PSA invests in China's rail container network

It acquires HK-based firm which owns 15.33% stake in China United Int'l Rail Containers

An aerial view of PSA International and its containers at Tanjong Pagar Terminal.
An aerial view of PSA International and its containers at Tanjong Pagar Terminal. PHOTO: ST FILE

Singapore-based PSA International is aiming for a slice of the expected major growth in China's railway container network.

The global port operator has invested in a Sino-foreign joint venture with a mandate from Beijing to develop and operate 18 railway container terminals across China.

PSA's investment in China United International Rail Containers Co (CUIRC) for an undisclosed sum was done through the acquisition of Hong Kong-based Luck Glory International, which owns a 15.33 per cent stake in CUIRC. This makes PSA the only global terminal operator with shareholding in CUIRC, the group said in a statement yesterday.

The 18 inland railway container terminals are strategically located at regional economic centres to form the core of China's intermodal transportation network.

Ten terminals are in operation: Kunming, Chongqing, Chengdu, Zhengzhou, Wuhan, Xi'an, Dalian, Qingdao, Ningbo and Tianjin.

Beijing-based CUIRC, set up in 2007, is part of national railway operator China Railway Corp. Joint venture partners include China Railway Container Transport Corp, NWS Holdings, China International Marine Containers (Group) and Deutsche Bahn Mobility Logistics.

The deal also marks the PSA Group's first foray into China's railway container terminal facilities, which extends its network in China beyond its 11 coastal container terminals in cities including Dalian, Fuzhou, Guangzhou, Tianjin, Dongguan, Lianyungang and Guangxi Beibuwan (Qinzhou).

PSA International group chief executive Tan Chong Meng noted that the project is a game-changer for PSA, and that it fits into the group's overall strategy for China.

"With our current presence in major China gateway ports, PSA is well-positioned to develop synergies with CUIRC to grow integrated sea-rail intermodal operations across the world's second largest economy," he said.

"I am confident that we will be able to forge strategic relationships with our partners, leveraging our complementary strengths to make the collaboration a success."

China's railway container sector carries only 2 per cent to 3 per cent of the country's seaport container volumes, compared with markets such as Europe and the United States, where the rail sector takes up 15 per cent to 40 per cent of container volumes.

The potential for further growth of China's railway container sector is supported by China's ongoing initiatives - such as the "One Belt One Road" and "Western Region Development Programme" - and progressive railway reforms, said PSA.

A version of this article appeared in the print edition of The Straits Times on October 13, 2016, with the headline 'PSA invests in China's rail container network'. Print Edition | Subscribe