Shanghai Celebrates Giant Port Amid Worries of Overcapacity
SHANGHAI — In many ways, Shanghai's new port is a work of wonder.
Built amid a cluster of craggy islands, Yangshan Deepwater Port is connected to Shanghai by a six-lane bridge that meanders across 20 miles of water. The government has not disclosed the project's cost, but local media put it at about $1 billion.
More than 26,000 people had a hand in its design and construction. It took just three years to complete the bridge and a container terminal that covers 400 acres of landfill conjoining two islands.
"I can't think of anything remotely like this in the world," said George Goldman, managing director of the shipping line APL China, as he stood in the drizzling rain in December watching government leaders inaugurate the first five of at least 30 berths planned for Yangshan.
Yet for all of its engineering ingenuity, Yangshan has left many shipping experts questioning whether it's too much of a good thing.
Shanghai is already the world's third-largest container port. Officials hope that within a few years, Yangshan will double Shanghai's cargo-loading capacity to 30 million 20-foot containers a year. That would put it ahead of Hong Kong and would be more than double the volume currently handled at the Long Beach and Los Angeles port complex, the largest in North America.
But Shanghai is competing with numerous other port cities in China — and throughout Asia — for prominence as international shipping centers.
While booming exports of Chinese-made textiles, appliances and electronics have clogged the ports of Southern California, China's answer to the surge in traffic has been to enlarge its harbors.
Along China's east coast, from Shenzhen in the south to Dalian in the north, port cities are aggressively expanding the number of berths and container facilities.
"No one is willing to be the other's feeder port," said Cai Meiyi, vice chairman of Shanghai Port Industrial Assn. "All the local governors want to show their political achievement."
Shanghai faces its most direct threat from Ningbo, a rapidly growing city in Zhejiang province about 100 miles to the south. With its natural deepwater harbor, Ningbo has made the most of the industrialization in the Yangtze River Delta region and is now building three bridges over Hangzhou Bay that would link its local ports to the mainland.
"Ningbo is working day and night to compete with Shanghai," said Yang Jianwen, an economist with the Shanghai Academy of Social Sciences. "Ningbo's aim is very clear: to contend with Shanghai for cargos."
Shanghai officials downplay the regional rivalry and note that Zhejiang leaders were on hand for Yangshan's opening ceremonies. Also in attendance was Huang Ju, a former Shanghai mayor who now holds the title of China's vice premier. Support from the central government could play a key role in reducing excessive regional competition and determining whether Shanghai will become the nation's international transportation hub.
But Yangshan's rise also has touched off a scramble in East Asia.
Shanghai's long-existing port near the city sits at the mouth of the Yangtze River and has a depth of less than 25 feet, too shallow for the newest generation of super containerships to dock.
Yangshan has twice the water depth, enabling it to take goods from smaller ports and load them to giant vessels bound for Europe and the U.S. West Coast. This so-called international transshipment market is now dominated by ports in Hong Kong, Singapore and South Korea — all of which are racing to boost their capabilities.
The port of Pusan in South Korea has been growing briskly in recent years, thanks in part to the overflow of goods coming from China that are then routed overseas. Pusan relies on transshipments for 40% of its containers, but half of that could be up for grabs now, said Cho Sam Hyun of the Pusan Development Institute.
Pusan knows it will be tough to compete with Yangshan, given China's cheaper labor rates. So in addition to investing $6.7 billion to add 30 berths to its harbor, Pusan is subsidizing rent for companies moving into the port and giving discounts to high-volume shipping lines.
"The cost difference is a problem," said Cho, although he added that Pusan and Shanghai could both benefit if they cooperate with each other and cargo shipments in the region keep growing rapidly.
Still, the flurry of investments in Asian ports has raised concerns about too much cargo capacity coming on line. Indeed, some executives in the industry say shipping costs may fall this year as supply outpaces demand. - Los Angeles Times 22/02/06