Ningbo Port set to join global heavyweights

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Port invests US$3.5 billion for international expansion over next three years

Mar. 20 – The Ningbo Port Group, based in the eastern city of Ningbo, just 90 minutes from Shanghai, has announced aggressive expansion plans including a US$600 million investment into an unspecified European port complex, its chairman Li Linghong stated. The group, which has been maximizing its strategic position as the nearest deep water port to Shanghai, where Yangtze River silting is limiting development, is already the fourth largest port internationally, and the second largest in China, expecting to handle 11 million TEUs this year and to some 20 million TEU by 2012.

The group also owns berths in the Chinese cities of Zhoushan, Wenzhou, Tiazhou and Jiaxing in its home province in Zhejiang, and Taicang and Nanjing in the neighboring province of Jiangsu, and is scheduled to obtain a dual listing in Hong Kong and Shanghai later this year. In terms of global development, Li mentioned that the company had already signed a US$600million agreement to invest in a major European port development, although he declined to provide further details. He said that the company growth would follow those of Singapore’s PSA International and Hong Kong Hutchinson Whampoa in seeking to develop, operate and profit from port facilities around the world.

The group operates a further five ports in Ningbo, which has steadily been developing as a deep water facility, reshipment and processing center since the reality of Shanghai’s Yangtze River silting problems surfaced 20 years ago. Ningbo Port Group realized pre-tax profits of US$300 million last year.

The rapid growth and growing preference for Ningbo as a cargo handling destination is starting to place pressure on Shanghai’s Yangshan Port, its only deep water facility, located on the Yangshan Islands some 12 miles offshore, and connected by a lengthy series of island hopping bridges to Shanghai city. The development costs have soared and the port is nowhere near its planned development capacity. Ningbo, with costs around 30 percent cheaper than Shanghai, has proven a difficult competitor for Yangshan to shake off.

“Ningbo has long been amongst our targets to have a presence in as we have seen with our own eyes the consistent development of the port over the past years,” said Olaf Griese, of Dezan Shira & Associates’ new Ningbo office. “We have full confidence in the local government to steer and direct its businesses as competition to Shanghai, and this inter-provincial rivalry can only be good for the Chinese consumer and for exporters. We are seeing a shift in some businesses from Shanghai to Ningbo and expect this transmigration to continue as we are seeing occur elsewhere in China.”

Chris Devonshire-Ellis, the firm’s Senior Partner agreed. “One of the most interesting things about China right now is the changing demographics along the coast,” he said. “Larger port cities are becoming both expensive and swamped with traffic, and the smaller cities are providing real alternatives. With operators of the like of Ningbo Port, China Merchants, Cosco, Sinotrans and OOCL all firmly behind these developments, the entire eastern sea board of China is undergoing significant redevelopment and investment from the south to the north at a pace that is staggering. It will have significant impact on strategic locations for export driven manufacturers and will continue to limit the attraction of the inland cities, which will remain locked in as investment destinations for domestic market sales only.”