With the fallout from Brexit still hitting the European Union, a global power has seen an opportunity to take over an industry. European banks have been scaling back their investments in shipping, which has allowed China to become a key player in the industry. China’s investments demonstrate a desire to become a dominant maritime player in the coming years.
A Financing Influx
European banks were some of the largest financers of the shipping industry, but Brexit has forced them to mitigate their risk and exposure. The shipping industry is currently in the middle of a long down cycle, where shipping rates are low due to overcapacity. This cycle was considered too risky for European banks to fund. Chinese lenders saw an opportunity and stepped up to finance an industry in need.
Chinese banks have been increasing their shipments financing over the past decade. In 2008, banks lent a mere few million dollars to shipbuilders. This year, China has invested over $20 billion into the shipping industry this year, which is a remarkable 33% increase from the previous year.
This figure also does not account for ship mortgages, bilateral loans, and private placements. It simply accounts for leasing deals. The country’s three biggest leasing firms own over 800 shipping vessels. Some of these firms have doubled their shipping assets between 2015 and 2017.
With the influx of financing, China now controls approximately 40% of the world’s shipbuilding capacity. Chinese lenders are considerably more aggressive than European lenders when seizing assets. They typically charge a 5.5% interest rate and will unload cargo and seize a ship as soon as a few payments are missed.
A New Shipping Service Opened
In late December, a new cross-strait shipping service between the Taiwan Wagon Group and the Pingtan Transportation Group was opened. The groups expect three shipments a week to be made from the Pingtan trade zone in Fujian to Taipei. Shipments will run on the Taipei Express, which can hold 630 twenty-foot equivalent units.
This new shipping service is an example of the recent investments being made in the shipping industry throughout Asia. Pingtan has been investing heavily in cross-strait shipping logistics, and it appears that their expansion is not complete.
Protecting Shipments Across The Pacific
With China investing so heavily in the shipping industry, ocean freight will continue to grow. Ocean freight can often be unpredictable, and it is slower than air freight. Shipments are exposed to varying climates and temperatures. If proper precautions are not taken, shipments can be ruined by the time they arrive in port.
If you are looking to protect your ocean freight, consider using the SureTemp Prime Transoceanic Container Liner. This protective foil liner is designed to fit any standard ocean shipping container, can protect against cargo sweat, container rain, and radiation. When properly installed, shipments within the container are protected from temperature, humidity, and other elements.
