Two container shipping lines are poised to exploit strong trade growth between China and Myanmar with direct services from Shanghai to Yangon.
They will deploy smaller vessels, bypassing the need to transfer cargo in Singapore or Malaysia.
State-owned China Shipping Container Lines (CSCL) and MCC Transport, a subsidiary of AP Moeller-Maersk Group, plan to launch services on January 25.
Departing from Shanghai, vessels filled with standard containers will call at Ningbo and Southeast Asian ports before heading for Myanmar’s commercial capital.
Projected journey times of between 12 and 14 days represent significant time savings and offer greater predictability for shipment schedules.
Trade between Myanmar and China grew an average 16 per cent a year between 2009 and 2013, according to Word Trade Organisation data.
Myanmar in 2013 imported US$7.3 billion worth of goods – from electrical equipment and construction material to home decorations and synthetic fibres – from China, its largest trading partner.
However, the absence of direct shipping services between the two countries complicated the transport process.
The predominant shipping option is to load containers in China that are discharged in Singapore or Malaysia and reloaded on another – often smaller – vessel for the final leg to Myanmar.
This procedure, known as transshipment, often makes shipment schedules unpredictable as vessel space on the transit journey is not always guaranteed, according to a CSCL spokesman.
“The launch of the new route will provide Chinese exporters and importers with a stable service. We estimate containerised cargo volume to have grown 30 per cent last year to 350,000 teu,” he said.
The CSCL service involves four ships, each able to carry 1,000 teu, calling at Ho Chi Minh City, Vietnam, and Singapore for loading or discharging of cargo.
MCC, a leading carrier in intra-Asia container trades, will deploy eight vessels of 1,100 teu each with calls at Singapore and Port Klang, Malaysia.
MCC, along with sister operator Maersk Line, was the first shipping company to open a branch in Myanmar after the United States and Europe lifted economic sanctions in 2013.
Owing to the shallow depth at Yangon port, only small vessels can haul cargo on the direct route, denying operators the economy of scale achieved through larger ships.
“Everyone would love this direct service but it really costs money to offer,” MCC chief executive Tim Wickmann said. “Due to the draught constraint in Myanmar ports, at 7 to 8 metres deep, only small ships can be deployed in this service.
“So from an economic point of view, we would have probably the highest unit cost per container between Shanghai, Singapore and Port Klang.
“Our hope is customers will appreciate the direct service, and be willing to pay a premium over the transshipment services.”
Source: South China Morning Post