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Peggy Sito

Improved infrastructure and port facilities and lower costs are expected to help Shenzhen become a more serious contender to Hong Kong's more mature port operations.

Yantian - Shenzhen's biggest port - is one of the mainland's largest container ports and has the most rapid growth. It is tipped to be the strongest rival to Hong Kong in the next decade.

Yet people in the industry say that, despite its impressive growth, Yantian by itself or even all Shenzhen ports together are too small to compete with Hong Kong in container traffic.

According to the Hong Kong Shippers' Council, last year the SAR maintained its position as the world's busiest container port. It had a throughput of 18.1 million teu (20 ft equivalent unit).

By comparison Yantian moved 2.15 million teu last year.

Shenzhen expects this year's throughput to reach 4.6 million teu, with more than a half handled by Yantian.

Helped by its lower costs and improving port facilities, Yantian has experienced rapid growth in the past few years.

Last year it rose 35.2 per cent from 1999, while Hong Kong recorded only an 11.7 per cent rise in the same period. Industry insiders said mainland ports, especially Yantian, were becoming more competitive.

The deep-water container port was jointly developed by the Shenzhen Yantian Port Group and Hong Kong partners including Hutchison Whampoa.

The venture has begun two development phases, with a third phase in planning, designed to turn the port into a high-ranking international-class project.

'Cosco Container Lines' recent extension of its China-Northwest Europe services directly to Yantian has shortened the transport time. That could increase the potential threat to Hong Kong,' said Simon Mok, director of Hong Kong-based electronic appliance manufacturer Raymond (Panyu Nansha) Electrical Appliance Development.

The manufacturer, which makes appliances mainly on an original equipment manufacturing basis, ships nearly 1,000 teus to Europe and the United States every year.

Last week, Cosco Container Lines, an unlisted unit of the mainland's largest shipping company Cosco Group, added Yantian as a direct port in its China-Europe route.

The company also upgraded their fleets thus shortening the delivery period from Yantian to Europe by four days to 22 days. This was a similar time as for shipping products from Hong Kong to Europe, Mr Mok said.

But Yantian was more attractive due to lower inland freight costs, he said. These are costs which vendors are required to pay for moving goods from factories to ports. Transporting a standard container from Panyu, south of Guangzhou, to Hong Kong costs HK$4,200 but to Yantian the cost is 2,300 yuan (about HK$2,155).

'We will persuade our clients to use Yantian port as a way to cut costs,' said Mr Mok.

'We hope that more than 70 per cent of our containers will be shipped from Yantian, instead of Hong Kong.'

Some of the company's clients also preferred to ship their goods from Yantian in the light of the short distance between the production base and the port.

Cosco Container Lines deputy managing director Chen Jingde said in terms of facilities and regulations, Yantian so far was not strong enough to pose a threat to Hong Kong which still outpaced Shenzhen in many areas such as foreign trade policy and better customs inspections.

But it would grow to become a a bigger threat when more facilities were built and the regulations and administration process streamlined.

Cosco Pacific, listed on Hong Kong's red-chip board, has a minority stake in the first and second phase of Yantian in conjunction with Hutchison.

Mr Mok said the major reason Yantian was lagging Hong Kong was limited services.

He cited Hong Kong's tight shipping schedules to the US' West coast against Yantian's three times a week.

He also raised concerns about the integrity of mainland officials and complicated customs inspection processes in the mainland port.

However, industry analysts said Shenzhen ports, especially Yantian were growing fast, bolstered by the government's heavy investment.

Shenzhen is to invest 15.6 billion yuan in 13 construction projects, including Yantian port phase three and Shekou Port Phase Two, during the next five years - more than a quarter of all the mainland's port spending, according to the China Daily.

Graphic: yan22gbz



Shenzhen throws down the gauntlet to SAR