April 17, 2024

China’s Exports Perch on Uncertain Truck System

But there is a surprisingly weak link in the Made in China chain.

Moving those goods from the factory floor to one of China’s enormous seaports — often a drive of less than two hours — typically means relying on an independent trucking company. And as vital as trucking is to China’s mighty export machine, the government seems to be ignoring the drawbacks of what analysts say is an increasingly disorganized, inefficient and even costly way to transport factory goods to seaports.

Trucking’s tenuous status has been underscored by recent protests and demonstrations by drivers. Last weekend, in an unusually bold display of public anger, 2,000 truckers went on strike in Shanghai to complain about the rising cost of fuel and unfair government transportation fees. Some protestors hurled rocks, tried to overturn police cars and smashed the windshields of truck drivers who refused to join the strike.

The Shanghai municipal government eventually ended the three-day strike by arresting protestors and threatening strike organizers, while also promising to lower some fees that trucking companies must pay to use the roads and seaport.

But the challenges that trucking pose to China’s $1.5 trillion a year in exports are still in place — and could become even greater, now that huge factories have begun relocating to poorer, inland regions to save on labor costs.

“Our concern is that as these factories move away from the coast, the service standards won’t keep pace,” said Ken Glenn, an executive at APL, a transportation services company. “Rail and barge are even less developed.”

Within China, thousands of small trucking companies, many of them family-owned, compete by promising low-cost delivery. Then they overload their 18-wheelers in dangerous ways, pay bribes to ward off highway inspectors and hope to eke out tiny profits.

Now, though, with global oil prices sending the cost of fuel soaring, many truckers say they are heading toward bankruptcy.

“We’re paying a lot more money for fuel than we did three years ago, but what we get paid for freight has stayed the same,” said Qi Zhenwei, a truck owner stationed at a dusty trucking depot near one of Shanghai’s busiest ports. “How am I supposed to survive?”

Mark Millar, a China logistics expert at M Power Associates in Hong Kong, sees Chinese trucking as “a seriously fragmented and brutally competitive industry.”

“Most of the drivers are owner-operators, and in order to make money, they carry more cargo than the truck is supposed to hold,” Mr. Millar said. “This is obviously not a healthy model.”

Not all trucking in China is such a seat-of-the-pants affair. Some global companies transport goods by truck in sealed shipping containers from factory to dock, sometimes accompanied by security escorts.

But more often, goods destined for export are delivered to seaports by small trucking companies — usually hired by logistics firms that bargain to get the lowest possible shipping price. To scrape by, many of the small trucking firms violate the law, pay bribes to avoid heavy fines and transportation restrictions, and even force drivers to sleep in the trucks overnight, sometimes in insecure parking lots.

These rigors might seem to contradict the heavy investment in infrastructure and expressways that China has made make its transportation network more efficient.

But many of this country’s modern roadways are expensive toll roads. And the government has placed tough regulations on many aspects of the transportation industry, which analysts say have burdened many companies with heavy taxes, insurance and government fees. As a result, transporting goods by truck in China is relatively more expensive than doing so in the United States.

Article source: http://www.nytimes.com/2011/04/29/business/global/29truckers.html?partner=rss&emc=rss

Speak Your Mind