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Goods transactions

International container movements

The incorporation of containers into multimodal transport systems is still undeveloped in Pacific Asia because of poor infrastructural facilities in China, Indonesia, and Thailand, and protectionism in Korea and Taiwan. Shipping, therefore, is the key support to physical distribution within Pacific Asia. To appreciate the complexities of interactions between world cities, an understanding of hub/feeder operating structures is necessary. Most cities are located within close proximity to each other and can be reached within two or three days- a 10-day voyage being the extreme case (table 3.11). There are, however, problems in discussing container movements by sea between world cities. Not only are several world cities not maritime centres, but data on origin and destination by ports are not available. There are, however, estimated country data for container movements on individual shipping routes within Pacific Asia in both 1983 and 1991 (though the figures are not strictly comparable).

Table 3.9 The value of trade Pacific Asian countries, 1983 (US$ million)

Source: International Economic Data Bank, Australian National University.

Abbreviations: lnd - Indonesia; Sin - Singapore; Mal - Malaysia; Thai - Thailand; Phil - Philippines; Taiw - Taiwan; HK - Hong Kong; Chin - China; Jpn - Japan; and Kor - South Korea.

Table 3.10 The value of trade between Pacific Asian countries, 1989 (US$ million)

Source: international Economic Data Bank, Australian National University.
Abbreviations: Ind - Indonesia; Sin - Singapore; Mal - Malaysia; Thai - Thailand; Phil - Philippines; Taiw - Taiwan; HK - Hong Kong; Chin - China;
Jpn - Japan: and Kor - South Korea.

Table 3.11 Distance and voyage time of ax-Shanghai and ex-Kobe voyages to major Asia-Pacific ports, 1989 (voyage speed 12 knots)

Source: Yamada (1989:7).

In 1983, container movements in Pacific Asia amounted to 2.7 million TEU (i.e. 5.4 million TEU as containers are handled twice, once at each end of the route) (NMCL, 1985). Total traffic only is given for individual routes (i.e. there is no breakdown by origin and destination). When flows over 100,000 TEU are mapped, a dominant network involving Japan and the newly industrializing economies is evident (Hong Kong, South Korea, Taiwan, and Singapore) - a reflection of high volumes of components being manufactured in different countries and being transported to a single destination for final assembly (fig. 3.4). Thailand, the Philippines, and the USSR featured as out-liers of this network, but China, Indonesia, and Malaysia did not figure prominently.

A major difficulty in interpreting this pattern of regional integration is that it comprises both: (a) intraregional movements carried by 100 major short-sea container lines within Pacific Asia (57 per cent); and (b) feeder flows to mainline deep-sea services (43 per cent) involving European and trans-Pacific markets (table 3.12). The three top intraregional routes of around 200,000 TEU included Japan - Taiwan, Japan-South Korea, and Japan-Hong Kong. These figures underlined Japan's pivotal importance as an intraregional force. Apart from high-intensity feeder routes, such as Japan-Korea and Singapore-Thailand, most container lines operated multi-port itineraries, with double or triple calls at a centre to assemble cargo. Many of the flows within Pacific Asia, however, were still made up of break-bulk rather than containerized cargo. Four flows of around 100,000 TEU accounted for 40 per cent of all feeder traffic to Europe and North America: Japan-South Korea, Singapore-Thailand, Taiwan-Philippines, and Japan-USSR. These covered the main lines (e.g. Sea-Land, American President Line, Maersk, Scan Dutch, and Evergreen Line) using a mix of direct line-haul calls, dedicated feeder vessels, and common carriers.

Fig. 3.4 Container movements between countries in Pacific Asia, 1983 (Source: NMCL, 1985)

Table 3.12 Container flows flows Pacific Asia, 1983

Source: NMCL (1985).

The importance of feeder container services for the port-shipping systems of world cities in the early 1980s is shown in figure 3.5. By then the hubs for mainline services were: Port Klang (Kuala Lumpur), important for Far East/Europe trades; Singapore and Hong Kong, the traditional entrepôts; Kaohsiung, which had just emerged to challenge Hong Kong as a mainline location for some trans-Pacific operators involved in the development of West Coast United States ports and landbridge access to Mid-Western and Gulf markets; Pusan, which previously had strong feeder links to Hong Kong and Japan, and had been a major hub since 1979; and Kobe-Osaka and Tokyo-Yokohama, which dominated port activities in Japan (Robinson, 1985, 1989, 1991). Both Japan and Hong Kong had strong feeder links with the Soviet ports of Nakhodka and Vostochny, which offered important multimodal and landbridge links to Europe via the Trans-Siberian Railway. The other ports included: Bangkok, which was limited by draft and length restrictions on vessels negotiating the Chao Phraya River, and had strong connections with both Singapore and Hong Kong; Jakarta's Tanjung Priok and Manila, which were still essentially feeder ports though they had aspirations for mainline services; and the Chinese ports, which were just receiving their first container vessels.

Fig. 3.5 Short-sea and deep-sea shipping services in Pacific Asia during the early 1980s (Source: Robinson, 1991)

Between 1983 and 1991, Pacific Asian world cities were part of the world's fastest-growing container market. Spurred by the globalization of manufacturing, an annual growth rate of 10 per cent was experienced. In 1991, Nippon Yusen Kaisha (NYK) estimated 3 million TEU were generated within the region - a figure larger than the Far East-Europe trade and on a par with the eastbound trans-Pacific trade (PDI, 1991). When these container movements are mapped by routes in figure 3.6, the strong links between Japan and the newly industrializing economies can be seen to have persisted. Indonesia, Malaysia, and Thailand have been incorporated into the main network, with the second wave of manufacturing stemming from the movement of capital from Japan and the NIEs to lower-cost resource locations. China and the Philippines, however, did not have annual flows in excess of 60,000 TEU, though forecasts suggest a marked upsurge in their trade between Pacific Asian world cities.

