Buoyant trade has shipping firms ordering new vessels
Hong Kong Standard Staff reporter
January 1, 2005

China's shipping companies have been rushing to add new vessels, betting that the robust international trade and demand for their services will continue in 2005.

China Shipping Development said on Friday it has ordered five crude oil vessels for US$242 million (HK$1.88 billion), while China Shipping Container Lines agreed to buy a 27-year-old container ship for 71 million yuan (HK$66.8 million).

"Since the first quarter of 2004, the crude oil transportation market has been very busy," China Shipping Development said. "The directors ... believe that the shipping market will maintain persistent growth in 2005."

Strong global economic growth has fuelled energy consumption and demand for consumer and industrial goods, thus benefiting shippers.

"As there is an increase in the demand for container spaces in the company's domestic trade lanes, the company intends to deploy the [newly acquired] vessel in such trade lanes in order to further strengthen its shipping capacity and to satisfy such increasing demand," China Shipping Container said.

The shipping firm also agreed to buy the remaining 50 per cent stake it does not own in Shanghai Puhai Shipping, a sub-route services provider, for 29.7 million yuan and plans to trim capital injection into the unit by 300 million yuan to 200 million yuan over the next two years. The remainder will be used to buy or build ships, it said.

Guangzhou Shipyard will build four 52,500-tonne crude oil vessels for China Shipping Development, the largest the shipbuilder will have constructed, for US$144 million. The ships are expected to be delivered between 2007 and 2008.

Another 298,000-tonne vessel, to be built by a Dalian-based firm, will be delivered in November 2007.

China Shipping Development shares rose 0.78 per cent on Friday, and gained 20 per cent in 2004. China Shipping Container was up 0.81 per cent, but have shed 1.57 per cent since their debut in June. Guangzhou Shipyard shares tumbled 13.66 per cent in 2004.

China Merchants confirms US$673 mln Shanghai port buy

HONG KONG, Dec 30 (Reuters) - State-backed China Merchants Holdings (International) Co. Ltd. on Thursday confirmed that it will spend 5.57 billion yuan (US$672.7 million) to buy a 30 percent stake in container terminal operator Shanghai International Port (Group) Co. Ltd.

China Merchants, which will gain a foothold in Shanghai's fast-growing container port through the deal, said about 20-25 percent of the purchase price will be funded with internal resources and the rest through borrowings.

Shares in China Merchants, which have rallied in anticipation of the Shanghai investment, were suspended on Wednesday afternoon pending an announcement. Reuters reported on Wednesday that China Merchants was making the Shanghai Port investment.

The company said it has applied with the Hong Kong stock exchange for a resumption of trading on Thursday morning.

China Merchants sold its tanker business and spun off its toll roads earlier this year in a group reorganisation to focus on its fast-growing port services business. Its interest in Shanghai, the world's third-largest container port behind Hong Kong and Singapore, has been well known in the market.

State-controlled Shanghai International Port Group will be converted into a joint stock company as part of the deal.

China Merchants shares reached a post-1997 intraday high of HK$14.30 on Dec. 21. The stock rose 1.8 percent to HK$14.10 before it was suspended on Wednesday.

(US$=8.28 yuan)

Lloyd's List
January 10, 2005
China Shipping plans to increase freight rates to fund expansion
Keith Wallis in Hong Kong

CHINA Shipping Container Lines is set to raise freight rates by up to 6% this year as its seeks to spend Yuan 3.5bn ($427m) on new containerships and boxes. About 85% of the cash, Yuan 2.97bn, is earmarked for investment in new vessels.

CSCL general manager Jia Hongxiang declined to specify the number or size of ships but his comments are believed to relate to a raft of newbuildings CSCL has ordered in the past 18-24 months.

The carrier, which listed in Hong Kong last June, has nine 4,250 teu boxships on order at Dalian New Shipbuilding. The vessels, including two ordered in July, will be delivered this year and next.

CSCL also has five 4,250 teu containerships on order at Hudong-Zhonghua shipyard in Shanghai which are also due for delivery this year and next.

While CSCL has made staged payments during the fabrication of the vessels, typically CSCL would pay up to 70% of the cost of each ship on delivery.

Mr Jia did not specify where the money would come from, but CSCL's Hong Kong listing raised $ 985m. The company, ranked tenth among the world's container lines, is aiming to be the third largest line by 2010.

- Grimaldi has ordered three more ships from Uljanik Shipyard, bringing to 14 the orders it has placed with the Croatian shipbuilder over the past four years.

The latest $ 200m order calls for delivery of three ro-ro ships with space for 3,000 cars and 1,300 teu as container capacity, with delivery set for 2008-09.

The previous 11 orders at the yard have been for pure car truck carriers of 4,300-5,400 car capacity.

Eight of the newbuild PCTCs, including all three larger 5,400 car capacity vessels, have been delivered so far. These have all been deployed within the Euromed network.

China shipbuilders rushing to satisfy booming economy

LONDON, Jan 30 (AFP) - China is rushing to build vessels to ship home the huge amounts of commodities its booming economy demands, amid reports it is also constructing military bases to help safeguard its shipments of oil.

"China is building ships as fast as it can," said Dennis Petropoulos, an analyst for British shipbroker Braemar Seascope.

"It would like to build more and there are people in there opening shipyards, and there are projects to increase shipbuilding capacity, but those projects take time and will not come on stream for three to five years."

The International Energy Agency (IEA) warned earlier this month that the world's ship-building yards were booked up for years in advance.

"China will move its cargoes on any ships it can," Petropolous said.

"There are projects to increase capacity in China, definitely, because (South) Korea and Japan cannot increase their capacity.

"Shipyards in Korea and Japan are booked out until 2007 and maybe a good chunk of 2008 has been allocated. Chinese shipyards are booked out until 2007 but not a large chunk of 2008 has been allocated," he added.

China has meanwhile launched a plan to double its current port capacity by 2010 by strategically developing facilities in the Bohai Rim and the Yangtze River and Pearl River deltas, state media reported last month.

The blueprint adopted by the State Council, or China's cabinet, said the three port areas would focus mainly on containers, iron ore, crude oil and coal.

China's booming economy expanded 9.5 percent last year after 9.3 percent in 2003, according to official data published last week.

The fourth quarter alone showed growth steaming ahead at 9.5 percent year-on-year, up from 9.1 percent in the previous three months despite Beijing's efforts to cool the economy.

Analysts meanwhile said that Chinese growth would continue to win strong support from the country's thirst for imported raw materials.

"The Chinese authorities are thinking, let's put this (material) on our own ships rather than chartering other people's ships", an industry source told AFP.

"With oil prices going up and freight prices going up at the same time, they

suddenly feel a bit out of control," added the source, who wished to remain anonymous.

While China needs vessels to transport its vast amounts of imported commodities, the country was also reportedly developing military bases and diplomatic ties from the Middle East to the South China Sea in order to protect its oil shipments and strategic interests.

China's "string of pearls" strategy is according to an internal report prepared for US Defense Secretary Donald Rumsfeld and recently reported by The Washington Times.

