China’s transportation system is rapidly expanding to support economic growth, meet projected global intermodal freight demands, and promote expansion into underdeveloped regions of the country. Given the current understanding of intermodal freight movement that was not available when the United States developed its port capacity, the purpose of this scan was to identify how China provides intermodal access to its new, greenfield maritime ports and the possible application of those methods in the United States. The scan also looked at the investment strategies adopted by Chinese officials to foster freight mobility and intermodal connectivity in support of their global competitiveness. The scan team represented a diverse set of interests and concerns for national and State decisionmaking. In addition to Federal Highway Administration (FHWA) officials at the national and division levels, the team included representatives from the departments of transportation for California, Maine, and Pennsylvania; a representative of the I-95 Corridor Coalition; a representative of the American Association of State Highway and Transportation Officials (AASHTO); a representative of the American Trucking Associations; and a university professor who also acted as the report writer. These scan members reflected different modal interests and expertise in intermodal freight transportation, trucking, transportation policy and planning, and transportation system operations. The scan team met with government officials at the national, provincial, and metropolitan levels; port authorities and terminal operators; U.S. shippers and retailers; logistics and warehousing companies; and research organizations. Although most of the team’s visits were to specific organizations, meetings were also held under the auspices of the local American Chambers of Commerce in Shanghai and Hong Kong that provided an opportunity to meet with representatives of many shipper, carrier, and trade organizations.
General Observations
The scan team made numerous observations about the way China has provided transportation infrastructure in support of its impressive economic growth. These observations are presented below. However, several major takeaways from this scan provide important lessons to the United States:
Given the global market and supply chain, what happens in China does affect the U.S., State, and local economies. Everyone is part of a global economy; flows of people and goods do not stop at jurisdictional boundaries. Although this scan focused on China, in reality the transportation system of each country is part of a global transportation network and should be viewed that way. It is surely the way the companies that movefreight view it. Although the Chinese system of governance is very different from the United States, several characteristics of the system are noteworthy:
National, provincial, and metropolitan transportation policy is closely coordinated among the three levels and is linked to other policy goals, the most prominent ones being economic development and what the Chinese call “social harmony.” This strong linkage often results in a unified vision of what is necessary in the transport sector to achieve policy goals.
The Chinese government at all levels targets investment on those components of the transportation system that best advance national goals. As a result, the evolving Chinese transportation system is focused on excelling in markets dominated by international trade. The expanding opportunities for investment in China have resulted in many public-private joint ventures for transportation projects. Freight Mobility and Intermodal Connectivity in China. However, in most cases, the government retains majority control in the joint venture. It always has the majority say. On intermodal access to the maritime ports, the scan team did not find new or different operational technology than is used in the United States or European Union. There were, however, significant differences in port operating rules because of different labor conditions and the focus on competing in a global market. The following observations from the scan are organized in four categories: China’s economic growth and driving forces; transportation infrastructure development; governmental structure, decisionmaking, and analysis; and global shipper and carrier perceptions.
China’s Economic Growth and Driving Forces
1. China’s economic growth over the past 10 years has been dramatic. Both government officials and private sector representatives expect this growth to continue in the foreseeable future at or near its current rate of about 10 percent per annum.
2. Although the national and local governments have invested heavily in infrastructure, much of the recent economic growth has been fueled by private investment. As different sectors of the economy have been opened to foreign investment, joint ventures and other financial partnerships have provided an institutional framework for expansion of the transportation infrastructure and the economy. Even with this foreign investment, the government is still in a dominant position on investing in the transport sector, especially in such areas as the national rail system.
3. The economic expansion of China started in the south (Pearl River Delta), moved north along the coastal area based on national economic policy, and is now pushing west in accordance with the “Go West” national government campaign. This campaign has significant implications to supply chain logistics costs and to the efficiency of the Chinese transportation system in moving exports to the coastal ports.
4. Much of China’s economic expansion has occurred in urban areas where the population provides the labor force. The consequence of such large urban concentrations is that thecentral government pays particular attention to and provides the resources to make sure that the basic needs of these populations are met (social harmony). From a transportation perspective, the consequence of this policy focus is that passenger transportation often receives priority over freight movement (although in port cities freight movement often receives close attention from transportation officials), especially in peak holiday seasons.
5. Although it appears that economic development is still the primary goal of governmental policy, additional goals and performance measures relating to environmental quality and energy consumption have been added to the national agenda.
Transportation Infrastructure Development and Operations

