Hutchison Port Holdings (HPH) has entered into a joint-venture agreement with Shanghai International Port (Group) Company Limited (SIPG), APM Terminals, COSCO and China Shipping Group to jointly develop the Yangshan Deep-water Port Phase II Project (Yangshan Phase II). The contract signing ceremony was held at the New Jin Jiang Hotel in Shanghai.

A.P. Moeller-Maersk, Hutchison Whampoa and three other companies said Tuesday that they would invest 4 billion yuan in Shanghai’s Yangshan port as global trade increases cargo demand in China. The amount is equivalent to $495 million.

The five companies will form a venture to buy and develop the second phase of Yangshan, according to a statement to the Hong Kong Stock Exchange from Hutchison, the world’s largest port operator. Hutchison owns 32 percent of Yangshan’s second phase.

A.P. Moeller, Hutchison and other companies have been seeking to invest in Yangshan, a $16 billion deep-water port that will double Shanghai’s cargo handling capacity by 2010 and bring it close to becoming the world’s busiest harbor. Shanghai, the mainland’s premier financial city, is located at the confluence of the Yangtze and Huangpu rivers.

“Yangshan’s growth is guaranteed,” said Oscar Choi, an analyst at DBS Vickers Securities Hong Kong. “Shanghai captures a large portion of the cargo movement in China’s Yangtze River Delta. Shanghai doesn’t want to be just a regional port, but a hub that will compete with other ports such as Busan” in South Korea.

APM Terminals, a unit of A.P. Moeller, which is the world’s biggest container line, will own 32 percent of Yangshan Phase II. Shanghai International Port (Group), which already operates the first phase of Yangshan, valued at $1.7 billion, will own 16 percent of the venture. Cosco Pacific, which invests in ports in Hong Kong and China, and China Shipping (Group), the country’s second-biggest shipping line, will each have a 10 percent stake.

The second phase of Yangshan will have four berths with a quay length of 1,400 meters, or 4,590 feet. It will be capable of handling about 2.1 million 20-foot containers annually for 50 years starting in December 2006. Each of the five companies will contribute to the venture based on their shareholdings, Hutchison said.

The first phase of Yangshan, which opened on Dec. 10, comprises five berths with an annual capacity of about three million boxes shipped between Asia and Europe. Shanghai’s container cargo handling capacity will double to 30 million boxes by 2010.

The city was the world’s third-busiest harbor in 2004, handling 14.6 million boxes at its four container terminals. In the first 11 months of 2005, the port processed 16.52 million boxes, 25 percent more than in the same period last year.

To attract shipping lines from Hong Kong and South Korea, Yangshan may cut transshipment charges by 50 percent. Vessels calling at the port will be given special customs clearance before they dock and a special tax-free zone has been set up at the harbor, according to a Xinhua report on Dec. 10.

Speaking at the ceremony, Mr. Li Ka-shing, Chairman of Hutchison Whampoa Limited, said, “The Yangshan Deep-water Port affirms Shanghai’s status as a major international shipping centre and deep-water container transport hub, and will accelerate growth in the Yangtze River Delta.” He continued, “As the first foreign capital firm to invest in and operate container terminals in Shanghai in the early 1990s, the Hutchison Whampoa Group will continue to work with the Shanghai Municipal Government to contribute to Shanghai’s future success.”

The joint-venture contract signing ceremony was also attended by Han Zheng, Mayor of Shanghai, Lu Haihu, Chairman of the Board, Shanghai International Port (Group) Company Limited, Canning Fok, Group Managing Director of Hutchison Whampoa Limited, James Tsien, Group Executive Director of Hutchison Port Holdings, and officials from the Shanghai Municipal Government.

Source: HPH and International Harald Tribune

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