The port of Shanghai is by far the busiest in China, handling 18.09m TEUs in 2005, up from 14.55m TEUs the previous year. By October 2006, Shanghai was reported to have shifted 17.87m TEUs, a figure projected to increase to more than 20m TEUs for the whole year. In addition, the port handled 443m tonnes of cargo, displacing Singapore as the top of the world bulk port league table. To address the capacity shortfall and other shortcomings of its Huangpu port, Shanghai is developing a deepwater port, with 35 berths (scalable to 52) and an annual capacity of 25m TEUs, at the Yangshan islands in Hangzhou Bay, south of Shanghai. The 18-year project will cost as much as US$18bn. The first phase of the project, comprising five berths with a capacity of 3m TEU and costing Rmb14bn (US$1.8bn), was completed and opened for operation in December 2005. The second phase, consisting of four berths, is scheduled for completion in December 2006 and has a designed capacity of around 2.2m TEUs. Phases three and four will include seven berths, with completion scheduled for 2010.

While the opening of Yangshan dramatically increases port throughput capacity in Shanghai, the new facility is not without problems. Its exposed position means it may be closed by bad weather for as many as 95 days per year. In addition, the 32.5km bridge linking Yangshan with the mainland has no rail link, so for now almost all cargo must be transported to the port by truck, creating a bottleneck.

The project, which started in 2002, involves multiple investors, including the Shanghai Port Authority (SPA), Century Investment Corp (an arm of the Shanghai municipal government) and the Zhejiang provincial government. The first phase will be operated by a venture between Shanghai Port Container Co and its parent, Shanghai International Port Group (SIPG). Phase two of the port, which is scheduled to complete construction by end-2006, will be operated by a joint venture between Shanghai Shengdong International Container Port (a subsidiary of SIPG), which owns 16% of the project, and foreign port operators HPH and APM Terminals (each with a 32% share). The remaining 20% will be shared equally between China Shipping Terminal Development and COSCO Ports (Yangshan).

Shanghai continues to upgrade its existing port facilities. Shanghai Pudong International Container Terminal (SPICT), a JV between Hong Kong’s HPH (30%), COSCO Pacific (20%), Shanghai Industrial Holdings (10%) and SPA (40%), was officially launched in March 2003 with an investment of Rmb3bn (US$375m). The JV is responsible for operating the three container berths in phase one of the Waigaoqiao port development. Phases two, three, four and five have also been completed, providing 13 more container berths. APM Terminals, a member of Denmark’s AP Moller Group, operates phase four under a joint venture with the SPA, while HPH has an agreement with SIPG for a 50:50 JV to invest and operate four berths in phase five, which became operational in December 2004. Waigaoqiao phase six is under construction and is scheduled for completion next year.

Shanghai’s shallow waters have made it a less-than-ideal shipping location, a major reason for the port building at Yangshan. Although the quayside draught at Waigaoqiao is 12 metres, ships have to negotiate the Yangtze River’s access channel, which is only six metres deep at low tide—impossible for fully-loaded ships larger than 10,000 dwt. To address the problem, a US$1.9bn dredging and dyke-construction project was begun in 1998. By 2005, the water depth at the main channel reached 10.5 metres and should reach 12.5m by 2010. Work on this ten-year, Rmb10bn project involves dredging upstream as far as Taicang and possibly even Nanjing, providing year-round draught of 12.5m. Management of Shanghai’s original container terminal facilities, featuring ten berths, has improved substantially since the SPA and HPH formed their 50:50 JV, Shanghai Container Terminals (SCT). The JV runs the Yangtze River wharves at Zhanghuabang (Terminal 9), Jungonglu (Terminal 10) and Baoshan (Terminal 14).

Meanwhile, construction of Luojing phase two at Shanghai’s Baoshan district is steaming ahead at an estimated cost of Rmb4.6bn. When completed, Luojing will become one of China’s largest bulk cargo ports, and will be a replacement for Shanghai’s Huangpu port, which is shutting down its bulk cargo berths ahead of the 2010 Asia Expo.

Shanghai operates an electronic data interchange (EDI) system for document submission. Ships must file documents electronically before arrival, detailing bay plans, manifests to terminals and details of any subcontractors being used. In 2000, it introduced a simplified customs clearance procedure with the aim of cutting clearance and cargo handling times to 24 hours. In July 2003, China signed a pact with the US agreeing to join the US Container Security Initiative (CSI), allowing US customs officers to inspect suspicious containers before they leave port. Its two largest ports at Shanghai and Shenzhen have begun to pre-screen cargo containers for US ports under the CSI.