China's move reportedly includes a new naval base under construction at the Pakistani port of Gwadar, naval bases in Myanmar, a military agreement with Cambodia, strengthening ties with Bangladesh and an ambitious plan under consideration to build a 20-billion-dollar canal in Thailand to bypass the Strait of Malacca.

"We need to acknowledge that China is indeed a net importer of energy resources and therefore has a long-term and immediate interest in enhancing energy security," said Jürgen Haacke, an expert in southeast Asian affairs at the London School of Economics.

But he said China had a long way to go to secure the safety of its shipping routes.

"There is a tendency in the media to exaggerate the achievements which China has had to date when it comes to the efforts to enhance the energy security particularly as regards control over shipping lanes," Haacke said.

Big Container-Shipping Firms Have Room Aboard for Growth
By Mary Kissel
1 February 2005
The Asian Wall Street Journal

Hong Kong -- THERE'S STILL TIME to load up on shares of the two biggest makers of shipping containers, analysts say.

During 2003 and 2004, China International Marine Containers (Group) and Singamas Container Holdings gave investors an enjoyable ride. Shares of CIMC, as the company with about 50% of the world market is known, rocketed 236%. Shares of Singamas, which has about 30% of the market, surged 167%.

Analysts consider the Chinese companies a duopoly in the business of making twenty-foot equivalent units, also known as TEUs, the most common box type of container. They say the companies, benefiting from industry consolidation and growing world trade, should do well again for 2005.

While it's unlikely the shares can repeat their recent gains, analysts say they could rise 10% to 20% for 2005, compared with predictions of single-digit returns in global stock markets.

"In this industry you've only got two players, they have pricing ability," and despite competitive pressures, they have managed to pass steel price increases on, says Louisa Lo, a fund manager at Schroder Asset Management in Hong Kong. "They benefit from the economy of scale," she adds.

The Chinese duopoly was quick to capitalize on buying opportunities in the wake of the 1997-98 Asian financial crisis. As container makers in once-dominant South Korea fell into bad financial straits, the two snapped them up. The Chinese companies diversified their product range and gained powerful market positions.

While the container industry was consolidating, trade links between China and the U.S., the current engines of world trade, were strengthening. Beijing's entry into the World Trade Organization in 2001 encouraged more companies to set up shop in China, assemble goods and transport them to U.S. consumers. The cycle remains strong, as does China's growth: Beijing announced last week that China's economy grew 9.5% year-to-year in the fourth quarter. That was significantly higher than many economists estimated, though few expect China's growth to continue at that pace.

Last week CIMC, based in Shenzhen, said that its 2004 net profit would likely be three and a half times the 2003 figure, thanks to better sales volume and higher container prices. CIMC shares trade in U.S. and Hong Kong dollars on the Shenzhen Stock Exchange. Singamas, which is based and listed in Hong Kong and trades in Hong Kong dollars, will release its annual results the week of March 21.

"It's been one of the best shipping cycles in 20 years," says Christopher Lee, an associate director at Standard & Poor's Asian-Pacific Equity Research in Hong Kong.

The heady run hasn't been without hiccups. Container makers rely heavily on steel to produce their products, and the metal accounts for a big chunk of a box's final selling price. So a spike in global steel prices early last year tested CIMC and Singamas.

CIMC, because of its potent market share, managed to pass through price increases to its customers, but Singamas struggled to do the same and saw its profit margins narrow. Mr. Lee expects Singamas's operating margins -- which average about 6% to 7%, compared with CIMC's 16% -- to improve as the smaller company digests recent acquisitions and raises productivity.

In the longer term, some analysts fear that a slowdown in global economic growth could damp container orders. But the container makers have a hidden source of demand: a backlog of purchases from shipping lines. It can take a year and a half to deliver a small ship to a customer, and most companies order their containers at least three to six months in advance. Thus, even if economic growth rates trend down, analysts predict the increase in container demand will remain steady at about 11% a year over the next three years, compared with a historical average of 8%, based on the ship-construction pipeline.

"The container ship and box are like a car and its tire," says Michael Chan of investment bank BOC International in Hong Kong. "You can't have a car ready with no tires." Mr. Chan, who has an "outperform" rating on both stocks, expects CIMC to rise about 30% this year while Singamas gains about 25%.

Shipping-container companies also have benefited from a rise in the price of their product, which has mirrored the increases in steel, jumping to US$2,200 a container from about $1,400 in 2004, according to Smith Barney. Even if prices moderate this year, analysts don't expect a large decline in profit for CIMC and Singamas because they operate on a cost-plus basis, adding a commission after they buy steel at the market price. The companies can do this, market observers say, because of their duopoly.

CIMC and Singamas shares look inexpensive when compared with broader stock markets. According to S&P's calculations, CIMC and Singamas are trading at about nine and eight times, respectively, their projected 2005 earnings, compared with an average of about 16 to 18 times for the broader Hang Seng index.

"Before the China growth story, nobody paid too much attention to Singamas," says Winson Fong, deputy chief investment officer for Asia Pacific ex-Japan at SG Asset Management, a unit of Societe Generale SA of France. Mr. Fong bought Singamas shares in 2003 at about HK$1.50 (19 U.S. cents) each; they closed yesterday in Hong Kong at HK$4.75. "We're comfortable to stay long Singamas," he says.

Cosco Shiprepair looking to build
Irene Ang
18 February 2005
Tradewinds

A Chinese giant traditionally known for repair work is moving into shipbuilding.

China's biggest vessel repairer, the Cosco Shiprepair Group, is poised to break into the shipbuilding arena.

A source close to the company says Cosco Shiprepair is in negotiations with shipowners from China and the US to build handymax bulkers. The ships will be of around 53,000 dwt.

Sources tell TradeWinds that Cosco Shiprepair is planning to construct the newbuildings at its new yard in the Zhoushan archipelago.

Last year, the company bought a privately owned repair yard on Liuheng Island and is planning to spend CNY 2bn ($240m) to transform the site into a mega-repair facility. It aims to get 20% of China's enormous amount of repair work. The new Zhoushan repair yard is scheduled for completion by the end of 2005. It will have three repair berths of 70,000 dwt, 100,000 dwt and 150,000 dwt, two drydocks of 150,000 dwt and 300,000 dwt and one panamax-size slipway.

Cosco Shiprepair is planning to use the slipway for newbuilding construction. It aims to deliver its first vessel at the end of 2007 or early 2008.

Industry sources say Cosco Shiprepair has not worked out the number of ships that it would be able to construct in a year because shipbuilding is a total new business for the company.

Cosco Shiprepair was formed in January 2003, when the commercial activities of Cosco's four yards were merged in a new Shanghai headquarters.

what are the world's 10 largest shipping companies? Maresk..K-Line, Hanji Evergreen maybe? is COSCO up there?

China To Increase Anti-Terror Measures For Its Ports '05
01 March 2005

BEIJING (AP)--China said Tuesday it plans to establish anti-terror teams this year to monitor global terrorist activities and prevent attacks on its ports.

In 2005, the Administration for Quality Supervision and Inspection and Quarantine will improve port emergency plans and come up with more effective anti-terror measures, said the administration's Vice Minister Ge Zhirong.

"We are going to get together a group of relevant experts from the administration to analyze terrorist activities taking place overseas for any new methods they might be employing" and to come up with counter measures, Ge said.

