BYD & Shenzhen Port Group Deepen Cooperation on Clean Ports & Green Shipping Corridors

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BYD and Shenzhen Port Group recently signed an agreement to expand cooperation between the automaker and port operator. While this news largely flew under the radar, the scope of the agreement goes far beyond BYD’s home ports to develop international logistics and decarbonize global shipping.

As reported by Chinese shipping website HYQFOCUS (translated with Google), BYD and Shenzhen Port Group will “deepen cooperation in the export of roll-on/roll-off ships for cars, the construction of KD parts overseas preparation centers, international logistics of complete vehicles and KD parts containers, automobile supply chain and trade, and green port construction.”

In addition to construction and port logistics, they will increase efforts in “green logistics channels, international supply chain services, new energy refueling….” Or, as reported on the English language website Gasgoo: “building green transport corridors, strengthening international supply chain services, and supporting new energy bunkering.”

Shenzhen’s Xiaomo Port is intended to become both the domestic and international roll-on/roll-off (RoRo) shipping hub for new energy vehicles. The domestic shipping aspect is important, as inland and short sea routes are currently more suitable for electrification.

In addition, the Shenzhen Yantian Port and Hong Kong Kwai Tsing Port will be used as container shipping hubs, particularly for CKD (Complete Knock Down, or unassembled vehicles) and parts shipment, essential to global EV manufacturing expansion. These are already heavily electrified and automated ports. Extending from those hubs, “we will gradually build a dense maritime logistics network covering the world’s major automobile consumer markets, helping Shenzhen build a global international trade hub for new energy vehicles.”

The Importance of Green Corridors

Similar to early long-distance travel with an EV, decarbonizing shipping is going through a chicken vs. egg dilemma. You can build ships that use lower-emission fuels or even run on batteries. However, there needs to be infrastructure to refuel/recharge them. Having the infrastructure only at the origin, but not the destination, limits operating range. On the other hand, ports do not want to invest in the infrastructure if nobody uses it. In addition, it is far more effective to place infrastructure along routes where it is likely to be used, rather than trying to put it everywhere. As such, global collaboration becomes essential to shipping decarbonization.

As the Global Maritime Forum puts it: “Green corridors have quickly become central to the shipping industry’s decarbonisation plans. Green corridors, which are specific trade routes where the feasibility of zero-emission shipping is catalysed by public and private action, can accelerate shipping’s transition to zero emissions by testing and deploying fuels, vessels, and infrastructure in a coordinated way, generating the knowledge required to unlock the rest of the sector’s energy transition.”

Potentially, as infrastructure is developed, the technology evolves, and routes are established, we could see fully-electrified ships travelling from port to port, covering great distances without exhaust emissions. And once those corridors are established, the benefits could branch out to other ports.

The Benefits Extend Beyond BYD

7 of BYD’s 8 announced RoRo ships are already in operation, with the final ship anticipated to hit the seas by the end of the year. These ships were designed to operate primarily on LNG, which already (arguably) has some environmental benefit. However, they also have large batteries on board that allow the ships to operate on electricity during some circumstances. Those are now likely very limited circumstances. However, as charging infrastructure expands, more electrified operation is possible. But BYD’s ships are not the only ships poised to take advantage of the greener, more advanced ports.

However, while these efforts could go a long way toward decarbonizing shipping, BYD also has a lot to gain. Overseas investments, sales, and revenue are growing rapidly, and they can utilize the infrastructure development. BYD terminal trucks and other vehicles also stand to gain in the electrification of port operations. Meanwhile, BYD’s FinDreams Battery is offering an increasingly specialized range of applications. The batteries will likely help to power the ports, store clean energy to recharge ships, and store energy on those ships.

While BYD stands to gain from localized production of KD vehicles, this also helps to develop global manufacturing, particularly in emerging markets. As local supply chains develop, the composition of the vehicles is likely to shift to increasingly domestic content, as we have seen with past examples of assembly starting with KD vehicles.

However, even if BYD stands to gain from decarbonizing shipping and other logistics, the benefits extend much further. We all share the same atmosphere, but local pollution tends to be far more concentrated around ports. Particularly in developing countries, where capital is often limited. By extending port development to the emerging economies where BYD is expanding rapidly, those markets stand to significantly gain both economically and environmentally. And by building up green shipping logistics and infrastructure, global shipping can also realize the overall benefits.