1. Recognizing the vital role that transportation plays in meeting its goal of continued economic growth, China is investing heavily in transport infrastructure, an investment estimated at more than 9 percent of the country’s gross domestic product (GDP). This investment comes from both public and private (joint venture) funds.
2. Substantial levels of private capital are being invested, in some cases with low expectationsof rapid return on investment. In other words, investors are willing to accept lower immediatereturns in exchange for longer term benefits. Over the past several years, this investment has occurred primarily in seaports, highways, airports, and logistics parks. Private investmentin rail infrastructure and intermodal terminals has had limited success, although some recentagreements suggest that the rail sector will also see private investment.
3. Coastal and river shipping is a significant component of China’s intermodal transportationsystem. In some port markets, as much as 35 percent of the containers arriving for export do so by barge.
4. The central government’s “Go West” policy has shifted investment attention to inlandtransportation and the challenges facing such transportation, especially the connections to the major international ports.
5. China’s intermodal rail service faces significant challenges. The movement of containers receives low in priority on China’s rail network, following military, passenger, energy (coal), and food movements. About 12,000 kilometers (7,456 miles) of passenger-only track are being built to separate passenger and freight movements. This will free up the existing combined-use track for freight movements. A goal of 10 million 20-foot equivalent units (TEUs) carried by rail (now less than 3 million) has been established for China’s current 5-year planning period.
6. The Chinese central government has encouraged joint ventures to finance the nationalexpressway system, the intent of which is to stretch government funds to support a varietyof new modal investments. Consideration is also being given in some locales to how tolls can be used to influence truck routing.
7. Toll rates are comparable to those found in the United States and Europe, but the Chinese believe this does not reflect the economic reality of travelers in China, where per capita GDP is much lower. In some cases, the Chinese are trying to renegotiate concession agreementsto allow lower toll rates, offsetting lower toll revenues with longer concession time periods(from 30 to 50 years).

8. The national expressway plan is centered primarily on three major economic and political centers: Beijing, Shanghai, and the Pearl River Delta. In essence, the national expressway system and the national rail network will be the major means of connection between the political and economic centers of the country, reinforcing their importance in the economic future of China. Intermodal connection has been an important consideration in network design.

9. Trucking is the predominant means of moving containers to and from the ports, especially in the river delta manufacturing regions. The trucking industry consists mainly of small businesses (one to three trucks), which makes its contribution to China’s economic growth even more impressive. Enforcement of the standard vehicle configuration regulation is weak, and integration of technology into trucking operations appears to be limited.
10. Given the relatively large number of trucking businesses found in China and the intense competition for freight movements, it was not surprising to find that oversized and overweight trucks have become an emerging and important concern for transportation officials. It appears that Chinese transportation and enforcement organizations have just recently begun to implement national and provincial weight enforcement programs.
11. Chinese port productivity is the best in the world. Chinese ports operate 24 hours a day, 7 days a week, 365 days a year. Operational strategies are impressive—cranes that lift four TEUs, 20- to 30-minute truck turns, nine cranes working one ship, etc. New ports are being developed and the capacity of existing ports is being expanded rapidly.
12. Given the significant level of trade to the United States and current U.S. legislation, security was a growing concern to port terminal operators. The relatively new infrastructure at China’s ports allows terminal operators to build security measures into terminal operations, especially using technologies to screen outbound containers.
13. China has not progressed to the point of systematically managing its transportation infrastructure; it is still in the “build” mode. The scan team saw little evidence that this infrastructure was being designed with system management challenges in mind, such as truck weight and size enforcement. Nevertheless, in a few of the more mature areas experiencing significant congestion, transportation officials indicated a need to begin paying serious attention to system management.
14. Intermodal connectivity and landside access to Chinese ports are not approached differently or in a more sophisticated way than in the United States or European Union. Many new port facilities are located in large urban areas, yet the access to and from these ports involves traversing mixed-use roadways that will, in the future, present the same challenges now faced in the United States and European Union.
15. Rail access to maritime port facilities is not being built consistently into new port design. With the exception of the Port of Qingdao, which has no river access and is being looked at as one terminus of a rail-land bridge from Asia to the European Union and Russia, no other port facility was being built with on-dock rail. This is partly due to a perception by shippers and ocean carriers that container movement receives low priority on the Chinese freight rail network, which results in little pressure to improve or provide rail access to the ports.

