalacksports, and promote thetimely realizationof a national strategy in which severalOver the Past two decades, the portmajor container ports in our coastalof Dubai has become increasinglyregions evolve into internationalimportant in international sealogistics hubs while Shanghai becometransportation and has become a hub foran international center for shippingtraffic, the largest distribution center forThe implementation of a free tradecargo and entrepot trade center in thezone policy in ports is of greatMiddle East. It is one of the 4 largestsignificance to China's development ofentrepot trade ports and the 13th largestcontainer port in the world. Althoughinternational logistic hubs andinternationallogistics.in ports. We canhubs that are geographically superiorreview it from the followinghave emerged in its neighboring regijs,perspectives.such as Aden and Salala, the port ofDubai has generated tremendousvolumes in the supply of goods with the
international logistics hubs in China. Only in this way can logistics focusing on bonded zones and ports be truly integrated in to the international supply chain. The specific function and policy designated to the ports by the State would undoubtedly promote the development of international trade and logistics, increase international transit volume，and significantly impact the route network of China’s liner transportation system. These would promote the development of China regular ship companies as well as the development of bonded zones along ports, and promote the timely realization of a national strategy in which several major container ports in our coastal regions evolve into international logistics hubs while Shanghai become an international center for shipping. The implementation of a free trade zone policy in ports is of great significance to China's development of international logistic hubs and internationallogistics.in ports. We can review it from the following perspectives. 1 The Free trade zone policy is the sine qua non in the establishment of international logistics hubs From international practices we may conclude that major manufacturing countries, such as Pusan in Korea, Antwerp in Belgium, Hamburg in Germany, Tokyo and Yokohama in Japan，Long Beach and Los Angeles in the US, all have or have had hubs. Two of the leading ports in the world, Hong Kong and Singapore, are both international logistic hubs, with a big share of transit volutes. They have a highly efficient free port system, which China lacks. Over the Past two decades, the port of Dubai has become increasingly important in international sea transportation and has become a hub for traffic，the largest distribution center for cargo and entrepot trade center in the Middle East. It is one of the 4 largest entrepot trade ports and the 13th largest container port in the world. Although hubs that are geographically superior have emerged in its neighboring regi}s, such as Aden and Salala，the port of Dubai has generated tremendous volumes in the supply of goods with the
and later expanding the practice in otherAlishan free trade zone, which wasestablished in 1985.ports of Japan. The measures, byIts throughput of containers in 2002selecting 2 to 3 ports from the 11international hubs of 4 regions acrossreaches 4. 2 million TEU, an increase of20%.Although many of the importJapan, aimed at reducing the ports' costsgoods entering the Alishan free tradethrough centralizing container supply tobetter compete with major hubs-.Localzone are for transit to other countries,they will undergo short term warehouseauthorities of Taiwan, on the basis of anprocessing in the zone. The free tradeAsia-Pacific center of transit, developedzone has attracted more than 125free trade ports fronts. According to itsshipping companies and over95 airlineplan, apart from the existing ports ofcompanies and there are now 2 ,400Keelung, Taizhang and Kaohsiung,doneatic and multinational corporations.more free trade ports, such as theAt present, in China's largestTaoyuan Freight Zone, and the port ofTaipei will soon be opened. Good fromcontainer ports, Shanghai Port andShenzhen Yantian Port, internationalthese ports will be free from customstransit volume accounts for less than 1declarations, and ports will issue 72-hour entry visas to overseas business% of the total volume, while in the portsof Hong Kong, Singapore, Kaohsiung,people, including those from theKobe and Yokohama, the figures areMainland. The Ports will enjoy a highdegree of autonomy in manage the40%,7096.53.4%21%and15%respectively. At the samewarehousing,transfer and deepprocessing of freight, and will be free oftime, countries and regions in East Asiaand the Asia-Pacific region. all adoptingport taxes, excise and sales tax. In ordermeasures to enhance the portsto realize its goal of becoming the centerinternational competitiveness.Theof logistics in north and East Asia, TheKorean government plans to developJapanese government put forward apolicy to establish.ports while implementing acorresponding favorable policy ofSpecial port areas, initiating a pilotproject in North Kyushu Port in 2003reducing their fares. In particular, the
