Over the past five years, the Shanghai Municipal Government has kept the goal of developing its port and shipping industry in mind and has undergone a series of reforms to form a good foundation for the future development of the centre. Following is a summary of the developments at the Shanghai port and the blueprint for shaping Shanghai as an international shipping centre, and its impact on Hong Kong.

Shanghai port has been the first container port in China and its infrastructure, container throughput and economic importance surpass all other ports in the country. Currently, Shanghai port has 145 berths of which 75 can serve vessels of over 10,000 tonnes. In 1999, the cargo throughput of Shanghai port reached 186mn tonnes with 4.22mn TEUs. The annual design throughput of the port is 4.8mn TEUs. At present, it operates more than 20 international container liner services and over 100 feeder service routes across China. The port receives an average of 800 vessel calls per month and has the capacity to handle fourth generation container vessels of 4,600 TEUs.

The developments in Shanghaiˆqs port industry in recent years:

Shanghai Container Terminal Ltd - Joint venture between Shanghai Port Authority, Huthchison Whampoa Group and COSCO Pacific (share ratio 5:4:1). Ten berths were built on the bank of Huangpu River with annual capacity of 1.7mn TEUs.

Phase 1 of Waigaoqiao Container Terminal - Total coastline measures 900m long, covers an open yard of 500,000sqm and is backed up by three berths designed for 35,000-tonne vessels. The designed annual capacity is 450,000 TEUs. In March 2000, the Shanghai Port Authority, Hutchison Whampoa Group, COSCO Pacific and Shanghai Industrial Investment reached a joint venture agreement (share ratio 4:3:2:1) on the management of Phase 1 of the Waigaoqiao Terminal under the Shanghai Pudong International Container Terminal Ltd.

Phase 2 of Waigaoqiao Container Terminal - Phase 2 commenced operation in September 1999. The terminal is equipped with three berthing spaces designed for 35,000-tonne vessels each. It is 900m long with 1mn sqm of container yard and annual capacity is 600,000 TEUs.

Phase 3 of Waigaoqiao Container Terminal - Phase 3 is still under construction with designed annual cargo capacity of 400,000 TEUs. The planned coastline of the terminal is 680m long and two berths to accommodate 35,000-tonne vessels each and a container yard of 500,000-700,000sqm. In addition, the Shanghai Port Authority also plans to build more than 30 container berths with 6.5mn TEU annual capacity in Wuhaogou in Pudong.

The blueprint projects that Shanghai ports will handle a cargo throughput of about 200mn tonnes in 2005 and 280mn tonnes in 2010, with container throughput at 5.5mn and 8mn TEUs respectively. With the advantages of a well-developed economic hinterland, it is anticipated that the Shanghai ports' annual container throughput will reach 7.5 to 8mn TEUs in 2005. However, in view of natural restrictions of Yangtze River estuary and Huangpu River, the dredging works of the channel will be a time-consuming project and involve huge investment costs. In addition, due to the insufficient back up waterfront for future deepwater ports, the further expansion of the Shanghai port will be affected.

International shipping centre

Along with the aim of establishing Shanghai as an international shipping centre into the core of the Far East economy, the Shanghai Municipal Government has planned the development of Pudong new district. In the past five years, the Ministry of Communications and Shanghai Municipal Government has invested manpower and resources to speed up the progress of development. Experts from various fields such as economic, shipping and architecture were invited to conduct in-depth studies on the necessity, urgency, developmental strategies and targets of the programme. Comparison and analysis on different proposals were also carried out. After a lot of preliminary work, the results are the following basic targets:

The programme has to be finished within the next five to ten years. Because of Shanghai's tremendous economic growth, the port now faces significant historical opportunities and challenges and faces keen competition from ports of neighbouring countries like Pusan, Kaohsiung and Kobe. If the new deepwater ports cannot be completed on schedule, majority of the containers from Yangtze River will be transhipped elsewhere which in turn will deteriorate the status of Shanghai as an international hub.

The construction of international deepwater container hub port is the core of the project. According to the plan, Shanghai must have a deepwater port with a -15m draught by 2005 which can handle 5-5.5mn TEUs annually and offer more than 200 direct shipping services for international sailings.

Shanghai International Shipping Centre will also serve as a trade, shipping, information and logistics centre as a whole, and to achieve this, here are the major strategies involved:

The Shanghai Shipping Exchange was founded in Nov 1996, as an associated organisation of the Shanghai International Shipping Centre. The services it provides include facilitating transactions between carriers and shippers, including sales of vessels; the release of container tariff figures on a regular basis; providing "one customs three inspections" service for members; enhancing the growth of shipping industry; adopting the tariff enacted by the Ministry of Communication; building up a wide network and channel of information.

The Shanghai Aggregated Ports Management Commission was established in Sept 1998, as a cross-district administrative office for the container ports in Shanghai. The commission is responsible for the aggregated ports' management and planning, division of labour as well as co-ordination and development, with the aim of enhancing the growth of these ports. The area of the Shanghai aggregated ports covers Wusongkou of Shanghai city, Yangtze River of Jiangsu Province, Zhejiang Ningbo and the waterfront inside Zhoushan district. Table 1 shows the container throughput of Shanghai aggregated ports from 1990 to 1999.

