2.9 Cooperation between the Ports of Dalian and Shenyang

BOX 2.9

Cooperation between the Ports of Dalian and Shenyang

Shenyang, the capital city of Liaoning province, developed during World War II as a railway hub and industrial base for the manufacturing of military equipment. At the dawn of the twenty-first century, it was connected via six railway lines to major Chinese cities and to the Democratic People’s Republic of Korea, Mongolia, and the Russian Federation. In 2003, the Port of Dalian invested in and converted part of Shenyang’s eastern railway station into a dry port. Its initial land area was 13 hectares (later expanded to 23). The dry port was originally set up to provide transport and logistics solutions for the automobile industries of Shenyang. The two main clients were BMW Brilliance Automotive Ltd. (a joint venture between Brilliance Auto Group and BMW) and SAIC General Motors Corporation Ltd. (a joint venture between SAIC and General Motors). The existing rail service between Dayaowan (the Port of Dalian) and Shenyang’s western railway station enjoyed a one-stop-shop at Shenyang West for customs declarations, inspections, and issuance and execution of bills of lading. The information systems for customs clearance and shipping schedules at the Port of Dalian are synchronized with those of the dry port. Shenyang’s dry port has joined the national Belt and Road Initiative.

The success of Shenyang’s dry port can be attributed partly to the backing of its major client, BMW Brilliance Automotive Ltd. The carmaker has been a long-time client of the Port of Dalian; it exports automobile parts through the Dayaowan container terminals and assembled cars via a nearby roll-on, roll-off terminal. The five trains per week that run between Shenyang and the Port of Dalian carry mostly auto parts and have maintained shipments of at least 200,000 twenty-foot equivalent units (TEUs) per year since 2010, with the dry port capacity gradually increasing to 300,000 TEUs to meet this demand. The dry port now handles rail traffic to and from European countries, at a frequency of five trains per week, carrying automobile parts and other cargo from the province of Liaoning.

BMW Brilliance Automotive Ltd. recently constructed a new factory to produce automobiles in Dalian, less than 20 kilometers from the Dayaowan port area. This move creates a new challenge for the dry port in Shenyang, given that automobile manufacturing may shift to the new factory and cut demand for dry port services in Shenyang.

(box 2.10) (Abdoulkarim, Fatouma, and Munyao 2019). And because many ports have overlapping hinterlands, the independent or cooperative construction of inland dry ports has become an important way to strengthen competitiveness and gain a foothold in new markets.

In addition to port companies, inland cities have also invested in dry ports, either jointly with rail or port companies, or independently. Ganzhou, Nanchang, Xi’an, and Xingtai are examples of cities that have substantially reshaped the supply of local goods, energized logistics, and improved local economic development through the construction of dry ports.

In the market-based dry port development model, coastal ports and inland cities form strategic partnerships to build dry ports that will bring benefits to both parties. One of the major advantages of dry ports is their ability to provide efficient logistics, especially in customs clearance. The relevant ministries have issued various policies and legislation to reform China’s logistics sector, including measures introduced by the General Administration of Customs that aim to simplify customs clearance procedures at dry ports for goods that must travel through different regions and jurisdictions (table 2.4). Under regional customs