China's Cabinet ordered increased terror monitoring in the wake of the Sept. 11, 2001, attacks in the U.S. but the administration has so far "not detected any items of a terrorist nature in China's ports," Ge said at a press conference.

"But we are going to better prepare ourselves for the worst case scenario to prevent the future occurrence of such terrorist activities," he said.

Maritime and defense experts in Asia have warned that commercial shipping routes and ports are vulnerable to terrorist strikes.

China container transport market blooming
02 March 2005
Xinhua's China Economic Information Service

BEIJING, March 2 (CEIS) – The growth momentum of China’s container shipping market continued into 2005, with abundant resources of goods and stable transport charges.

The Shanghai Shipping Exchange (SSE) put the integrated shipping charge index at 1173.23 points on January 28, rising by 3.6 percent.

The price indexes on the European and Mediterranean routes stood at 1,543.60 points and 1,673.12 points, down 1.8 percent and 5.1 percent respectively over the last month of 2004, with that on the European route registering 1,300 US dollars/TEU, and that via the Shanghai Port, the lowest 1,250 US dollars/TEU. Shipping companies forecast that the price can hardly climb in the next month due to cargo shortages.

The price on the North American route was kept stable without apparent rises in the sources of cargo. The integrated shipping charge index for W/C America service released by the SSE on January 28 stayed at 1,361.97 points. Statistics showed that the container throughput of W/C America/Long Beach/Los Angles rose by 11 percent over 2003 to reach 13.1 million TEUs, including 5.8 million TEUs at Long Beach port and 7.3 million TEUs at the L.A. port, up 24 percent and 1.98 percent year on year, with the combined growth of less than 18 percent over the previous year.

The Japanese route handled more containers, with the price adjusted upward to 300 US dollars/TEU. Its integrated shipping charge quoted at 858.93 points, up 5.1 percent. The amount of cargo is expected to go upward until the busy month of March.

Cosco Pacific expands on back of box demand
4 March 2005
Lloyd's List

AS DEMAND leaps for boxes, Cosco Pacific has decided to spend $353m this year expanding its container capacity, writes Sam Chambers in Hong Kong.

The Hong Kong-listed subsidiary of China Ocean Shipping (Group) Co is the world’s fourth-largest container leasing firm, with around a 10% market share. It is also an extensive investor in container terminals, primarily in China. It will add 178,300 teu this year, 15% more than it added last year. At the end of 2004, Cosco Pacific owned 919,128 containers.

Also initialled on Cosco Pacific’s 2005 budget is $350m for terminal acquisitions including at Dalian, Tianjin and Guangzhou in China as well as at Long Beach in California. In a recent report, investment bank Morgan Stanley suggested Cosco Pacific will earn $200m in 2004, $301m in 2005 and $316m in 2006. Its full-year results are announced today.

HK COSCO Pacific Agrees To Buy Stakes In 4 China Ports
4 March 2005
Dow Jones

The four port projects include a 30% stake in a four-berth terminal at the Tianjin port in northern China and a 20% stake in a five-berth terminal at Ningbo, Zhejiang province.

The two terminals are expected to begin operations in the second half of 2007.

COSCO Pacific has also agreed to take a 20% stake in a five-berth terminal in Nanjing, which is already operational.

In southern China, COSCO Pacific has agreed to take up a 35%-40% stake in the Nansha port in Guangzhou, which will start operating in the first half of next year.

COSCO Pacific is 54%-owned by mainland shipping group China Ocean Shipping (Group) Co., commonly known as COSCO Group.

- By Julie Wang
- Edited by David Riordan

Shenzhen container throughput up 16.6pc
5 March 2005
South China Morning Post

The volume of trade handled at the port of Shenzhen last month expanded a comparative 16.6 per cent as western demand for China-made goods continued.

Containerised throughput in Shenzhen - generated mainly by terminals in Chiwan, Shekou and Yantian - exceeded 974,300 20-ft equivalent units (teu) for the month despite the impact from a week of holidays in China.

Yantian, the Hutchison-managed terminal on the eastern side of the Pearl River Delta, again led all Shenzhen ports, moving more than 449,500 teu, or 8.8 per cent more than last year. Chiwan moved almost 262,000 boxes, up a comparative 36.6 per cent. Shekou moved a little more than 149,100 boxes, up 12.3 per cent. The remainder was handled across the port's smaller berths.Russell Barling

asia-pacific carriers move 117m passengers in year

More than 117 million business and leisure travellers flew on Asia-Pacific-based airlines last year, up 22.5 per cent on the Sars-depleted numbers of 2003.

The 17 members of the Association of Asia-Pacific Airlines managed to boost their aggregate load factor - the proportion of seats filled - 3.4 percentage points, to 73.1 per cent.

Cathay Pacific beat all association members in December last year with a load factor of 79 per cent. The volume of cargo carried by members last year grew 13.8 per cent to 48.6 billion freight tonne kilometres, an industry measurement equal to a kilo of goods flown one kilometre.Russell Barling

general motors venture expands buick range

General Motors (GM), the world's largest carmaker, has expanded its Buick range and cut prices of previous versions to compete with Volkswagen and other carmakers in China.

Shanghai General Motors, a venture between GM and China's largest carmaker, Shanghai Automotive Industry Corp, has started marketing two new versions of the Excelle and a new version of its luxury Regal, according to the company.

The price of the Excelle had been cut to 117,800 yuan, while the older version of the Regal now sold for 203,800 yuan, it said. Shanghai GM did not disclose the size of the discounts or previous prices for the cars.Bloomberg

hactl volume drops as holiday eats into demand

Hong Kong Air Cargo Terminals Ltd (Hactl) saw business decline last month due to the Lunar New Year festivities affecting demand for flights to and from the mainland.

Provisional figures released yesterday indicated Hactl's volumes for the month dipped a comparative 12.4 per cent to 146,362 tonnes. The decline was led by imports, which fell 18 per cent to 45,378 tonnes. Exports were down 14.7 per cent for the month at 75,443 tonnes.

Cumulative tonnage at Hactl in the first two months reached 321,134 tonnes, or up 2.7 per cent on last year.

Russell Barling

China Shipping to Buy 39 Extra Ships
By Mai Tian
08 March 2005
China Daily

China Shipping (Group) Ltd, the country's second largest sea transport operator, will buy 39 ships this year at a cost of 8 billion yuan (US$966 million) to meet surging demand.

The company's plan is part of its strategy to be running one of the world's largest three fleets by 2010.

Li Kelin, president of China Shipping (Group), told Reuters that the new ships, including 6 oil tankers, will add 2.2 million tons to the company's total capacity, an increase of 17 per cent.

China Shipping, parent of Hong Kong-listed China Shipping Container Lines and China Shipping Development, has a fleet of 417 ships, including 90 oil tankers and 120 container vessels.

Their deadweight reached 13 million tons in 2004.

A company spokesman yesterday declined to comment on the report.

Reuters reported the group will finance the acquisitions with bank loans and existing funds.

China Shipping is enjoying rapidly increasing demand for its services, spurred by a bottlenecked rail network since 2003.

