Executive Briefings

APL Sees Infrastructure Challenges as China and Vietnam Grapple With Growth in International Trade

The emergence of China as a source of low-cost production has raised a host of issues related to the efficiency of global supply chains. According to Brian Lutt, president of APL Logistics, the surge in trade with China has created additional costs and potential choke points that will have to be addressed. Such problems will only be magnified as China looks to shift production from coastal areas into the hinterland, he said at the first Transpacific Maritime Asia Conference in Shenzhen. Lutt praised the Chinese government for its ambitious plans to develop new roads and railways to support international trade. But building infrastructure is only part of the solution. "From a container logistics perspective, this additional road and rail capacity must be matched by precise connectivity with ocean transportation and other value-added logistics services," he said. "Without this connectivity and integration, supply chains will falter."

Another APL report looks at transportation developments in Vietnam. It finds that existing port and landside infrastructure is nearly at capacity, with new facilities not expected to be in operation for several years. Congestion is a particular problem in the country's key commercial gateway of Ho Chi Minh City, said Jim McAdam, APL's president for the Asia Middle East region. "There may be some relief once the first phase of new capacity comes on stream in 2009," he said at a conference in Hanoi on Vietnam ports and logistics. "But if demand growth exceeds 25 percent, we will likely have serious under-capacity in the years ahead."

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The emergence of China as a source of low-cost production has raised a host of issues related to the efficiency of global supply chains. According to Brian Lutt, president of APL Logistics, the surge in trade with China has created additional costs and potential choke points that will have to be addressed. Such problems will only be magnified as China looks to shift production from coastal areas into the hinterland, he said at the first Transpacific Maritime Asia Conference in Shenzhen. Lutt praised the Chinese government for its ambitious plans to develop new roads and railways to support international trade. But building infrastructure is only part of the solution. "From a container logistics perspective, this additional road and rail capacity must be matched by precise connectivity with ocean transportation and other value-added logistics services," he said. "Without this connectivity and integration, supply chains will falter."

Another APL report looks at transportation developments in Vietnam. It finds that existing port and landside infrastructure is nearly at capacity, with new facilities not expected to be in operation for several years. Congestion is a particular problem in the country's key commercial gateway of Ho Chi Minh City, said Jim McAdam, APL's president for the Asia Middle East region. "There may be some relief once the first phase of new capacity comes on stream in 2009," he said at a conference in Hanoi on Vietnam ports and logistics. "But if demand growth exceeds 25 percent, we will likely have serious under-capacity in the years ahead."

Visit www.apl.com