Three leading international shipping companies – the British Peninsular and Oriental Steam Navigation Company (P&O), the Danish Maersk Company (a division of the A. P. Moeller-Maersk Group) and the China Ocean Shipping Company (COSCO) -- will jointly invest US$887 million to develop the Qianwan Seaport in Qingdao, Shandong Province. With a yearly cargo handling capacity of 6.5 million TEUs, it will be the largest container port in China and the newly established Qingdao Qianwan Container Port Co. Ltd. (QQCP) will become the largest enterprise of its kind in the world.
The Qingdao Port Group will have 31 percent of stake of the QQCP, while the P&O will have 29 percent, Maersk will have 20 percent and COSCO, the other 20 percent. In 2002 the Qingdao Port Company and P&O invested US$176.75 million to build the second phase of the Qingdao Qianwan Seaport.
Chang Dechuan, president and board chairman of the Qingdao Port Company, said the new company is a union of the most powerful companies in the world’s shipping industry. He expects a bright future for it. The Maersk and P&O are the world’s two largest shipping companies, both having been listed as one of the top 500 companies on the globe. The COSCO is China’s largest shipping company.
China’s port transportation has been growing for four years since 1998. According to statistics of the Ministry of Communications, the handling capacity of China’s main seaports enjoys an average yearly increase of more than 10 percent and that of the first quarter of this year was 20.9 percent higher than that of the same period last year.
It is expected that by 2020, the total handling capacity of the country’s seaports will reach 3 billion tons, while the container volume increases to 100 million TEUs. And the figures will get to 4.4 billion tons and 170 million TEUs respectively by 2020.
The prices of stocks of China’s listed port companies are going up, promoting another round of investments to them.
Among port businesses, container develops most rapidly and remains as a hotspot of investments. In developed countries, almost 100 percent of foreign trade cargos are transported by containers. Along with the fast development of foreign trade, China’s container business has been developing quickly and steadily.
Foreign funds came to China’s port sector 20 years ago. The Maersk Company, Port of Singapore Authority (PSA) and the Hong Kong based Hutchison Whampoa Company, three of the four largest shipping companies in the world, had arrived in China years ago. And there have been foreign funds invested in China’s container business since 1999. For example, the Hutchison Whampoa Company joins in the management of nine of China’s container ports, such as Yantian of Shenzhen, Shanghai, Beilun and Xiamen. To date, a total of US$2 billion of foreign funds have been invested in 30 Chinese port projects, with a yearly handling capacity of 9 million TEUs increased.
The shares of foreign funds in a joint venture used to be limited below 50 percent. With China’s entry to the WTO and the implementation of the Port Law, the country has lifted the limitation so as to encourage foreign investments. Eight ports originally under the administration of the Ministry of Communications, including the Shanghai and Qinhuangdao ports, will be put under local administrations and they will allow foreign companies to be the holding company in their joint ventures.
Background: Qingdao Port
Qingdao Port is China’s second largest foreign trade port and the third largest container port. It handled 3.4 million TEUs of containers last year, winning it the 14th position in the world. The project of Qingdao Qianwan Container Port includes the second-phase and third-phase constructions. When finished, it will handle all the container shipping business in Qingdao. The port will have 10 17.5-meter-deep special berths, which will be able to have container ships of 10,000 TEUs; its coastline will stretch 3,400 meters long; and its storage ground will be as large as 2.25 million square meters. The annual cargo handling capacity will reach 6.5 million TEUs.
(China.org.cn by Feng Yikun, July 30, 2003)