Governmental Structure, Decisionmaking, and Analysis
1. China’s policymaking and implementation process identifies clearly specified national goals with corresponding performance metrics. However, local officials have leeway under this national policy to implement projects that also meet their local objectives. A national 5-year plan provides policy direction on what will be emphasized during the plan’s timeframe (China is in its 11th 5-year plan).
2. National transportation agencies have different modal responsibilities (e.g., Ministry of
Communications,* Ministry of Railways, Ministry of Construction, Central Administration of Civil Aviation). Because the performance of government officials is measured by results, attention is paid to measures of progress. National data on overall modal performance and the state of the economy are collected and analyzed. Data analysis is used to determine the extent to which goals are being met at different levels of government. Some officials referred to this as “results-oriented planning.”
3. The performance of local officials and governments is measured against national goals. For example, many noted that the most important metric for local officials is the degree to which economic growth occurs during their tenure, defined primarily as job growth. China’s tax policy also supports this goal because the tax revenue from the economic activity in a province stays, for the most part, in the province.
4. Although this scan did not conduct a systematic assessment of the capability of municipal government agencies to plan and provide for transportation infrastructure and services, every meeting with local officials included the staff members responsible for each mode. In other words, all of the modes were located in one agency, which encouraged the adoption of a multimodal systems perspective when looking at regional transportation investment.
5. In most cases, there was little evidence that carriers or shippers were asked for advice on national strategic transportation plans or investments. However, at the provincial or regional level, the inclusion of the private sector in tactical investment decisions was evident in the number of public-private partnerships.
6. Port development plans considered modal access strategies as part of the planning process, but multimodal port access did not always result (note comment 15 in the previous section about rail access to ports). The interesting aspect of this port planning was that the boundary of such studies encompassed a much larger area than that adjacent to the port itself. Access was a key concern.
7. Project development occurs much faster in China than in the United States. Transportation projects are viewed as a priority for economic development, so they move forward rapidly.
8. In keeping with the national policy of social harmony, government officials are concerned about the negative impacts of transportation facility operations and expansion on local communities. They provided examples of efforts to mitigate the impact when community displacement does occur.
9. Hong Kong’s role in the competitive market of the Pearl River Delta is evolving. New ports
*In April 2008, the Chinese government created a Ministry of Transportation that incorporates the former Ministry of Communications. Aviation, maritime, and highways are among the functions in the Ministry of Transportation.
The Ministry of Railways remains separate. The result is a transportation policy and development entity similar in structure to the U.S. Department of Transportation. nearby (along with dredging in the river to allow access to these ports for bigger ships), as well as new manufacturing development on the west bank of the Pearl River, will likely cause a shift in container exports to other ports. It remains to be seen how the market will adjust to these changing conditions, but it appears that Hong Kong’s relative position in global container flows could evolve in a different direction in the future.
Shipper and Carrier Perceptions
1. Many of the international ocean carriers and shippers the team met during this scan view the serious constraint in international trade and supply chain efficiency as being on the receiving end, in Europe and the United States. The prevalent perception is that terminal throughput in the United States and European Union is limited by terminal operational limitations, landside access capacity, growing road congestion, and protracted decisionmaking processes.

2. Shippers and carriers believe that the effect of a widened Panama Canal and increased transits through the Suez Canal will likely be more shipments heading to east coast U.S. ports, but that the west coast U.S. ports will still be the major destination for most transpacific containers.

3. Several shippers and carriers identified the “bunching” of vessel departures from Chinese ports (because of when merchandise arrives at the ports and when it is needed in the U.S. market) as the cause of a significant peaking problem. It was observed that a peaking in departures from China usually results in a peaking in arrivals at U.S. ports, especially
Los Angeles-Long Beach in California. Several shippers and carriers believe that this peaking phenomenon could be remedied by working with retailers, shippers, and manufacturers. How the Chinese Invest In and Operate Their Transportation System to Support a Growing Economy

1. China has a national transportation investment policy that is closely linked to its trade and economic policy. National transportation investment appears to focus on two major goals (besides military defense): strategies to foster social harmony among Chinese citizens and strategies to support economic growth, with the second goal supporting the first. The United States would benefit from adopting a national transportation investment policy that supports the nation’s economic health.
2. The Chinese central planning function is not a model that would work in the United States. However, the concept of locally executing a strategic network focused on national interests with national financing support (along the lines of the initial effort to build the U.S. Interstate Highway System) is worth considering. Such a system should use performance measures to monitor progress in developing and operating key elements of the national transportation system.
3. Many of the assets that work in tandem with the Chinese transportation system (port terminal development, logistics parks, etc.) are partially funded through private investment. In some cases, the return on this investment is not likely to be realized in the short term. Instead, it will take years for the investment to start producing net gains. However, companies made it clear that because the Chinese can make infrastructure investment decisions quickly and show progress toward improvement, they are willing to invest. This suggests that if transportation agencies in the United States are interested in encouraging more private investment in transportation facilities, they need to give greater attention to timely public sector decisionmaking. Agencies simply need to get to the decision point earlier.
4. The primary instrument of privatization in China is the joint venture. In almost all cases, private investors do not get a majority share of the investment (the exception being port terminals).
Government agencies or state-owned enterprises retain at least 51 percent control.
5. Chinese planning for intermodal centers, and indeed for regional transportation networks, adopts a systems perspective on performance and investment. In the United States, several multistate coalitions seek to coordinate multijurisdictional activity. To achieve systems-level coordination, more efforts along these lines will be necessary.
6. Air cargo is the fastest growing segment of freight movement in China. While it is stil only a small percentage of total tonnage, the implication to the U.S. transportation system of this growth in both air cargo hubs and belly freight is new stress on the transportation network at already-overcrowded U.S. airports.
7. National data collection in China provides a springboard for national transportation planning, investment, and performance evaluation. U.S. freight data systems should not only be continued, but expanded to provide the information needed for optimal transportation investment decisionmaking, especially given the important role that freight plays in the economic health of the Nation.
8. Finally, it was noteworthy that the Chinese transportation officials who met with the scan team were very high quality professionals and most often quite young. They were expert in the use of data and data analysis and knowledgeable about how their respective transportation systems fit into a much larger transportation systems perspective.