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Drewry: China’s Waste Rules to Affect Container Shipping

Nearly 3% of world loaded container traffic, or around 4-5 million TEU, could be at risk from becoming landfill following China’s decision to turn away “foreign garbage”.

Having given notice in July 2017, China has placed stricter quality thresholds on a range of waste imports. The new rules were implemented on January 1 and will become enforceable on March 1.

Shipping consultancy Drewry said that China’s policy shift is bad news for ocean carriers that are tasked with moving the waste materials. Concerned that laden boxes of waste paper might stand on the quay in China for lengthy periods of time, pending further investigation of contents, several lines decided to tighten up their procedures for the acceptance of bookings in the first place.

According to one major carrier that Drewry spoke with, the company was braced for some volume loss after China gave notice to the WTO in July, but the impact on backhaul shipments “has been negligible so far.” That situation does not appear to be limited to that single line as trade flow statistics out of the US and Europe did not veer off normal seasonal trends at the back end of 2017.

While the disruption to shipping might have been limited thus far, the carrier source did concede that they remain concerned about the situation as waste products can make up half of backhaul voyages. The carrier is most fearful for the most heavily-exposed westbound Transpacific market.

“It is unclear at this early stage whether China’s new waste quality thresholds can be attained, which puts significantly more tonnage at risk of being incinerated or put into landfill rather than boarding containerships. Other backhaul cargoes, particularly foodstuffs, will ease the pain for shipping lines,” Drewry concluded.

The Chinese government says that turning away “foreign garbage” will protect the environment. But analysts seem to point out that most of the “foreign garbage” which is consumed by China’s recycling industry comes from domestic sources, not imports. As for the millions of tonnes of waste that will soon be blocked at China’s border, some of the high-quality waste will find buyers in other countries such as Malaysia, Vietnam or Indonesia. The rest will probably end up in a landfill.

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