Shanghai: the world’s next shipping capital?

Shanghai: the world’s next shipping capital?

Twenty years ago Shanghai announced ambitious goals to transform itself into a world-class financial centre on a par with Hong Kong. With a name that can be translated as ‘Upon-the-Sea’, Shanghai vowed to establish itself at the centre of the maritime world too.

How is it doing? Menon Economics, a consultancy from Norway that compiles a ranking of the world’s shipping capitals, scored Shanghai fourth overall in its latest assessment in April, behind Singapore, Hamburg and Oslo.

The survey focuses on five main parameters: shipping, maritime finance and law, ports and logistics, maritime technology, and overall competitiveness.

Shanghai was outside the top five as a shipping centre (defined by ownership, operations and vessel management) and trailing Singapore, as well as Athens, which is home to the largest fleet in tonnage and value terms. Shanghai looks likely to narrow the gap as the Chinese increase their share of vessel ownership, however.

In the technology ranking on attributes like shipbuilding and R&D, Shanghai features strongly in terms of the stock market value of its shipyards and the value of the vessels manufactured in its yards.

But it still trails more technologically advanced locations like Busan in South Korea and first-placed Oslo in Norway. Menon points out that Chinese yards still import around half of the equipment installed in the ships that they make.

In finance and law London ranks first, buoyed by institutions such as the Lloyd’s insurance market and the reliance on English law for most of the world’s shipping disputes. Shanghai gets a helping hand from the second-largest market capitalisation for shipping companies on its stock exchange. Not mentioned is the increasing influence of China’s banks in ship financing, which should bolster Shanghai’s case in future.

In ports and logistics Shanghai scores strongly as the world’s largest container port, more than doubling its throughput in the last 10 years. It stands out further as a gateway to the vast manufacturing zone in its hinterland, although Singapore and Hong Kong are seen as more important transshipment ports. Menon predicts that Shanghai could soon overtake Singapore because of rising costs in the Southeast Asian hub, plus the momentum of the Chinese market for maritime freight demand.

Scoring is more subjective in a fifth criterion called attractiveness and competitiveness but here Shanghai doesn’t do as well. Industry insiders cite challenges in doing business, a policy framework that needs overhaul, and problems with the city’s ‘cluster dynamics’ (one criticism is that Chinese firms are too reluctant to share information).

Shanghai has overtaken Hong Kong in the overall rankings since Menon’s last assessment two years ago. But the lower scores on competitiveness show that both the private sector and the policymakers have more work to do if Shanghai is going to grab the top spot.


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