Growing pains affect all things that develop quickly, and China is no exception. It’s all very well to churn out record amounts of clothes, furni-ture and toys for export, but It’s no good if those items can’t be shipped overseas due to overcrowded ports. To aid resolution of the problem, an innovative deep-water terminal off the coast of Shanghai is aiming to make the financial capital the biggest port city in North East Asia.
The Yangshan deep-water port is one of the largest projects of its kind in the world and will accept huge vessels not previously able to come close to the Chinese coast. The first phase of the project, which will see the open-ing of five berths, is scheduled for completion this November. Once the entire development is .nished it will consist of approximately 52 berths giving a container capacity of around 20 million tons (TEU). And with container traf.c in China rising by 30 percent each year, the portfis completion will be key to China re-alizing its dream of making Shanghai the major shipping hub of North East Asia.
The decision to build the new terminal was made after an analysis of the existing Shanghai port and its suitability to accom-modate a forecasted growth in container traffic. Shanghai’s position at the mouth of the Yangzte River means it handles the li-on’s share of all imports and exports in the region. The current port has seen explosive growth levels . around 29 percent each year for the past three years, thanks to rising export demand.
What makes this project stand out is its location. Most ports, unsurprisingly, are on the coast of a mainland, or upstream from the sea on a major river. But the Chinese have taken a very inno-vative approach and placed their port slap bang in the middle of the sea. So how do the goods reach land then? No problem . the 32 kilome-ter long Donghai bridge, completed in May this year, connecting to the Yangshan Islands solves the problem. The structure was built to connect big Yangshan Island, small Yangshan Island and the southern coast of Shanghai - the islands themselves are in fact under the jurisdiction of Zhejiang Province. The bridge is an eight-lane fixed bridge, but in order to allow ships to pass underneath two raised sections, one for 1,000 DWT vessels and another for 5,000 DWT ves-sels, were built.
But why not just build the entire structure closer to the shore? Well, two main problems exist. Shanghai already has port facilities, but it doesn.t have a big enough deep water port to allow bigger third and forth genera-tion container ships to dock. The depth of the Yangtze River estuary is only 7 meters, so larger ships can only move freely at high tide.
Also, Shanghai sits at the mouth of the Yangtze River, which is prone to heavy silt-ing, so Chinese planners decided to kill two birds with one stone by moving to a loca-tion away from a river mouth and with sufficiently deep water. The Yangshan port will be 15 meters deep, and will be able to handle container ships with 8,000 TEU. And, conveniently, the area acts as a natural harbor from Typhoons.
Co-chair of the European Chamber of Commerce in China Logistics Working Group Alex Tate says the new port is a unique proj- ect which would set the factory of the world on a very sound footing to support its huge export market. He also believes the move puts China ahead of its European and North American partners in terms of port capacity, and government cooperation for the logistics industry.
“We fully support this development which demonstrates the Chinese government’s seri-ous commitment to boosting its import and ex-port capacity . something which is lacking in North America and Europe,” says Tate. “This port is fundamental to the future export indus-try of China, and will free up space at Shanghai port and help the overall logistics flow in this region.”
According to Tate, the main issue is port congestion. “The current Wai Gao Qiao terminal in Shanghai is really stretched at the moment to say the least. It is a river port which means there are draft restrictions for vessels, but the new Yangshan terminal will allow the largest modern container ships to operate in the Shang-hai area.”
The .gures more than back up Tate’s state-ments. According to China Daily, Shanghai saw a record volume of 10.16 million TEUs up to July 2005, a 26.8 percent rise year-on-year. And after the first seven months of this year, Shang-hai sent abroad 48.15 million tonnes of cargo, a 28.7 per cent increase compared with 2004. Of the imports, 80 percent of containers came from overseas, a 28 per cent increase on the previous year.
Tate says the opening of the first phase of the port marked the beginning of exciting times for the logistics industry. “All of the major opera-tors will move in towards the end of this year and the beginning of next year. It’s going to be a state-of-the-art terminal which will increase ef.ciency as well as capacity. We are going to have more logistical options here and that can only be good.”
The Chinese government may offer subsi-dies in the first few years of the port’s op-eration to make sure all berths are filled. Tate adds that a large number of containers are manufactured in China and the new port will provide an ideal means to export this product.
One of the first firms at the new termi-nal will be Sinotrans. The Chinese logistics provider revealed in August its plans to build container yards and freight sta-tions at Yangshan. Sinotrans are mak-ing their presence at the new port in the face of what they see as increasing competition, thanks to China’s con-tinuing reforms.
“With the economic growth of China, the volume of containers handled by ports is increasing very fast, and many ports are almost working to their full capac-ity,” says Sinotrans spokesperson Angie Li. “To effectively release the pressure of certain ports, including Shanghai port, and also to tackle the problem of port congestion and improve the ef.ciency of logistics circulation, the construction of Yangshan port is of great importance.”
Sinotrans considers the port as a key to accelerating the opening up of lucrative markets in the hinterlands around Shanghai, which are currently not reaching their full potential due to Shanghai port being over-subscribed. “The construction of Yangshan port will accelerate the economic growth of the Yangtze River Delta, and drive the overall prosperity of all ports in the Yangtze area, and the development of the logistics industry as a whole,” Li says. “Presently, the logistics park around Yangshan port is already under construction and Sinotrans will keep a close eye on the related develop-ment and construction of Yangshan port.”
The new port is already creating spin-off developments around the edges of Shanghai. To complement the new facil-ity, the fishing village of Luchaogang, on the south coast of Shanghai, will be developed to support the terminal. The new .Port City. will essentially include a huge logistics center, warehousing fa-cilities, customs offices, and quarantine and transportation links to the highways and railways for cargo coming through the port, over the new bridge into the port city. Resi-dential and commercial buildings will be built with a projected population of 300,000.
The islands situated in the middle of Hang-zhou Bay have a small resident population who will be displaced by the port and relocated. In addition to the 32 kilometer bridge connecting the islands to the mainland there will be an on-shore terminal to house offices and other facilities that cannot .t onto the island site. Ex-tensive land reclamation work will be carried out as the Islands are small and hilly - further pushing up the project’s construction costs. Stage one is estimated to be costing around US$2.8 billion, and some experts are predict-ing that US$16-18 billion will have been spent on the entire 52-berth complex once it has been built.
Ideally, the port should have been built be-fore now, but planning and developing large infrastructure projects like Yangshan means years of surveys and feasibility studies before construction can begin. China Daily reported that ports in Shanghai saw an all-time high monthly freight volume of 39.78 million tonnes in July, around a 14 percent increase on the pre-vious month, underlining the need for the new terminal. Xu Peixing, director of the Shanghai Municipal Port Administration Bureau, says the unprecedented rises were due to the recent Chi-nese currency appreciation and the developing economy of the Yangtze Delta. The slight Ren-minbi adjustment lowered buying costs, which led to increased import levels. In particular, crude oil imports were boosted, with China’s rising energy consumption levels further fueled demands.
It’s the logistics industry that has to stretch the most to accommodate everyone else’s business whims, and its task has not been made easier by the lack of port capacity in the Middle Kingdom. Yangshan has the im-mediate potential to solve China’s logistics bottleneck.