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Tangshan to shift movement of bulk commodities to rail by 2019

Published by , Assistant Editor
Dry Bulk,

Argus Media reports that China's largest steelmaking city Tangshan plans to transport all iron ore and coal from ports to steel mills by rail, rather than truck, by the end of 2019. The change is likely to significantly reduce demand for trucks, which currently haul most bulk commodities.

The switch will cost around US$1.67 billion and is to be implemented in two phases. Six dedicated railway lines are to be laid this year, enabling five steel companies to end their reliance on trucks. More rail lines will then be built for another 10 steel companies next year, effectively moving all of the city's ore and coal shipments to rail.

The rail development plan is part of China's programme to end truck transportation of bulk materials for steel mills in the key steelmaking provinces of Shandong, Jiangsu, Hebei and Tianjin by the end of next year. The government wants to move cargoes to railways instead, to reduce emissions and road congestion.

According to Liu Dacheng, a professor at China's Tsingua University, the environment ministry is planning to complete the switch in key steelmaking areas of Shandong province and the Yangtze river delta in Jiangsu this year, followed by Beijing-Tianjin-Hebei region by September 2019. But rail cargoes need to travel over 1000 km to become competitive with road transports, while trucks are still need for door-to-door deliveries, Liu said.

Rail transportation of bulk goods has strong political support and state-owned steel mills will take the lead in implementing the programme, Chinese financial company CIMC Capital said. Transport efficiency will be affected and transportation costs will rise accordingly, it added. Fierce competition in the coal industry means the logistics changes will have a big impact on coking coal trade.

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