Future is shipshape

PUBLISHED : Wednesday, 23 May, 2012, 12:00am
UPDATED : Wednesday, 23 May, 2012, 12:00am


With three of the mainland's largest ports within 300km of each other, competition between the ports of Ningbo, Zhoushan and Shanghai has transformed the region into one of the world's largest areas for processing cargo.

When Ningbo and Zhoushan ports merged in 2006, the combined entity became the world's second-largest port. Today, it continues to thrive, drawing new investment and logistics opportunities to the region.

The sheer scale of operations is mind-boggling. Arriving and departing ships conduct trade with more than 500 ports in nearly 100 countries and regions. The port has 191 operational berths, with more in the pipeline.

Last year, Ningbo Port handled 385 million tonnes of cargo, up 19.2 per cent from 2010, with container throughput increasing 13.7 per cent to 15.2 million units, the third largest on the mainland and sixth in the world.

The merger simultaneously vaulted Ningbo-Zhoushan into the top tier and gave it a forward-looking strategy. 'With Ningbo and Zhoushan merging, there is a co-ordinated plan for capacity expansion, which is good for establishing market order in the region,' says Lee Won-joon of management consultancy Accenture's infrastructure and transport practice.

Not content to rest on its heels, Ningbo-Zhoushan Port issued an initial public offering (IPO) in 2009, raising 7.4 billion yuan (US$1.1 billion) when it went public on the Shanghai Stock Exchange. The port has used the funds for expansion and capital investment.

The IPO also compelled the company to clarify its state and future plans. Going public made the company more transparent to investors, according to Lee, which is of increasing importance for investors in the mainland market.

The port's vault into the top tier allowed the company to shift resources away from a chase for volume and towards profitability. Today, port authorities are working to leverage analytics to identify profitable businesses, Lee says.

It has not been all smooth sailing. The global financial crisis and slowed mainland growth has created new challenges beyond the top-level impact on volume. Customers have not shied from using the doldrums to attempt to wrest more favourable terms for the port's services.

Regional competition and macroeconomic conditions have compelled Ningbo-Zhoushan Port to anticipate and respond to the needs of its direct customers (shipping lines) and customers. The massive investment in mainland transport infrastructure and shifting production zones means that it is important for ports to understand these shifts and canvass cargo owners, Lee says.

Port authorities will continue to look for ways to streamline internal and port operations to improve efficiency and productivity. Lee says it will also have to find a path to sustainable growth by 'reaching cargo owners in the hinterland and creating stickiness for them'. If it is to realise its goal of becoming the world's largest port, it will also have to find new customers and transform those contacts into long-term relationships.

Finding new companies and markets is part of the agenda. Exports to Brazil, Russia, India and South Africa reached US$312 million last year, up 17 per cent from 2010.

Ningbo-Zhoushan will maintain its focus on its present customers. Lee says Brazil, Russia India and South Africa will 'grow in significance, but for the near future it will still be the United States, Europe and Asia that dominate the major share of throughput'.