The main backbone route was between Japan and Singapore. Most two-way routes, however, comprised both local and feeder cargoes and had not reached the point where the volume attracted large operators on a long-term basis or justified them as independent trades (table 3.13). On balance, Korea, Japan, and Singapore were "sources" (i.e. outflows exceeded inflows). Conversely, the other economies - Hong Kong, Indonesia, Malaysia, the Philippines, Taiwan, and Thailand - figured as "sinks" (i.e. inflows exceeded outflows). No data are available for routes including rapidly growing markets in southern China and Viet Nam.

Given the huge potential for trade between Pacific Asia's emerging world cities, shipping lines have flooded routes with surplus capacity, driving rates below the costs of providing the service - a phenomenon that has prompted a search for a mechanism to stabilize the market (Yamada, 1989). An uneven demand throughout the year makes the trade very difficult to manage. Total cargo on the Japan-Bangkok route does not exceed 10,000 TEU per month, but Japanese Lines deploy that capacity each week and have to compete with other mainline carriers (American President Line, Maersk, and Sea-Land), dedicated end-to-end intraregional carriers (Singapore's Pacific International Line and Regional Container Line, Taiwan's Cheng Lie Navigation and Wan Hai Steamship Company), and wayport operators. With such a diverse carrier base it is not surprising that rates between Japan and Singapore in 1991 were US$800 per TEU - the same as in 1983. The importance of the unstructured intraregional trade, however, should not be overestimated because it comprises raw materials to be transformed into products for shipment to the United States and Europe. Despite its growth it is still largely an auxiliary trade whose final customers are in North America and Europe.

Fig. 3.6 Container movements between countries in Pacific Asia, 1991 (Source: PDI, 1991)

Table 3.13 Estimated monthly movements of containers within Pacific Asia, 1991

Source: PDI (1991:A4).
Abbreviations: Jpn - Japan; Kor - Korea; Taiw - Taiwan; HK - Hong Kong; Phil - Philippines; Sin - Singapore; Mal - Malaysia; Thai - Thailand; and Ind -Indonesia.
a. The totals have been amended from the original.

Shipping line strategies coupled with economic growth have sparked marked port development in and around world cities. Like Kaohsiung, Hong Kong has extension plans at Tsing Yi and Lantau, and Singapore at Pulau Brani, to enhance their superhub status derived from their manufacturing bases and pivotal locational positions in shipping line itineraries. In South Korea, the new port of Kwangyang will offer Seoul an alternative outlet to the Port of Pusan, which handled 2.4 million TEU in 1989 - one-third above its design capacity. In Thailand, the addition of Laem Chabang, located some 130 km south-east of Bangkok, is designed to relieve the capital's congested port of Klong Toey, which handles over 1 million TEU annually - though the newcomer is having difficulty in attracting shipping lines. Finally, there is a glut of expansion projects at lesser ports, such as Port Klang (Kuala Lumpur), Manila, Shanghai, Tanjung Priok (Jakarta), and Tianjin (Beijing), which have been designed to attract cargo previously handled by the ports of neighbouring world cities.

This last set of ports is poised to take advantage of foreign investment in national economies and of schemes for deregulation and privatization (e.g. by allowing the entry of foreign carriers into Indonesia's protected markets and by allowing the private sector to run Manila's and Laem Chabang's wharves). A counter to the concentration of activity on emerging world cities is aid from international funding agencies to develop regional ports (e.g. Johore and Penang in Malaysia, Surabaya and Belawan in Indonesia). Although these may attract bulk cargoes, there are few signs of a marked decentralization of containerized cargoes from the superhubs. As the national economies sustaining the world cities shift from resource-based activities to manufacturing, it will be necessary to provide cargo centres at airports to handle higher-valued goods. Already this has been reflected in an increase in sea-air cargoes (e.g. from Japan to Hong Kong and Taiwan by sea and to Bangkok and other points in South-East Asia by air).

International air freight

Attention in discussing international air freight is focused on distances between Pacific Asia's world cities (table 3.14). The longest leg between world cities is 5,795 km between Jakarta and Tokyo, and the shortest is 300 km between Singapore and Kuala Lumpur. Hong Kong is the network's pivot because it has the shortest total distance to all other centres. A major difference in studying international air freight interactions between Pacific Asia's world cities compared with shipping, however, is that the quality of transport - punctuality, service frequency, and cargo collection and delivery - is the key. Time is more important than distance. To meet this desideratum, just-in-time systems are being adopted within the region assisted by:

(a) the pluralization of carriers (e.g. the introduction of Nippon Cargo Airlines);

(b) the development of new airports to overcome limited airport capacity created by service expansion (most marked in Japan where work is proceeding on the second phase of the New International Airport at Narita, the construction of the new Kansai International Airport, and the seaward expansion of Tokyo International Airport at Haneda); and

(c) changes in the structure of the air freighting industry in an attempt to upgrade general cargo and express services through merger (e.g. Federal Express and Flying Tigers, the heavyweight cargo airline), investment (e.g. Japanese Airlines investment with Lufthansa in DHL), and development of comprehensive air cargo information systems for logistics control.

Table 3.14 Air distances between Pacific Asian cities (km)

Source: Besser (1991:552).
Abbreviations: JAK - Jakarta; SIN - Singapore; KUL - Kuala Lumpur; BKK - Bangkok; MNL - Manila; TPE - Taipei; HKG - Hong Kong; SHA Shanghai; BJS -Beijing; OSA - Osaka; TKO - Tokyo; and SEL - Seoul.

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