Pinglu Canal could slash China’s annual logistics costs by $730m

It is also expected to cut maritime distances from inland Guangxi to ASEAN markets.

China’s $10.2b (RMB72.7b) Pinglu Canal, due to open by the end of 2026, is poised to deliver more than $730m (RMB5.2b) in annual logistics savings, according to a CGS International report.

It is also expected to cut maritime distances from inland Guangxi to ASEAN markets by roughly 560 kilometres.

Whilst cargo volumes are expected to rise as trade reroutes through the Beibu Gulf, shorter sailing distances are likely to compress freight rates, creating a volume-versus-yield trade-off for shipping operators.

Beibu Gulf Port, which handled more than 10 million twenty-foot equivalent units in 2025 and connects to over 200 ports across nearly 100 countries, stands to absorb incremental flows as inland provinces gain direct maritime access.

The report said the redistribution could ease pressure on Guangdong’s port cluster whilst diversifying China’s southern export channels.

Moreover, industrial demand from southwestern China—including electric vehicle and stainless steel production—relies on inputs such as Indonesian nickel and coal, as well as Malaysian rubber.

“Lower transport costs and improved bulk shipping efficiency could tighten supply chains and reduce input price volatility.”

In agriculture, time savings of about two days—based on typical sailing speeds—are material for high-value perishables. Guangxi imported 1.7 million tonnes of ASEAN in 2024, accounting for roughly one-third of China’s fruit imports from the bloc by value.

Meanwhile, Vietnam dominated these flows with 92% of volume and 80% of value, followed by Thailand at 6% and 18%, respectively.

The canal also alters competitive dynamics in manufacturing as lower outbound logistics costs are expected to increase the price competitiveness of Chinese goods in ASEAN markets.

Despite the scale of the project, capacity constraints—including limits on vessel size of up to 5,000 tonnes—mean the canal will function as an additional corridor rather than a substitute for existing Pearl River Delta routes.

Instead, its impact is likely to be felt most acutely in pricing, routing decisions and regional trade balances as companies recalibrate supply chains around a materially lower cost base.