The shipping centre project is limited by the shallow draught of the Yangtze estuary. After several years' studies, the State Council gave approval for the Ministry of Communications (MoC), the Shanghai Municipal Government together with the Jiangsu province to launch a dredging programme for the channel of Yangtze River. The progamme will be carried out in three phases within 10 years. Upon completion of the programme, the 48 km channel will be expanded to 300m wide and -12m deep. Phase 1 will take three years to complete at a cost of US$3bn. By 2001, the channel will be deepened to -8.5m which can cater for feeder container vessels of 700 TEUs, first generation container vessels and 30,000-tonne vessels. Phase two will also be completed within three years and will cost $8bn. After completion of the phase two, the channel will further be deepened to -10m. The port will be able to handle first and fourth generation container vessels and 50,000-tonne vessels. Phase 3 will last for 4 years at a cost of $2bn and upon completion, the draught of the channel will reach -12.5m to accommodate third and fourth generation container vessels, post-Panamax container vessels and 100,000-tonne vessels. Phase 1 started in early 1998 with satisfactory progress.

The MoC has invited proposals from Jiangsu province, Zhejiang province and the Shanghai city on the location of deepwater port. The Water Planning & Design Division of the MoC gathers the proposals, and in March 199, the China International Engineering Consulting Co held a meeting on "The location of Shanghai International Shipping Centre Deep Water Port". The following proposals were submitted:

Jiangsu province's proposal is to dredge the channel of Yangtze River estuary and build 20 berths near the -12m waterfront of the Tai Cang Port. According to the proposal, the port will be 5,400m long with annual design throughput capacity of 5mn TEUs and can handle 40,000-tonne vessels annually.

Zhejiang province proposed to build a deepwater port zone in Daxiedao of Beilun which will form part of the Shanghai International Shipping Centre.

Due to the lack of a deepwater front in Shanghai, the city proposed to construct the deepwater port in the area between Dayangshan and Xiaoyanshan Islands adjacent to Shanghai, in Zhoushan city of Zhejiang province.

The Water Planning & Design Division of the MoC has proposed that Shanghai serve as the core of economic, finance and trade, taking advantage of the natural conditions of both Jiangsu and Zhejiang. The resulting plan is to build a deepwater port in Taicang Port of Jiangsu that can serve third and fourth generation container vessels; and then to build a deepwater port in Daxiedao in Ningbo city, Zhejiang that will be able to berth fifth and sixth generation container vessels.

The Shanghai Municipal Government's plan is to build a deepwater port with -15 m draught. Preliminary studies conducted on Dayangshangang and Xiaoyangshangang show that the Yangshan project is feasible. The Shanghai Municipal Government has given the plan full financial support.

Yangshan deepwater port

Since 1996, the Shanghai Municipal Government has invested over $20mn on the preliminary work of the project and invited more than 3,000 experts from over 200 design, scientific and research units to participate in the studies of the construction works, including the necessary criteria of the port and feasibility of the project.

Dayangshan and Xiaoyangshang cover an open yard of 6.5 sq miles, which is some 27.5km from Luchaogang in Shanghai. Dayangshan and Xiaoyangshan have more than 90 islands and reef. The first stage of the Yangshan project includes the building of the Lu Yang Bridge that will link Shanghai Luchaogang, Dayangshan and Xiaoyangshan Islands as well as the construction works of the phase 1 of the container terminal. The cost is estimated at $11.5bn and will take four to five years to complete. The bridge will be 30km long with four lanes and will cost about $5.6bn. The Shanghai Municipal Government will be responsible for all the investment plans of the bridge and the bridge will be designated as an urban facility with estimated toll fee at about $180 per vehicle. Meanwhile, the Design & Consulting Corp of the MoC will be responsible for the overall planning of Yangshangang.

The first stage of the container terminal will see the opening of a 1,600m long quay and five deepwater berths with handling capacity of 1.8 to 2mn TEUs annually. The investment cost will be about $6bn.

The Yangshangang project will cover an open yard of 20-22 sq km. The coastline will be about 20 to 22 km long with -14.5 to -15m draught whereas the channel will be at -15.5m deep. There will be 50 deepwater berths with designed annual capacity of 10mn TEUs. Estimated investment cost is about $40 to $50mn.

Impact on Hong Kong

Shanghai International Shipping Centre is located at the convergence point between the eastern coast of China and the Yangtze River. It enjoys excellent geographical locations. Its direct economic hinterlands include the Yangtze River Delta area of Jiangsu-Zhejiang-Shanghai. It also provides transshipment services for the middle and upper banks of Yangtze River including Xichuan, Zhongqing, Hunan, Hubei, Jiangxi, and Auhui. Table 2 shows the projected container throughout in the Yangtze River Delta and the districts in the middle and upper Yangtze River by the Planning Corp of the MoC.

Hong Kong, the Far East shipping hub, has an economic hinterland that covers Guangdong, in particularly the Pearl River Delta. About 70% of containers handled in Hong Kong originate from or destined to Guangdong province. With different cargo sources, there is no competition between the ports of Shanghai and Hong Kong.

In recent years, the number of transhipped containers from Shanghai via Hong Kong accounted for 20% of the total container throughput of Shanghai. For example, based on 1999 Shanghai throughput figures, of Shanghai's turnover of 4.21mn TEUs, about 1mn TEUs were transhipped via Hong Kong and comprised about 1/16 of the 16.2mn TEUs handled by Hong Kong in 1999. If the Shanghai throughput reaches 8mn TEUs in 2005 and we assume that the 20% transhipment cargo remains unchanged and all containers are shipped directly from Shanghai, Hong Kong will stand to lose only 1.6mn TEUs.