Alishan free trade zone，which was established in 1985. Its throughput of containers in 2002 reaches 4. 2 million TEU，an increase of 20%.Although many of the import goods entering the Alishan free trade zone are for transit to other countries , they will undergo short term warehouse processing in the zone. The free trade zone has attracted more than 125 shipping companies and over 95 airline companies and there are now 2 ,400 doneatic and multinational corporations. At present, in China’s largest container ports, Shanghai Port and Shenzhen Yantian Port, international transit volume accounts for less than 1 % of the total volume，while in the ports of Hong Kong, Singapore, Kaohsiung, Kobe and Yokohama, the figures are 40%，7096，53. 4%，21% and 15% respectively. At the same time，countries and regions in East Asia and the Asia-Pacific region. all adopting measures to enhance the ports‘ international competitiveness. The Japanese government put forward a policy to establish. Special port areas，initiating a pilot project in North Kyushu Port in 2003 and later expanding the practice in other ports of Japan. The measures，by selecting 2 to 3 ports from the 11 international hubs of 4 regions across Japan, aimed at reducing the ports' costs through centralizing container supply to better compete with major hubs-.Local authorities of Taiwan, on the basis of an Asia-Pacific center of transit, developed free trade ports fronts. According to its plan, apart from the existing ports of Keelung, Taizhang and Kaohsiung, more free trade ports, such as the Taoyuan Freight Zone, and the port of Taipei will soon be opened. Good from these ports will be free from customs declarations, and ports will issue 72- hour entry visas to overseas business people, including those from the Mainland. The Ports will enjoy a high degree of autonomy in manage the warehousing，transfer and deep processing of freight, and will be free of port taxes, excise and sales tax. In order to realize its goal of becoming the center of logistics in north and East Asia, The Korean government plans to develop ports while implementing a corresponding favorable policy of reducing their fares. In particular, the
The diversification of the functionnew port of Kwangyang is attractingship-owners with its lowfares.Recently,of ports is realistic and inevitable.Theport-related charges have been furthercombination of ports and bonded zonesreduced to increase the number ofthrough free trade can give full play totransit.the multiple functions of ports. Ports canMost international hubs haveevolve from pure land and waterimplement free port policies, and whattransportation hubs into the leadingChina needs in its development ofplatform of providing service to theinternational logistic hubs is a softwarehinterland economy,and employ theenvironment of hubs, i.e.favorablediffusion, radiation and comprehensivepolicies. Free trade zones and free portoperationfunctions of ports.Ports likemechanisms are the popular andthese boast a complete range of porteffectiveinstrumentsofinternationalindustries which can work for loadinglogistic hubs which play a vital role inand unloading, warehousing and transit,port operations and thepromotion oftheas well as a group of port enterpriseseconomy. After China's accession intowhich workfor production,thecapitalthe World Trade Organization, tariffsmarket, the commoditymarket and otherhavebeenreduced and willbereducedsocial markets. In this way, both afurther. However, this will by no meanscomprehensive mufti-industry logisticslessen the importance of hubs with theindustry in ports and an industry districtcharacteristicsoffreeports.Hubswithalong the ports are established.The purpose of a free trade zonethe characteristics of free ports not onlyresemble free ports, but also play thepolicy in ports is to attract theinternational transit of goods, to increaserole of hubs, thusgeneratingtremendousconvenience for containervolume of entrepot trade, and thustransportation, the major modern meansenhance the country's status in the globaloftransportationeconomyandpromotethedevelopment2 The Free trade zone policy inof the national economy. A port mustincrease the proportion of transitports enhances the transit function ofinternational logistic hubscontainers, especially international
new port of Kwangyang is attracting ship-owners with its low fares. Recently, port-related charges have been further reduced to increase the number of transit. Most international hubs have implement free port policies, and what China needs in its development of international logistic hubs is a software environment of hubs, i.e. favorable policies. Free trade zones and free port mechanisms are the popular and effective instruments of international logistic hubs which play a vital role in port operations and the promotion of the economy. After China's accession into the World Trade Organization, tariffs have been reduced and will be reduced further. However, this will by no means lessen the importance of hubs with the characteristics of free ports. Hubs with the characteristics of free ports not only resemble free ports, but also play the role of hubs, thus generating tremendous convenience for container transportation, the major modern means of transportation. 2 The Free trade zone policy in ports enhances the transit function of international logistic hubs The diversification of the function of ports is realistic and inevitable. The combination of ports and bonded zones through free trade can give full play to the multiple functions of ports. Ports can evolve from pure land and water transportation hubs into the leading platform of providing service to the hinterland economy，and employ the diffusion, radiation and comprehensive operation functions of ports. Ports like these boast a complete range of port industries which can work for loading and unloading, warehousing and transit, as well as a group of port enterprises which work for production, the capital market, the commodity market and other social markets. In this way, both a comprehensive mufti-industry logistics industry in ports and an industry district along the ports are established. The purpose of a free trade zone policy in ports is to attract the international transit of goods, to increase volume of entrepot trade, and thus enhance the country's status in the global economy and promote the development of the national economy. A port must increase the proportion of transit containers, especially international