Shanghai free-trade zone

Shanghai wants to expand container port

In another move to boost the city's free-trade zone, the development of deep-water berths at Yangshan is to capture more cargo traffic

PUBLISHED : Monday, 02 December, 2013, 5:19am
UPDATED : Monday, 02 December, 2013, 12:41pm

Shanghai has applied to the central government for permission to build a multibillion-yuan container port facility to further develop its free-trade zone.

The city plans to start the fourth phase of the expansion of Yangshan Port, and construction will begin once the National Development and Reform Commission gives the go-ahead.

According to Xu Wei, the chief of logistics with Shanghai Tongsheng Investment, the city's investment arm in charge of development at the deep-water port, the new phase of expansion will begin "sooner rather than later", in line with the central government's ambition to build a mini-Hong Kong in the country's commercial hub.

Xu declined to provide details such as the investment amount and timetable.

"Construction will start in compliance with the instructions by the NDRC," Xu told the South China Morning Post on the sidelines of a media briefing.

On the mainland, local governments must receive approval from Beijing before they can begin huge infrastructure projects.

Sources with the knowledge of the proposed expansion said the development of new berths would cost at least 10 billion yuan (HK$12.7 billion), to add annual capacity of 4 million 20-foot equivalent units.

Shanghai began a trial run in late September of its free- trade zone, which Premier Li Keqiang wants to use as a testing ground for further economic reforms.

Shanghai has been the world's busiest container port for the past three years, and the Yangshan deep-water port accounted for about 40 per cent of the container volume the city handled last year.

The free-trade zone is expected to help Shanghai boost international transshipment - cargoes handled in the zone will be transferred to other vessels bound for foreign destinations after temporary storage.

Goods stored in the free-trade zone are exempt from customs intervention, as the authorities aim to facilitate commodity flows.

International transshipment is a key factor used to gauge the level of internationalisation of a container port.

Last year, international transshipment represented 5.5 per cent of the container throughput in Shanghai.

The plan to expand Yangshan Port is in line with the city's goal of hugely increasing international transshipment volume, which could pose a threat to regional rivals such as Hong Kong and Singapore.

Shenyin Wanguo Securities said the free-trade zone policies would help Shanghai handle an additional 900,000 teu of "international transshipment" cargoes.

"The absolute figure wouldn't appear high initially," analyst Zhang Xilin said.

"However, based on the previous low base, the added volume would reflect the city's accelerated pace in vying for international transshipment cargoes."