Much of China's coal has to be moved off the tracks and onto water to be shipped from major ports in North China, such as Qinhuangdao, to markets in the east and south.

The company delivered more than 100 million tons of coal last year, or 5 per cent of the country's total coal output.

The increase saw China Shipping reap a windfall last year. It posted a pre-tax profit of 8.5 billion yuan (US$1 billion) in 2004, up 340 per cent from 2003.

"China's existing transport capacity is inadequate to meet the demand for coal," said Li, who is attending the annual meeting of China's National People's Congress.

"The situation will last two to three years," he added.

Li was also quoted as saying that the group's shipping prices should rise by 3 to 4 per cent this year, driven by rising oil prices.

Global shipping rates reached record highs over the past year on the back of voracious demand from developing countries, like India and China, for coal, oil and other raw materials.

China Shipping earlier said it planned to increase its container capacity from the current 280,000 twenty-foot equivalent units (TEU) to 650,000 TEUs by 2010, ranking it third in the world.

Top Chinese container line COSCO sails for HK IPO
By Alison Leung

HONG KONG, March 11 (Reuters) - China's top shipping group, China Ocean Shipping (Group) Co. (COSCO), plans to float its container shipping arm, the world's seventh largest, in a Hong Kong IPO that is expected to raise more than $1 billion.

Hong Kong-listed COSCO Pacific Ltd., which leases shipping containers and operates terminals, said on Friday that sister firm China COSCO Holdings Co. Ltd. had submitted paperwork to the stock exchange to list its H-shares.

The shipping sector is booming worldwide thanks to China's surging economy. Many experts expect freight rates and volumes to hit fresh highs this year, but some question how much longer the momentum can last and worry about a flood of new capacity poised to enter the market.

"We think the container shipping industry has already passed its peak in the current cycle," ABN AMRO analyst Osbert Tang wrote in a research note on rival shipper Orient Overseas (International) Ltd.

COSCO Holdings will hold state-run COSCO Group's interests in container shipping and related businesses and will become the direct parent of COSCO Pacific.

But COSCO Pacific's listing position and its businesses will remain unchanged, the statement said.

Analysts said including a controlling stake in COSCO Pacific in the newly formed company will help the listing vehicle offset some of the cyclical risk inherent to shipping lines.

"COSCO Pacific is trading at around 16 times P/E while container shipping firms are only around 4 times," said Michael Chan, an analyst at BOC International.

The company gave no financial details of the proposed listing. A source familiar with the situation said the deal should be worth more than $1 billion.

Shares in COSCO Pacific have jumped 52.4 percent over the past year, giving it a market value of US$4.87 billion. Its shares ended 2.35 percent higher on Friday.

COSCO Group operated 123 container ships with total capacity of more than 300,000 20-foot-equivalent units (TEU) at the end of 2004, analysts said.

In January, it ordered four 10,000 TEU container ships, the largest in the world, from South Korea's Hyundai Heavy Industries Co.

HSBC and UBS are underwriting the deal. (Additional reporting by Daisy Ku in Beijing).

Wharf's MTL to get Shenzhen port project approval soon

HONG KONG, March 8 (Reuters) - Wharf Holdings' (0004.HK) Modern Terminals Ltd. said on Tuesday it will get Beijing's final approval soon for a container terminal project in southern China with a total investment of up to 7 billion yuan (US$845 million).

"I believe we will have approval for Dachan Bay in the next two to three months," said Modern Terminals Managing Director Erik Christensen.

MTL announced last year that it would take 65 percent of the first phase of the Dachan project, which will have total capacity of about 2 million 20-foot equivalent units (TEUs) a year.

The project is located in China's southern boomtown of Shenzhen, a key gateway to the country's huge Pearl River Delta manufacturing base.

China's State Council introduced a master plan last December with an aim to co-ordinate port development in the nation and that delayed approval of the project, Christensen said.

"Initially it caused a bit of delay but it doesn't matter because while we are waiting for the approval we are still building," he told reporters after a ceremony to celebrate MTL's handling of its 50 millionth container in Hong Kong.

The terminal was expected to begin operations in the second half of 2007, Christensen added.

Market sources had said the Chinese government delayed approval at container port development in Shenzhen to avoid putting too much pressure on the world's busiest container port of Hong Kong, which has been losing market share to the cheaper Shenzhen port.

MTL also expects total throughput at its container terminals in Hong Kong's Kwai Chung terminals to rise about 8 percent this year after it added about 11 percent to 4.5 million TEUs in 2004.

The company is investing HK$1 billion to upgrade facilities at its container terminal No. 1, 2 and 5 in Kwai Chung. It also operates four berths at Kwai Chung's Container Terminal 9.

The project will boost MTL's total container handling capacity in Kwai Chung by 25 percent to just over 7 million TEUs a year after the upgrade is completed in 18 months.

"It is much cheaper than buying a new one (terminal)," Christensen said.

The government is encouraging Kwai Chung operators to upgrade their facilities to expand capacity of the 22 berths at Kwai Chung to about 1 million TEU each. Kwai Chung handled about 14 million TEUs of goods last year.

More investment on the way as Yantian terminal growth continues
7 March 2005
Lloyd's List

WHILE TOC Asia 2005 is taking place in the container capital of the world, Hong Kong, the real future of the container terminal industry in this localised area lies north of the border in Shenzhen.

The area that was all paddy fields 20 years ago has suddenly catapulted up to become the fourth largest container port in the world with throughput last year of 13.66m teu, noticeably outstripping the main terminals in Hong Kong’s Kwai Chung district for the first time.

Those with a China visa will have the opportunity of visiting Shenzhen’s premier container facility — the city’s only deepwater port — Yantian International Container Terminals on the morning of March 17.

Established in 1994 as a joint venture between Hutchison Port Holdings and Shenzhen Yantian Port Group, YICT’s throughput is flying at the moment.

It has opened four 9,000-teu berths in the past two years in addition to its existing five 5,000 teu berths.

Early statistics out this year show no let-up in Shenzhen and Yantian’s growth. January throughput for the city as a whole rose 41% year on year in the pre-Chinese New Year rush and for Yantian the figures were up 39% to 589,000 teu, not far off its all-time record of 600,000 teu.

In terms of key developments this year for YICT, the Shenzhen municipal government has vowed to invest heavily in highway construction.

A total of Yuan1.7bn ($205m) will be invested this year to build a highway to solve the traffic bottleneck in the eastern port area of the city.

The 11.34 km road is scheduled for completion in 22 months with a designed speed of 80 kilometres an hour.

The construction of the highway is designed to cope with the busy traffic caused by the booming Yantian port, which handled 6.26m teu last year.

However, the Wutong mountain has blocked the traffic between the Yantian district and the central area.

“The new highway will ease the traffic pressure and help to improve the residents’ living environment as well as the investment environment,” says vice-mayor Xu Zongheng.

Discussing what delegates can expect on their tour of one of the jewels in the crown of the Hutchison Port Holdings empire, Anthony Tam, the company’s corporate communications manager, tells Lloyd’s List: “The terminal visit has attracted a very good response.

“There will be a yard tour as well as a general container terminal visit with a brief explanation of the terminal, its functions and its location.”

