Report on the Ports of Shanghai

The ports of Shanghai are as important as the urban facilities in terms of their contribution to Shanghai's economy. Port and related activities generate a large amount of commercial activity and serve as a key gateway for international trade coming into and leaving China.

With a history of tight government control of ports, Shanghai faces two areas of difficulty in the development of its port facilities. First, a number of the established service agents are Chinese state owned enterprises with poor service performance. Second, many port facilities are old fashioned, too small, too distant from urban areas and generally are in need of upgrading. Road and rail links need upgrading too.

Shanghai city planners are permitting the concurrent development of a series of ports in Shanghai in an effort to distribute the in-land transport bottlenecks around the city. Some of the port facilities focus on river traffic only, but a Yangtze River dredging program is under way to allow ocean going vessels all the way to Wuhan, whence the same vessels are to be able to go all the way inland to Chongqing after completion of the massive Three Gorges Dam (assuming that subsequent silting does not foil the plan). If the river dredging program works, the importance of Shanghai as a gateway for international trade would diminish. However, no such dredging program has ever worked for long and Shanghai is developing its numerous port facilities without much reference to the possibility of a downturn in traffic after the Three Gorges Dam opens.

Located along the mouth of the Yangtze and Huangpu Rivers are the Shanghai Container Terminals at Baoshan; Waigaopiao Container Terminals, phases I-III at the northern end of Waigaoqiao opposite Changxing Island, and Waigaopiao Container Terminal phase IV at the southern end of the Waigaoqiao zone. Not far from the Huangpu River, closer to the city centre, are offices for Shanghai Container Terminals Limited, Zhanghuabang Terminal (Container) and Jungonglu Terminal (Container).

The deep water ports are located several kilometres out to sea along a series of very small islands well off Luhu Terminal, starting midway between Luhu Terminal and Jieshan Island, and running northeast of Jieshan Island. These ports are eventually to be connected by Luyang Bridge, one of China's most ambitious bridge projects.

Along the northern and eastern coast are Taicang Terminal at the north, opposite Chongming Islang, Waigaoqiao Terminal, Wuhaogou Terminal to the south of that, Luhu Terminal considerably to the south of the Pudong International Airport and air cargo centre, and Jinshanwei, Zhapu and Haiyan farther south along the coast, and Beilun Terminal much farther south opposite Zhoushan Island.

Ports and their associated facilities have for a long time been state owned in China, originally owned and run by the central government, and in recent years by the local government bodies. This sector has begun cautiously to open to foreign participation. Foreign developers face the challenges of broad geographic dispersal of the ports and their substantial distance from urban facilities.

The port of Shanghai is China's biggest (other than the port of Hong Kong). Shanghai had almost twice the throughput tonnage of its nearest Chinese competitors Ningbo and Guangzhou in 1999 according to statistics of for Ministry of Communications reported in Port Weekly, International Business Daily, 20 January 2000. (204,400,000 tons reported throughput). Container throughput was also much higher than the nearest Chinese compatitor (the port of Shenzhen, with TEU throughput of 5,612,000 compared to Shenzhen's 3,959,400).

The other main China ports are in the north on the Bohai Bay (in the city of Dalian) and in the South in the general area of the Zhujiang River and around Guangdong province, particularly in Shenzhen.

Opportunities for Foreign Participation in Port Development and Management

Chinese port management has shifted from central control to local government management. Port taxes and fees are supposed to remain centralized, though this policy has not interfered with the local imposition of additional fees of one sort or another. Foreign participation in port development and operations was clarified in the 1986 State Council Provisional Regulations on the Preferential Treatment of Construction of Port Terminals by Sino-foreign Joint Ventures in China. By 1998, 59 foreign financed port projects were approved in various placed in China, including a total investment of US$2.6 billion, and a significant number of joint venture container berths.

Policy for Development

The tenth five year plan (2001-2005) focuses on updating port facilities and developing specialized berth facilities for crude oil, iron ore, etc. Shanghai is among the regions targeted for the construction or upgrading of deep water berths. Highway connections to the on-shore port facilities have recently been completed. A new rail system is due to be built to facilitate distribution from the port areas to the rest of China.

Major players

The most active container shipping company in Shanghai is Maersk (15% market share in container shipping), followed by Costo (14%), OOCL (12%), APL (10%), China Shipping (7%), P&ON (7%), Hanjin (5%), MOL (4%), CMA (4%), Evergreen/Uniglory (3%), Sinotrans (3%).

The joint venture integrated logistics companies handle the rest of the shipping transaction: ST Anda (Sembcorp Logistics), APL Logistics (the logistics arm of Neptune Orient Lines), Danzas, TNT, Maersk Logistics and Inchcape (whose shanghai based domestic distribution network has been operating since the 19th century), and a few in-house logistics operations (notably Haier, PG and Tingyi subsidiary Tingtong) also take a noticeable share of the market.

The Port Administration Division of the Ministry of Communications is the central level government body in charge. The local port administration is in charge of day to day management. Port infrastructure projects are under the supervision of the Capital Construction Administration Division of the Ministry of Communications as well as the State Development Planning Commission (in charge of approving port projects with more than RMB200 million in investment or capable of servicing more than 1 million tons throughput). Local chapters of the China Ports and Harbours Association are influential in the drafting of regulations and the introducing of projects for foreign investment.

China's largest port engineering contractor is the China Harbour Engineering (Group) corporation. Sinotrans is the largest freight forwarding company and the second largest shipping agent (according to its own estimate).

For further information on this please contact Luke Filei on [email protected] or +86 10 6590 0389 in Beijing or +86 21 6289 6363 in Shanghai.