Tangshan to end movement of bulk commodities by truck

China's largest steelmaking city Tangshan plans to transport all iron ore and coal from ports to steel mills by rail, rather than truck, by the end of 2019. The change is likely to significantly reduce demand for trucks, which currently haul most bulk commodities.

The switch will cost around $1.67bn and will be implemented in two phases. Six dedicated railway lines will be laid this year, enabling five steel companies to end their reliance on trucks. More rail lines will then be built for another 10 steel companies next year, effectively moving all of the city's ore and coal shipments to rail.

Tangshan, in northern China's Hebei province, is served by the ports of Caofeidian and Jingtang.

The rail development plan is part of China's programme to end truck transportation of bulk materials for steel mills in the key steelmaking provinces of Shandong, Jiangsu, Hebei and Tianjin by the end of next year. The government wants to move cargoes to railways instead, to reduce emissions and road congestion.

China's environment ministry is planning to complete the switch in key steelmaking areas of Shandong province and the Yangtze river delta in Jiangsu this year, followed by Beijing-Tianjin-Hebei region by September 2019, Liu Dacheng, a professor at Tsinghua University, told state-owned media. But rail cargoes need to travel over 1,000km to become competitive with road transports, while trucks are still need for door-to-door deliveries, Liu said.

Rail transportation of bulk goods has strong political support and state-owned steel mills will take the lead in implementing the programme, Chinese financial firm CIMC Capital said. Transport efficiency will be affected and transportation costs will rise accordingly, it added. Fierce competition in the coal industry means the logistics changes will have a big impact on coking coal trade.