Flying performance sees port surpass rival Kwai Chung
16 March 2005
Lloyd's List

SPECULATION was rife in the middle of last year that Shenzhen, whose container throughput was flying once again, might even surpass its northern neighbour Shanghai to become the nation’s leading box port, writes Sam Chambers in Hong Kong.

In the event, though, Shenzhen narrowly lost out to Shanghai. However the port, which surpassed the 10m teu mark for the first time in 2003, did get the satisfaction of beating out the main Hong Kong terminals of Kwai Chung by 230,000 teu for the first time.

Ominously for Hong Kong, Shenzhen’s growth was 90% direct shipment related while Hong Kong saw growth primarily from lower revenue generating transhipment boxes. Port officials said the increase in box volumes was helped by a raft of new shipping services, which rose by 25 to 131 last year, coupled with the inauguration of five new berths. These included the second phase of Shekou Container Terminal, and additional facilities at Chiwan and Yantian.

The Shekou Container Terminal project has a number of investors, including Swire Pacific and Modern Terminals.

Work is now proceeding on phase three of SCT and Yantian International Container Terminal, jointly owned by Hutchison Port Holdings, the world’s largest port operator, and the Yantian Port Group.

In September, Shenzhen port started to charge shippers port-construction fees of Yuan40 ($4.83) per 20 ft box and Yuan80 per 40 ft box, narrowing the cost gap between the special economic zone and Hong Kong. This year it will, along with Hong Kong, implement security surcharges amounting to Yuan50 per teu, with transhipment boxes and empties exempt.

Port operators are all eyeing further terminals around the Shenzhen area, including Mawei and a large site at Dachan Bay which will have the Whart-controlled Modern Terminals on board. While Shanghai’s expansion is focused around Yangshan Shenzhen continues to grow from a variety of locations.

CONTAINER SHIPPING - Capacity growth: is all the teu in China?
Paul Sandle
28 March 2005
International Freighting Weekly

The global shipping industry is riding high at the top of the biggest boom it has experienced for 80 years.

Shipowners made US$80bn last year, according to Martin Stopford, MD of Clarkson's Research, and the lines are posting record profits on the back of soaring freight rates.

The boom has been caused by a lack of new capacity coming into the market coinciding with an increase in world trade, led by a strong global economy and the emergence of China as a manufacturing powerhouse.

But since the demandsupply pendulum starting swinging back in the lines' favour in 2000, shipyards' orderbooks have filled up, particularly for vessels over 8,000teu.

The record amount of extra capacity coming on stream in the next few years – 150 large vessels will join the east-west trades by 2008 – has led some commentators to predict a return to the days of boom and bust.

But the lines are confident rates will hold up and the good times will continue. A spokesman for OOCL, which recently unveiled a doubling of profits for last year, says:

"During the course of 2004, the supply and demand balance remained firmly in our favour and at the present time it is hard to find any data to suggest that this favourable situation will alter in the near term." It is no news that the main driver of the market has been China. But if China is the catalyst, other factors, including the growth in merchandised trade, which at 9.5% is running at more than twice global GDP growth of 4%, and pressure on transport infrastructure, particularly in the US and Europe, have contributed to the tightening in capacity and high rates.

Martin Stopford, speaking at the China Shipping 2005 conference in Shanghai earlier this month, said China's influence was felt most strongly now because its boom was synchronised with a period of growth in the global economy.

China started on its upwards trajectory in the 1990s, he points out, but two recessions – the Asian financial crisis in 1997 and the bursting of the dotcom bubble in 2001 – eclipsed the impact it was having on trade flows, particularly on the import of raw materials.

"The recession in the rest of the world had freed up shipping capacity, making the speed at which China was soaking up shipping capacity less apparent, " he says.

"But when the business cycle turned up again in 2003/04 and the world economy grew rapidly, the world found itself seriously short of ships for the first time in 30 years." The emergence of China as a trading superpower has had an impact on demand, which outstrips the growth of its own domestic economy.

"In 2004, China still accounted for 10% of world imports, but China's share of year-on-year growth in sea trade averaged 48% during the period 1998-2004, " Stopford says.

What has been different in China's rise compared with previous emerging maritime economies, such as Japan and South Korea, is that the Chinese government has not planned its sea freight requirements, he says.

"I believe China's business model, which relies heavily on market forces, has played a significant part in determining the extremity of freight markets over the last two years, " he says.

China's growth in the import of raw materials, much of which are then exported as manufactured goods, combined with a strong global economy has caused freight rates to "break out" from their historical cycle.

According to the Howe Robinson Container Index, in January 2004 rates shot through the previous high, achieved in August 1995, and have continued on a steep curve ever since. Ayear later, they stand 70% above the historical peak.

Although demand has been growing most strongly on the east-west trades, Nick Hubbard of shipbroker Howe Robinson says a lack of new capacity on other routes has caused the demand-supply imbalance.

"The 502,000teu which entered service on the eastwest rates, leading to an oversupply of 79,000teu, was more than offset by a shortage of new capacity on the northsouth and feeder routes, where only 136,000 of the 650,000teu that were required entered service, " he says.

The situation will be repeated this year, he claims, with an estimated undersupply across the total market of 266,000teu, or 3%.

"This does not allow for congestion on both US coasts, and in Panama, Europe and India, which increases the demand for small ships and reduces fleet efficiency through delay, and the inefficiency of displacement, " he adds.

Over the course of this year, he predicts the continuing tightening of supply will cause rates to rise at a similar pace, ending the year 20-30% higher than where they started.

But the upward curve will start to level off in 2006 as more capacity enters the market, he predicts.

"The pendulum in the supply-demand balance will be swinging back towards an increase in supply outpacing demand by 0.5%, " he says.

But he warns that a levelling off of rates at a level 30% higher than today depends on demand staying strong.

"If growth in demand weakens, down to an average level of 9%, freight rates would crash and charter rates would also fall significantly, but both would remain above the last alltime high, " he says.

"If there is an economic crisis, and demand weakens to 5%, both freight and charter rates would be devastated." Arthur Kroeber, MD of China Economic Quarterly, outlined the reasons why the growth of China has had such a major impact on freight rates at the China Shipping 2005 conference.

China is still far from becoming a consumer economy, according to Kroeber.

Although the domestic economy is powering ahead, it is "factory Aselling to factory B selling to factory C, which then exports.

"China combines Japan style export capacity with American-style import appetite, " he says.

This could leave it susceptible to a global downturn in demand and a falling off of inward investment.

But Kroeber thinks there is only an outside chance of this happening. China's role as a trade aggregator means that even if US demand slows, China's trading position will remain strong.

Adownturn will put pressure on costs, he says, and manufacturers will respond by moving more Asian manufacturing to China.

Hubbard acknowledges that the outlook on rates needs to take into account more than just the supply/demand equation.

Even with deliveries hitting an all-time high in 2006, there will still be a shortage of ships below 4,000teu, he says.

"There's a deficit of ships to trade between China and the rest of Asia, " he says. "More hub services will need more small ships – that's exactly what's not being built at the moment."

The fastest increase in rates is already being seen in the intra-Asia trades.

