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Maersk is the first foreign liner to make a coastal relay of international cargo in China
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Carrier says China’s opening of its cabotage market to foreign players addresses some factors behind the bottlenecks in Chinese supply chains
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China says international cargo relay will be allowed on trial until end-2024 for select players under third-country reciprocity conditions and several criteria
Danish shipping giant A.P. Moller-Maersk made history on May 31 by being the first foreign carrier to engage in a coastal relay of international cargo as China opens its cabotage market to overseas operators on a three-year trial basis.
With a cargo 27 containers from Vancouver, Canada, loaded onto the container vessel “Merete Maersk,” the first batch of international cargo from a foreign ship marked for the coastal relay began Tuesday its last leg of its ocean voyage from Shanghai’s Yangshan terminal to Tianjin.
“We are proud to be the first foreign company that successfully implements international cargo relay in China,” A.P. Moller-Maersk chief executive Soren Skou said in a statement on Tuesday from the company’s Copenhagen headquarters.
“Transhipment in Shanghai allows us to improve services through optimized networks and could also address some of the factors behind the bottlenecks in Chinese supply chains, shortening transit times, reducing emissions and freeing up additional capacity for our customers,” he said.
Skou expressed Maersk’s appreciation of China’s opening of cabotage to foreign cargo vessels.
“It is an important step towards optimizing relay regulations, and we hope it will serve as an inspiration in other geographies where restrictions on international relay still exist,” Skou said.
Most countries prohibit cabotage by aircraft and ships to protect local industry players. The breakthrough in Yangshan is a result of the China State Council’s 2019 overall plan to boost the development of the international shipping center in Shanghai.
In November 2021, China’s Ministry of Transport announced that international cargo relay would be allowed on a trial basis until the end of 2024.
Based on third-country reciprocity conditions and meeting several additional criteria, qualified carriers can use their own vessels to carry out international cargo relay between Shanghai Yangshan and northern Chinese ports, including Dalian, Tianjin and Qingdao.
In China, international cargo relay shipments between two Chinese ports have historically been considered cabotage and, therefore, strictly prohibited for foreign carriers. Instead, these carriers use Busan, Singapore and other international ports for transhipment.
Maersk says this initiative can also strengthen Shanghai’s role as an international maritime center with more throughput and revenue generated. Network optimization and shorter transit time will also reduce the carbon footprint of the ocean transport involved, the company said.
Cabotage comes from the French word “caboter,” meaning to travel by coast, Container xChange explains in an online primer. It says “cabotage stands for the right of domestic coastal trade. Precisely, cabotage defines the domestic transport of goods or people done by a foreign company.”
“The first regulations were developed in this area in the 18th century to prevent foreign ships from threatening the local shipping industry. Today, cabotage laws exist globally. Not only to protect the domestic industries. They’re also instated to protect shipping infrastructure, keep the territorial seaways clear, as well as for reasons of national security,” Container xChange says.
The most well-known regulations are the “Jones Act”(1920) in the United States, which imposes an absolute ban on cabotage, Container xChange. This means all domestic transport along the US coastlines must be carried out by US vessels with a US crew, although nowadays at least 75% of the crew has to be US seafarers.
