Two decades ago, Shanghai’s ambitious goal was to transform itself into an international metropolis with world-class financial and shipping centres on a par with Hong Kong. Mainland China’s most developed city, capitalising on the thriving trade between the country and foreign economies, envisioned creating a busy port and a gateway for global business as it shelled out billions of dollars to build berths, deepen rivers and increase handling capacity. To date, the efforts appear to have paid off. The Port of Shanghai has become the world’s busiest container port in terms of volume, handling 37.1 million 20-foot-equivalent units (teus) in 2016, up a scant 1.6 per cent from a year earlier. But it was enough to ensure Shanghai retained the title of the world’s No 1 container port for the seventh consecutive year. Piggybacking on the Yangtze River Delta, the mainland’s most affluent region and home to thousands of export-oriented companies, Shanghai Port has seen buoyant cargo growth as Chinese-made clothes, leather bags and electrical appliances were snapped up by foreign buyers over the past two decades. In comparison, Hong Kong Port’s container throughput last year hit 19.6 million teus, 47 per cent less than its Shanghai counterpart. “Shanghai Port is the top beneficiary of China’s booming trade and rising economic might, and the largest container volume worldwide is proof of the [region’s] rapid economic growth,” said Lu Ming, an agent with Shanghai Ocean Shipping Agency. “However, Shanghai hasn’t established itself as an international shipping hub yet.” In 2016, only 7.2 per cent of cargo handled via the Shanghai Port fell into the category of international transshipment – defined as cargo that is sent onwards to other ports in Asia. In Hong Kong and Singapore, the more established shipping centres in Asia, international transshipments account for more than 50 per cent of their total container throughput. In August 2016, Shanghai municipality published a blueprint for the city’s economic development in which it set a target of 15 per cent for international transshipments by 2040. Shipping industry officials said the efficiency of loading and discharging cargo at the Port of Shanghai has improved over the past two decades. But they have lobbied local authorities to further cut red tape in customs procedures and oversight to boost cargo flow and processing of goods in Shanghai amid the ambitious goal of creating a Hong Kong-like free market embraced by global businesses. In 2013, Shanghai launched the mainland’s first free-trade zone, which included part of Yangshan deep-water port, as a way of reinforcing its efforts to become a global financial and shipping centre. The city government has been constantly touting its progress in streamlining the customs process, reducing the time needed for carriers and cargo owners to complete their documentation. However, two senior officials with international shippers said the city’s custom clearance system still lags far behind Singapore and Hong Kong. For example, Chinese exporters have to go through different procedures imposed by authorities for commodity inspection, quarantine of animals and plants, and customs clearance before receiving approval to ship their goods abroad. Hong Kong’s port seeks new role amid mainland China competition and decline in container throughput Industry observers say the cutting of customs red tape could effectively improve logistics services which would speed up cargo flows. That in turn would encourage global transportation and manufacturing businesses to increase their investments in Shanghai. Ioana Kraft, the general manager of the European Union Chamber of Commerce’s Shanghai office, said recently that reforms related to port development, particularly loosened customs oversight, were anticipated by European businesses operating in Shanghai, which could in turn encourage more trading companies to do business with the mainland’s commercial capital. “The Shanghai government, fully aware of the importance of building both ‘hardware’ and ‘software,’ has been making efforts to attract vessels from around the globe to call on the Port of Shanghai,” said Xiao Yingjie, president of the Merchant Marine College at Shanghai Maritime University. “The focus is on how to ease port congestion and avoid gridlock in traffic.” An advisor to the local government, Xiao played down fears of rivalry between Shanghai and other ports along the Yangtze River Delta, such as Ningbo in Zhejiang province. “Competition is not inevitable,” he said, explaining that ports could focus on different market segments. “In its efforts to build a world-class port, Shanghai can attract not only container carriers, but cruise operators banking on the country’s booming tourism market.” A Shanghai port authority official, who asked not to be identified, said the city has a lot to learn from Hong Kong in terms of planning, management and services despite the fact that two decades of construction and operations have seen it outgrow the special administrative region in terms of volume. In the early 1990s, Hutchison Port Holdings Group, a subsidiary of billionaire Li Ka-shing’s conglomerate Hutchison Whampoa, set up a joint venture with the Shanghai government-owned port group to become the first operator of modern container terminals in the city. “I am pessimistic whether Shanghai will ever become a real global shipping centre,” said Xiong Hao, an assistant general manager at Shanghai Jump International Shipping. “Local manufacturers are feeling the pinch of slowing exports and business morale appears to be low.” Last year, exports and imports via Shanghai Port were valued at 6.9 trillion yuan (US$1 trillion), up just 1.5 per cent from 2015.