P&O Nedlloyd recorded profits in its container line of US$388m last year compared with US$96m in 2003 driven by an average increase in rates of 13%. Although it says growth was strong on the Asia-Europe and transpacific routes, it was Asia, and intra-Asia in particular, that boomed.

"Overall volume growth in the Asia trades reached 11% and freight rates increased by 19% across all trades, " it says.

"The strongest volume growth was in the intra-Asia trade."

And it is not just a tightening in the supply of ships that will keep rates high – it is also a tightening in the supply of the rest of the infrastructure needed to cope with accelerating global trade.

Congestion is already compounding the supply/demand imbalance, and unlike the shortage in vessels, the situation will not ease in the next two years, at least not in the US and Europe.

The impact of worsening congestion on the global freight industry is high on the agenda of Bruce Calton, associate administrator for policy and international trade maritime administration in the US Department of Transportation.

"Simply stated, the huge trade volumes out of China are overwhelming large segments of the total transportation infrastructure, " he says. "It is happening in the US and it is happening in Europe. Not surprisingly, it's also happening here in China." He says more delays will be the inevitable consequence of failing to improve infrastructure in pace with global trade expansion.

"It is quite clear that we have forever lost the luxury of assessing shipping markets in isolation, " he says. "On the contrary, global shipping markets are now the key driver shaping both public and private decisionmaking in all aspects of freight transportation." Congestion on the US west coast last year led to volumes moving to the east coast.

"Strong volume growth of 17% on the transpacific trade was moderated by the impact of congestion on the west coast of the US, " says a spokesman for PONL. "As a result, the service from Asia to the east coast via the Panama Canal showed the strongest growth in the region." Changing trade flows to avoid congestion also have the effect of swallowing up new capacity as well as putting up costs.

Stanley Shen, general manager corporate marketing at OOCL, says it takes five vessels to operate an Asiawest coast loop on a 35-42 day round trip, whereas a 63-105 day trip to the east coast requires nine vessels.

This is just one of a range of factors that analysts fail to take into account enough when looking at the supply/demand balance, he says.

"Predictions use the value of trade as the measure of growth when what is important in container traffic is the volume of goods, " he says.

In an era of low inflation, the value of many consumer goods – for example, DVD players – has fallen, which disguises the increase in volume, he says.

"Actual slot utilisation also falls short of declared slot capacity because of operational technicalities.

There's also a trend towards increased containerisation, including goods such as wool, cotton, grain and produce." These changes in trade patterns and the impact of congestion leads OOCLto remain bullish on rates despite all the capacity coming on stream.

"Even were a supply surplus [of static slots] to arise it is likely to be less severe than some are predicting and therefore, is likely to have only a marginal effect upon freight rates, " says chairman CC Tung.

"Indeed, some of these same independent commentators and analysts are now starting to come around to this point of view once they account for the congestion factor and its potential impact upon effective tonnage supply, especially on the transpacific trade lanes." With high demand for their services, the shipping lines have had no difficulty in finding customers, and some forwarders have been left scrambling around to secure capacity, particularly from Asia to Europe and from Asia to the US.

But the forwarders have gained some leverage from the increasing trade imbalance, particularly between Asia and Europe.

Exel is one logistics operator that operates a global partner carrier programme with the container lines, which offers them eastbound cargo in return for guaranteed slots westbound.

"We try to supply nine carriers with the majority of our volume, " says Charles McGurin, Exel's sea freight director in the UK. "The programme is a huge help in securing capacity. We can provide them with exports to China, mainly in the engineering, hi-tech and pharmaceutical sectors." OOCL, however, is confident that it can offer shippers the levels of service they require, and it is not so bothered about finding lowrate return cargo.

"On the westbound [transpacific] service, we carry empty boxes to make the turnaround as fast as possible, " Shen says.

Osamu Suzuki, MD of MOL(Asia) agrees that the trade imbalance is also a factor that will keep rates high. "On the transpacific trades, 50% of containers come back empty. This has to be taken into account in pricing, " he says.

Customers may not be as preoccupied by rates as industry analysts suggest, according to Suzuki.

"Customers know more – they are service-driven rather than rate-driven, " he says.

"China will keep on growing, keep on increasing exports to the US and Europe.

Trade growth will be 15-16% on the transpacific [routes] and the same on AsiaEurope, " he says. "We will easily fill capacity growth.

"The increase in demand has led to a more efficient industry. The next time the market downturn comes, the industry will be more flexible." China, as well as being the source of much of the demand for new capacity, has its sights set on being the source of most of the new ships as well.

Its stated aim is to overtake Japan and South Korea and reach the top of the shipbuilding league in 1015 years. If the lines are correct in their long-term outlooks on rising demand, China's yards should still be busy in 2015.

China to abide by single-hulled tanker ban - official

BEIJING, April 1 (Reuters) - China plans to impose an international ban on the use of single-hulled dirty tankers, due to take effect next Tuesday, a government official said, but traders and shippers doubt whether it could be done on time.

However, Chinese-flagged boats plying domestic routes would not be bound by the ban, said the official from the Communications Ministry, which deals with international shipping issues.

"China will abide by the IMO ban on single-hulled boats starting on April 5," the ministry official, who declined to be named, said on Friday.

China's fuel oil trade will be severely disrupted if these vessels are barred from entering the southern port of Huangpu, the largest in China, which takes in nearly half its total fuel oil imports and sees about 1.0-1.5 million tonnes of the product a month.

The International Maritime Organisation (IMO) is imposing the ban on "unprotected" single-hulled tankers carrying heavy-grade oil, in the wake of the sinking of the Prestige, a single-hull tanker, off the Spanish coast in November 2002.

Tankers delivered before April 5, 1982, will be banned from the IMO deadline, while younger vessels will be phased out by Dec. 31, 2005.

The official said the ministry had yet to inform the market of the impending ban, adding it would do so "as soon as possible". The official declined to comment further when asked what measures Beijing would take to enforce it.

Chinese traders and shippers said they had not yet received any notification.

"China will follow IMO's ban but don't think that can be put into force as soon as next week," said a shipping agent in Huangpu.

Chinese fuel oil players have fixed most of their April arrivals into Huangpu using single-hulled panamax tankers since they have not been notified of any ban.

A Guangdong-based maritime official said his office knew of the ban but had not yet been instructed to implement it.

China plans to enforce phasing out single-hulled dirty tankers - report
5 April 2005

HONG KONG (AFX) - China is planning to enforce the International Maritime Organization's (IMO) regulation to phase out single-hulled dirty tankers, The Standard reported, citing unnamed sources.

A ban on 'unprotected' single-hulled tankers carrying heavy grade oil was imposed by the IMO after such a tanker sank off the Spanish coast in Nov 2002.

As of Tuesday, tankers delivered to customers before April 5, 1982 have been banned and new deliveries will be phased out by Dec 31, 2005.

Concerns about the ban have pushed up freight rates by up to 5 pct for 60,000-ton vessels plying the Singapore-South China route, the report said.

However, most tankers delivering fuel oil to China are single-hulled and at least six such vessels delivering about 360,000 tons of fuel oil are due to arrive in China soon, according to the report.

