transit business rather than hinterlandtransit containers, if it is to become atrue international logistic hub. Thesupply alone is crucial to the develop ofconvergence of the supply of goods andinternational container logistic hubs,because become the function ofthe geographical location of ports areinternational transit can a the transit portreasons that hubs can attract largevolumes of transit goods with a greatfor major liner companies and a trulynumber of branch line networks andinternational sea transportation logistictrunk lines covering the globe. Shippinghub. Currently the world shippingcompanies, by consistently using theseindustry is quite centralized and choicehubs, can gain considerable guaranteesof major liner companies for transitfor freight. On one hand, shippingports can virtually determine if a port iscompanies are willing to do so toable to become an internationalacquire more goods and, on the othercontainer logistic hub. Becoming ahand, the companies will have moretransit port for a major liner companyleeway in providing transit for their owncan bring tens of thousands of TFU infreight. With the"Matthew Effect" ingoods and significantly impact on thethe container industry,the importance ofexpansion of throughput.In 2001, withhubs will continue to grow.the acquisition of Maersk Sealand bymeans of a low price ,throughput at theFrom 1990 to 2003, the throughputof containers in three major ports ofport of Danjungpalapas in MalaysiaChina increased dramatically: Shanghaisoared 390% over the year before and(460,000 to 11.25 million TEU)reached 2.0Smillion TEU, while theShenzhen (30,000 to 1065million TEU)port of Singapore, having lost Maerskand Qingdao(140,000 to 4. 2millionSealand, dropped to 1 .52 million TEU.TEU).Shanghai and Shenzhen climbedWith the expansion of throughput, linerdensity and international routes , theto the 3rd and 4th largest in the world.This year, Shanghai is expected tothree ports of Shanghai, Shenzhen andexceed 13. 80 million TEU. AlthoughQingdao have attracted the containerthe throughput of containers in China'ssupplies of their neighboring portsmajor ports has reached a high level,However,faced withfierce competition
transit containers，if it is to become a true international logistic hub. The convergence of the supply of goods and the geographical location of ports are reasons that hubs can attract large volumes of transit goods with a great number of branch line networks and trunk lines covering the globe. Shipping companies, by consistent1y using these hubs, can gain considerable guarantees for freight. On one hand, shipping companies are willing to do so to acquire more goods and, on the other hand, the companies will have more leeway in providing transit for their own freight. With the ”Matthew Effect" in the container industry, the importance of hubs will continue to grow. From 1990 to 2003，the throughput of containers in three major ports of China increased dramatically: Shanghai (460,000 to 11.25 million TEU) Shenzhen (30,000 to 1065million TEU) and Qingdao(140,000 to 4. 2million TEU ).Shanghai and Shenzhen climbed to the 3rd and 4th largest in the world. This year, Shanghai is expected to exceed 13. 80 million TEU. Although the throughput of containers in China's major ports has reached a high level, transit business rather than hinterland supply alone is crucial to the develop of international container logistic hubs, because become the function of international transit can a the transit port for major liner companies and a truly international sea transportation logistic hub. Currently the world shipping industry is quite centralized and choice of major liner companies for transit ports can virtually determine if a port is able to become an international container logistic hub. Becoming a transit port for a major liner company can bring tens of thousands of TFU in goods and significantly impact on the expansion of throughput. In 2001，with the acquisition of Maersk Sealand by means of a low price ,throughput at the port of Danjungpalapas in Malaysia soared 390% over the year before and reached 2.0Smillion TEU，while the port of Singapore, having lost Maersk Sealand, dropped to 1 .52 million TEU. With the expansion of throughput, liner density and international routes , the three ports of Shanghai , Shenzhen and Qingdao have attracted the container supplies of their neighboring ports. However, faced with fierce competition
companies are adjusting their operationfrom neighboring ports, internationallogistic centers with characteristics ofand development strategies. The focusfree ports must be set up in ports tofor the strategic goal of logistics, as wellattract containersfor, transit overseas, toasforthedevelopmentofa logisticbecome transit ports for major linernetwork and its management, would bethe general trend of global procurementcompanies and to provide a tax-free,production and operation.convenient platformfortransitbusiness3 The effect of a free trade zoneIt is an inevitable choice forpolicy on the expansion of transit inmultinational companies to transferportsservices, such as warehousing,Overthepasttwopackaging, LCL, and distribution, toregions with low labor and land costs.decades, economic globalization haspicked up speed. This has resulted inMultinational companies procure finalgreat strategic impact on the shippingproducts in regions within and adjacentand port industries of the world. Theto these countries, and have thememergence and rapid development ofundergo simple processing such asmultinational corporations has greatlywarehousing, labeling and LCL. Theenhanced economicglobalization,products are then shipped to salesinfiltration, interdependence and tradeoffices overseas. This can be conceivedliberalization, increasing demands onas some logistic value-addingplayers in international logistics,procedures being transferred fromShippers require that carriers adapt toabroad to home, elongating the valuethe changing environment, set up achain. After entry, some products withhigh tariffs(e.g. cars) can first be storedcomplete logistic network,transport rawmaterials and products using a variety ofin the port, and be imported aftertransportation modals and door-to-doorfounding the purchaser, thus postponingthe taxes and reducing capital costs.transportation, manage operationsBonded zones combining free tradethrough a supply chain, and providecustomers with high-efficiency,low costzones and ports or ports with flee tradevalue-added service.Multinational
from neighboring ports，international logistic centers with characteristics of free ports must be set up in ports to attract containers for; transit overseas, to become transit ports for major liner companies and to provide a tax-free, convenient platform for transit business. 3 The effect of a free trade zone policy on the expansion of transit in ports Over the past two decades，economic globalization has picked up speed. This has resulted in great strategic impact on the shipping and port industries of the world. The emergence and rapid development of multinational corporations has greatly enhanced economic globalization, infiltration, interdependence and trade liberalization, increasing demands on players in international logistics, Shippers require that carriers adapt to the changing environment, set up a complete logistic network，transport raw materials and products using a variety of transportation modals and door-to-door transportation，manage operations through a supply chain，and provide customers with high-efficiency, low cost value-added service. Multinational companies are adjusting their operation and development strategies. The focus for the strategic goal of logistics, as well as for the development of a logistic network and its management, would be the general trend of global procurement, production and operation. It is an inevitable choice for multinational companies to transfer services, such as warehousing, packaging, LCL, and distribution, to regions with low labor and land costs. Multinational companies procure final products in regions within and adjacent to these countries, and have them undergo simple processing such as warehousing，labeling and LCL. The products are then shipped to sales offices overseas. This can be conceived as some logistic value-adding procedures being transferred from abroad to home，elongating the value chain. After entry，some products with high tariffs(e.g. cars) can first be stored in the port, and be imported after founding the purchaser, thus postponing the taxes and reducing capital costs. Bonded zones combining free trade zones and ports or ports with flee trade