Silk Road Headlines_1st November, 2019

An article published by Riviera identifies several developments in the maritime domain that affect China’s relations with Europe [Asia-Europe: bigger volumes and more mega ships]. First, the US-China trade dispute leads to increased shipping between Europe and East Asia, as Chinese exporters are diverging part of their trade from the US to Europe. Second, shipping companies are investing in ever larger ships. The number of ships that can carry over 23,000 TEU (twenty-foot equivalent container units) is increasing. Shipping companies are ‘slashing base rates to fill [these giant ships] to get economies of scale’. Only a few very large companies, including the Chinese firm COSCO, are able to commission the building of giant ships, and as a result smaller companies are unable to compete on long-distance trade routes such as those between Europe and East Asia. Incidentally, on 25 October SASAC, China’s state asset regulator, announced that it allows the merger between the country’s two largest shipbuilders, CSIC and CSSC. The merged company will be the world’s largest shipbuilder, with an 18% market share [China approves merger of shipbuilders CSSC and CSIC]. Third, according to Riviera, ‘the investment by Chinese terminal operators in European terminals is part of the country’s Belt and Road initiative. This initiative is having a positive impact on the Asia-Europe trade.’ For instance, investments by COSCO in European ports Piraeus and Zeebrugge resulted in new equipment and overall upgrading of the container terminals in these ports. An implication of this observation is that the importance of China-invested ports in Europe, relative to other ports, is likely to grow.

These developments suggest that maritime trade relations between the EU and China are becoming tighter, while at the same time the role of Chinese companies in Europe-China maritime trade is getting larger.

Frans-Paul van der Putten