China may mean end to boom and bust box cycle says Green
Sector may be entering period of sustained growth, writes Janet Porter in Rotterdam
25 April 2005
Lloyd's List

CONTAINER shipping may be coming to an end of the boom and bust cycles that have characterised the industry for the past three decades and entering a period of sustained expansion, P&O Nedlloyd chief executive Philip Green said in a keynote lecture on Friday.

The historic link between global economic activity and container trade growth could be broken by the China effect, Mr Green told students and industry representatives attending his presentation at Erasmus University,

In the past, increased demand has led to container lines, including P&O Nedlloyd, investing in more capacity with the inevitable result.

“The industry has been here before: ordering new vessels as the economic cycle creates a boom in demand which precipitates a crash as supply eventually and unsurprisingly outweighs demand as the economic cycle turns down,” he acknowledged.

But this time the outcome may be different, with the world undergoing a second industrial revolution inspired by the “Chinese economic miracle”.

European outsourcing to Asia has barely begun, while US high-end products have yet to be outsourced, said Mr Green.

“In essence, the container shipping industry may no longer be at the whim of a vicious cycle of boom and bust but may, in fact, be responding to a steady upwards curve in demand which will remain for the foreseeable future,” he predicted.

Industry experts are becoming divided about the near-term outlook for the industry.

After an unprecedented level of ordering in the first quarter, many brokers are now more concerned about prospects for the containership charter market in 2006 and 2007 than they were a few months ago.

And a slump in charter rates would probably also hit freight rates, they are warning, as shippers take advantage of the tonnage surplus to drive a hard bargain.

On the other hand, consultants such as Drewry Shipping and financial analysts like Handelsbanken have recently issued very upbeat assessments on the future of container shipping, based largely on the much longer voyages from Asia to Europe and North America as more manufacturing is shifted to China. Mr Green admits it would be “fanciful” to suggest that China’s current levels of growth can continue unabated.

“That clearly is not the case but China’s economy is built on solid ground,” he maintained.

There has been a genuine economic shift in the form of outsourcing. China enjoys political and economic stability, almost immeasurable output capacity and potential, and a level of western demand that is guaranteed, the P&O Nedlloyd boss continued.

He believes the Chinese miracle dwarfs all economic shifts since the US became a world superpower in the 19th century.

“It is this dramatic scale that allows us to refer to the Chinese phenomenon as more than just a trend but as the second industrial revolution,” said Mr Green.

And just as the first industrial revolution would not have been possible without the development of canals and steam trains, so the second one “could not and would not be taking place without containers and container shipping”.

Focus is on trade with China
28 April 2005
Lloyd's List

WITH most of the liner service changes now in place for trade from Brazil to the US east coast, lines have turned their attention to services to and from Africa and Asia.

“What will be important will be the further relationship between China and Brazil after Brazil recognised China as a free market economy,” says Dick Meurs, P&O Nedlloyd general manager for east coast South America services. “That was a very important step in the industry of Brazil.

“Brazilian and Argentine industry was critical because the risk is whether the local industry can compete with China.”

With growth in trade between the two countries around 50% last year, carriers are lining up to move more volume directly from Brazil to China.

Imports and exports on this trade between January and November last year reached 350,000 teu, reports Paulo Simoes, MOL general manager in Brazil, with import and export volumes balanced, making it the most profitable of the three principal routes. “The advantage is that the ships are sailing full in both directions,” says Mr Simoes.

In contrast, the northbound leg on the US east coast trade commands a $500-$600 per teu pre- mium over the southbound leg due to the imbalance in exports and imports.

As a result companies such as MSC and CMA CGM that serve the east coast of South America to China by means of transhipment services in Europe are planning to enter the market with direct services.

CMA CGM has teamed up with China Shipping and Maruba to create a weekly service employing 2,500 teu vessels.

P&O Nedlloyd has decided to go it alone with a similar service redeploying five 2,500 teu vessels from its Europe to east coast South America service in August.

NYK Line, likewise, is adding an extra string using 1,700 teu vessels on its South America to South Africa and Asia service, also starting in August. The move by P&O Nedlloyd brings an end to its joint venture with MOL, which is now looking to bring in new vessels or partners to ensure that it can maintain a weekly service, says Mr Simoes.

P&O Nedlloyd has been able to shift its vessels from the Europe trade thanks to the introduction of 5,500 teu vessels in its joint service to North Europe, with Hamburg Süd effectively doubling its capacity on the South America to Asia route.

New port to ease coal shipments
April 30, 2005

The mainland will build a new northern port to expand capacity for coal shipments and imports of iron ore and crude oil, according to the China Daily.

The port in Caofeidian, also slated to be the new base of one of China's biggest steel makers, will initially be able to handle 50 million tonnes of coal per year and its annual capacity will rise to 200 million tonnes when it becomes operational in five years, the paper said Friday. Coal from the port will go to southern China.

"The port will ease the bottleneck in coal transportation from inland areas of north China to east and south China, and satisfy demand from the booming coastal areas of east and south China,'' it said.

Rocketing coal demand is being exacerbated by transportation bottlenecks that last year left many cities with insufficient stocks for winter.

The State Development and Investment Corp (SDIC) will hold a 51 percent stake in SDIC Caofeidian Port, the new company charged with developing the port, the daily said.

Caofeidian, near Tangshan city in northern Hebei, will also be the new home of Shougang Group, a huge steel maker now based in Beijing.

After the relocation, the steel maker will be able to use the port to receive imports of iron ore necessary for meeting its production needs, the paper said, without giving details on the port's iron ore capacity.

REUTERS

South China Morning Post
April 29, 2005
Hutchison gets nod for Yantian project
Russell Barling

China's state planners have approved a 12 billion yuan expansion of Hutchison's Yantian International Container Terminals, the busiest terminal complex at South China's port of Shenzhen.

The project will add six deep-sea berths and put more pressure on the higher -cost port of Hong Kong, where growth has stagnated in the first three months.

Yantian International, which is operating at 70 per cent capacity according to sources at the port, will start building the first berth by the end of the year as the constant stream of manufactured exports through Shenzhen shows no signs of letting up.

"If the market continues the way it is, we should probably start construction by the end of the year," a Hutchison port executive said on condition of anonymity.

"Once we get the green light, we can build a 350-metre berth every six months."

Yantian handled 1.58 million 20-foot equivalent units (teu) in the first quarter, up 21 per cent year on year.

Construction of the first 600-metre berth - much larger than the standard size for even the biggest deep-sea vessels - would be completed by September next year and reclamation for it had already started, a source at the port said.

The 12 billion yuan price tag for the greenfield project is bound to raise a few eyebrows in South China; the benchmark price for construction of a terminal is about 500 million yuan per berth.

It is thought the price of Yantian's extension was inflated by the projected cost of extensive reclamation and the 30 super post-Panamax-sized quay cranes it has slated for the facility.

Hutchison Port Holdings spokesman Anthony Tam confirmed Beijing's approval yesterday but declined to verify any details.

Hutchison Port, the world's largest container terminal operator, has an effective 42.5 per cent stake in Yantian's Phase III.

Hutchison rival Modern Terminals on Tuesday confirmed the National Development and Reform Commission - the country's state planners - had approved the first five-berth phase of its massive Dachan Bay project, just northwest of Yantian on the Pearl River.

