ADB $150 Million Loan to Overhaul Transport and Logistics in Chongqing
BEIJING, PEOPLE’S REPUBLIC OF CHINA (16 November 2016) – The Asian Development Bank (ADB) has approved a $150 million loan to develop an efficient goods handling system for Chongqing that integrates logistics for road, water, and rail transport.
Chongqing, situated along the upper reaches of the Yangtze River in southwest People’s Republic of China (PRC), is already an important transport and logistics hub, comprising extensive networks of railways, expressways and inland waterways. In 2015, the city handled 1.1 billion tons of cargo at 24 locations within the inner city or inner ring road.
“The movement of freight trucks among the various logistics sites in Chongqing worsens traffic congestion, creates air pollution, and slows down the delivery time for goods,” said Sharad Saxena, an ADB Principal Transport Specialist. “The city has great unmet potential as a regional transport and logistics hub that if tapped, will promote economic growth in central and western region of the country.”
To cut down on congestion and delays in unloading goods at the separate logistics centers, the government plans to create new logistics parks beyond the inner ring road and combine all logistics functions in one location to integrate the various modes of transport. These improvements will reduce logistics costs, which in turn should help lower prices of consumer goods.
For example, growing traffic demand on the 11,200 kilometer Chongqing-Xinjiang-Europe International Railway Corridor needs upgraded logistics to handle transshipments and related processes such as sorting, packaging, and storage. Launched in 2010, the route forms a new Silk Road from Chongqing to Duisburg in Germany, moving goods in 16 days as opposed to 40 days by sea.
Chongqing is also one of the most important inland ports in the PRC. But a limiting factor for cargo is the capacity of the ship lock, where container ships have to wait for several days in order to pass the Three Gorges Dam. To avoid these delays, shippers unload goods upstream of the dam and transfer goods to their final destination by road. The introduction of roll-on roll-off (Ro-Ro) ships would make loading and unloading faster, reduce labor, equipment and time, and enable inland waterways to be used more for cargo movement.
Logistics information systems in the PRC are also not fully developed, providing few means of tracking cargo and leaving the different modes of transport unintegrated. Poor information availability creates further bottlenecks for logistics and results in higher costs and delays.
The project—ADB’s third urban development project in Chongqing—will develop a transportation logistics park to handle international freight movements, including a road-rail hub that will provide a starting point for the Chongqing-Xinjiang-Europe line. Included in the park will be a hub housing various logistics companies to carry out transactions as well as a financial exchange center providing services such as insurance, financing, and guarantees.
The project will also construct a logistics park in the south of the city to serve as the main distribution center in Chongqing for freight transfer, customs inspection and a free trade zone.
To improve waterway connections, the project will build energy efficient Ro-Ro ships of about 4,000 tons each together with tractors and trailers for unloading to operate out of Guojiatuo Port in Chongqing as well as in Yichang city.
In addition, the project will establish logistics information system to provide real time information on freight movements and help communications between freight forwarding companies and the transporters. This will serve as the integrated logistics information system for the entire city of Chongqing.
The project will benefit about 2.9 million people living in the three project districts and more indirectly 8.19 million around the city.
The total cost of the project is about $427 million, of which more than $277 million will be met by the government. The project is due for completion around September 2022.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.