Ningbo Port to feed off Shanghai's strength

PUBLISHED : Saturday, 04 September, 2010, 12:00am
UPDATED : Saturday, 04 September, 2010, 12:00am

Ningbo Port plans to tighten its partnership with rival Shanghai after Ningbo Port's initial public offering on the Shanghai Stock Exchange on September 14. The two neighbouring ports in the Yangtze River Delta are the world's two largest ports by cargo tonnage.

Ningbo Port has received approval from the China Securities Regulatory Commission to issue 2.5 billion A shares on the Shanghai exchange, from which the state-owned port operator hopes to raise at least 13.03 billion yuan (HK$14.88 billion).

Ningbo Port's strategy was to capitalise on the central government's policy to establish Shanghai as a leading international port by expanding its scale as a deepwater port and increasing its specialisation, said Ningbo Port's IPO prospectus.

'I see the two ports growing stronger rather than weaker going forward. In the past, there was a lot more rivalry between Shanghai and Ningbo, but at the end of the day, they don't need to compete fiercely because both are enjoying strong volume growth,' said Anderson Chow, Asia head of infrastructure research at Macquarie Securities.

Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council, said that if Shanghai and Ningbo developed aggressively, they might take some of Hong Kong's international transshipment business. In 2009, Shanghai was the port with the world's most cargo throughput at 590 million tonnes, with Ningbo second at 570 million tonnes and Singapore third, according to data by the Port of Rotterdam.

Excluding river cargo, Ningbo had the world's most cargo throughput at 577 million tonnes in 2009, with Shanghai second at 495 million tonnes, according to data by China's Ministry of Transport. Last year, Ningbo ranked eighth globally in container throughput with 10.26 million 20-foot equivalent units (teu), according to its prospectus.

During the first half, Ningbo's container throughput grew 34.4 per cent to 6.27 million teu, overtaking Guangzhou as China's third-busiest container port behind Shanghai and Shenzhen. On a monthly basis, Shanghai is the world's busiest container port, with Singapore second, Shenzhen third and Hong Kong fourth.

'Ningbo is stronger than Shanghai in bulk cargo. Because of its location, Shanghai still enjoys an advantage in containers,' Chow said.

Ningbo Port planned to add 5.5 million teu of new annual container capacity by 2014, said its prospectus. 'More capacity may lead to lowering terminal prices. It means operating costs will be lower, so Ningbo can afford to be competitive,' Ho said.

During the first half, Ningbo Port's net profit soared 60.4 per cent to 1.11 billion yuan, while revenue grew 62.9 per cent to 3.08 billion yuan.

The lead underwriter of Ningbo Port's A-share IPO is BOC International.

Bigger player

Ningbo overtook Guangzhou as China's No 3 container port

Ningbo Port's container throughput in the first half was 6.27 million teu, an increase of: 34%