| Ambitious plans shake up rail, ports and airline sectors |
SHANGHAI, Jan. 24 -- One year after China's logistics sector was fully opened to foreign investors, 2006 saw ambitious development plans and drastic changes in the market.
New investment streams and a more diversified mix of players are expected to develop over the next five years.
From ports and airports to railways, new plans were drafted and investment projects were ready to take off.
Meanwhile, the lucrative Chinese market attracted foreign companies looking for opportunities. United Airlines, for instance, was recently awarded a new direct flight route from Beijing to Washington D.C. amid fierce competition.
Also the world's leading commercial aircraft maker, Airbus SAS, agreed to build its single-aisle aircraft assembly line in Tianjin last year. The plant is expected to help boost Airbus's orders in the world's fastest-growing air travel market and help it compete with rival Boeing Co.
Meanwhile, industry trailblazers like Shanghai-based Spring Airlines pioneered affordable airfares, managing to turn a profit in a highly competitive market. This has benefited both the industry and consumers.
Shanghai Daily brings you the top 10 news stories affecting the sector last year. Here's the second part of our series.
6 New blueprint streamlines port operations
CHINA'S State Council approved a blueprint to guide the development of domestic ports in August, calling for the establishment of five port groups to streamline freight.
The groups with varied business focus include the Bohai Sea ports, the Yangtze River Delta ports, Southeast coastal ports, the Pearl River Delta ports and Southwest coastal ports.
Transport of coal, crude oil, iron ore and containers will be focused on the ports around the Bohai Sea, the Yangtze River Delta and the Pearl River Delta.
The plan also clarified eight water transport systems for coal, petroleum, iron ore, containers, food supplies, automobiles, roll-on and roll-off transport and passenger transport. The whole development plan will help optimize coastline resources among the ports, raise efficiency and avoid competition and duplication among the ports.
7 US air competition
FOUR United States carriers, including American Airlines, United Airlines, Northwest Airlines and Continental Airlines, fought vigorously for a new nonstop flight route to China in 2007, based on a 2004 deal that pledged to open the skies of both countries.
United, the biggest carrier on Sino-US routes, applied to start a nonstop service between Beijing and Washington, D.C. American called for the right to fly between Beijing and the airline's largest hub, Dallas-Fort Worth International Airport. Northwest, which had applied to open a Detroit-Beijing service, halted its own application later to join Continental Airlines' campaign to open a Shanghai-New York direct service.
American later amended its application by adding a Chicago stop on Beijing-bound flights. American sought the change after it failed to come to terms with its pilots' union for the Texas-China route.
Passenger traffic between the US and China totaled 1.15 million in 2004, up from 570,000 in 1999. The winner of the battle was United, announced earlier this month.
8 Airbus lands Tianjin assembly line
CHINA approved Airbus SAS's plan to establish an A320 assembly plant in the nation's northern city of Tianjian through a joint venture with Chinese aircraft manufacturers.
The first assembly plant outside Europe, located at Tianjin Binhai New Area, is expected to help the Toulouse, France-based aircraft maker win more orders from China and compete with arch rival Boeing Co.
Airbus plans to invest seven billion euros (US$8.99 billion) in the plant, which is scheduled to deliver the first A320 aircraft in 2008 and achieve the capacity to build four planes a month from 2011.
Airbus announced an order for 150 A320s from China on October 26. The company signed another order of the same size in 2005. Airbus now accounts for 32 percent of the Chinese market.
Over the next two decades, the number of Airbus aircraft in China is expected to reach 1,600, including 200 A380 double-deck super-jumbos, the company said. China accounted for 219 orders and 65 deliveries in 2005.
9 Rail expansion
CHINA plans to spend at least two trillion yuan (US$257 billion), or 100 billion yuan annually, to expand its rail network by 35 percent to 100,000 kilometers by 2020, the State Council, China's Cabinet, said in the 11th Five-Year plan.
All the new lines will be double tracked and China should have separate networks for passenger travel and cargo after upgrading existing lines by 2020, it said.
The plan calls for annual expenditure to double on rail projects. The Ministry of Railways has encouraged private and foreign investors to fund the projects, previously run by government monopoly.
Meanwhile, the ministry has for the first time formed a 12-billion-yuan rail joint venture with NWS Holdings Ltd to develop and manage large rail container terminals in 18 major cities.
10 Cheap flights
CHINA'S first low-cost air carrier, Spring Airlines, reported earnings of 10 million yuan (US$1.29 million) in the first eight months of 2006, compared with huge industry losses among bigger airlines.
China Eastern Airlines and China Southern Airlines reported first-half losses of 1.46 billion yuan and 838 million yuan, as mounting fuel prices added to costs.
Spring Airlines also initiated one-yuan airfares for limited seats on its Shanghai-Jinan route, triggering industry disputes on whether the low fares were fair competition.
Spring also plans to raise three billion yuan in the coming years to fund its aircraft purchase and nationwide expansion. It plans to go public, borrow from banks and seek private investors. Global finance giants like Citibank and Deutsche Bank have expressed interest.
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