The approvals were thought to have been linked as authorities aimed to encourage competitive pricing by discouraging the emergence of a dominant player.

Hutchison said the commission had also approved an expansion of its underutilised facility at Gaolan, on the west side of the delta.

"We are now looking to accelerate Gaolan's development with the introduction of more international line-haul services," Hutchison Whampoa managing director Canning Fok Kin-ning said.

Logistics Company Assists Yantian Port
By Chen Hong
27 April 2005
China Daily

SHENZHEN: Yantian Port Group has recruited the services of a leading United States firm to improve the efficiency of its logistics services as its price advantage is being cut by Hong Kong rivals slashing handling fees.

"The port handling facilities, services and management have been gradually improved over the past few years to come up to international standards. However, its logistics services are still lagging far behind and keep troubling port users," said Li Xuanmin, general manager of Yantian Port Group, which runs the Yantian International Container Terminal with Hong Kong port-to-telecom conglomerate Hutchison Whampoa.

Li said there is competition between the ports at Shenzhen and Hong Kong, so the company is strengthening the competitive edge of Yantian Port, the largest port in Shenzhen.

"The price gap is narrowing to about US$400 for one TEU goods from Shenzhen and from Hong Kong to the United States or to Europe, which is likely to continue to fall since the Hong Kong port operator has cut the handling fee," Li noted, suggesting that another 10 per cent of the fee may be removed.

To provide a better distribution solution, the company set up a 50-50 joint venture with Prologis, a leading American logistics facility developer, to build a logistics park 3 kilometres from Yantian port.

With a total US$90 million investment, the joint venture will build six three-storey ramp buildings, a special facility developed by Prologis that will allow six to eight 20-foot container trailers to load and unload simultaneously on each floor.

The construction of the first two buildings will begin in the fourth quarter of this year, and is due to be finished in the third quarter of next year, said Ming Z. Mei, managing director of Prologis China.

If the market gives a positive response, the other four will be built, he added. Upon completion, they would provide a total floor area of 290,000 square metres.

"Given the limited land - about 190,000 square metres - our system could provide larger space as our Chinese partner requires, but the cost will increase correspondingly, nearly double that of the general model," Mei noted.

By renting the warehouses to three-party logistics companies, manufacturers and retailers, Prologis could also provide solutions to help clients cope with challenges. It could purchase distribution facilities that customers currently own, and then lease them back.

This is the fourth project launched by the world's largest listed industrial property investment trust in China, which allows the company to expand its business from East China's Yangtze River area to the manufacturing hub of the Pearl River Delta area.

Zheng Jingsheng, board director of Yantian Port Group, said the strong customer base and operational capability of Prologis will boost the logistics industry in the Yantian port area and in the city as a whole.

Prologis has served at least half of the top 1,000 distribution business users in the world, of which 70 per cent are renting more than one property owned by Prologis.

Chinese giants square up in box battle
China Shipping and Cosco slug it out in bid to trump each other, writes Janet Porter
3 May 2005
Lloyd's List

THE race for supremacy between China’s two largest container lines is reaching fever pitch, with Cosco reported to have placed an order for another four 10,000 teu ships and arch rival China Shipping actively looking for takeover targets.

And in an added twist that underlines China’s determination to dominate container shipping within a few years, it is a Chinese yard that is said to have landed the Cosco order.

Market talk of Cosco’s latest spending spree surfaced at the weekend as speculation spread through the industry about China Shipping’s renewed efforts to join the super league of container lines.

With full shipyards inhibiting organic growth through newbuildings, China Shipping has made little secret of its wish to expand through acquisition and is thought to have taken a close look at a number of potential candidates.

But Cosco appears to have found some newbuilding berths, with industry sources claiming that the company is ordering the 10,000 teu quartet from Nantong Cosco KHI Ship Engineering, known as Nacks, its joint venture with Kawasaki Heavy Industries.

According to brokers, the ships are likely to cost just over $130m apiece and will be built in a new dock that is under construction. Delivery is believed to be set for 2009. Cosco already has four ships with a declared nominal capacity of 10,000 teu on order at Hyundai Heavy Industries in South Korea — although their true maximum capacity is nearer 9,600 teu.

At the same time, Nacks is building five 9,200 teu units for Cosco. The delivery dates of the latest orders are not known.

But China Shipping is in a hurry to catch up with the biggest in the industry, with chairman and founder Capt Li Kelin said to be considering growth through acquisition until Chinese shipyards are big enough to support organic fleet expansion.

But, he is determined not to greatly increase the average age of China Shipping’s very modern containership fleet. That not only rules out growth through secondhand tonnage, but a number of possible acquisition targets, according to sources close to the company.

One line that has been linked with China Shipping for some time now is CP Ships, as Lloyd’s List disclosed last week.

That rumour gained currency because of the link between the two via Seaspan Container Lines, the Vancouver company that has ordered ships on behalf of both under long-term charter contracts. Seaspan has declined to comment on the speculation.

CP Ships’ apparently half-hearted attempt to find a new chief executive to replace Frank Halliwell who resigned five months ago, and then last week’s sudden announcement that it was abandoning its multi-brand strategy, fuelled the gossip.

However, industry insiders do not think CP Ships is the only company that China Shipping has in its sights. P&O Nedlloyd would also be an attractive proposition, said one well-placed source, partly because of its very large orderbook including super post-panamaxes that would appeal to Capt Li’s ambitions. China Shipping Container Line has achieved staggering growth since it was set up in 1997. The company had climbed to number 16 in the world by 2001 and then gained a ninth place ranking this year with a fleet of more than 100 ships totalling 273,000 teu of capacity. There are another 41 ships on order that will almost double the size of its fleet, according to ci-online statistics. The goal is to become one of the top three container lines in the world by 2010.

China Shipping was the first line in the world to order ships with a declared capacity of more than 8,000 teu, and then was the first to break the 9,000 teu barrier by ordering a series of 9,580 teu vessels.

Talk of China Shipping’s thirst for acquisitions has been the gossip of bankers, brokers, vendors and other lines for several weeks now, with some dismissing the speculation as “old hat” while acknowledging that CP Ships would be a good match because of the complementary trades.

Other well-placed sources, while admitting they had no firm knowledge of what was being discussed, thought an approach seemed “highly likely”.

CP Ships’ market capitalisation is currently around $1.2bn, the same as the purported bid price doing the rounds.

P&O Nedlloyd’s market capitalisation is $2bn. P&O still hold a 25% stake in P&O Nedlloyd that could provide a sizeable foothold for a potential suitor.

State planners give go-ahead for first phase at Dachan Bay
Approval comes early with two berths expected to be operational by end-2007
Russell Barling
27 April 2005
South China Morning Post

The seven billion yuan first phase of Shenzhen's massive Dachan Bay container terminal project has been approved by state planners, paving the way for another entry into the region's increasingly crowded port scene within two years.

The first five-berth phase of Dachan Bay, a joint venture between the Wharf Group's Modern Terminals Ltd (MTL) and the Shenzhen municipal government, was approved by the National Development and Reform Commission on March 29 and is expected to be operating two berths by the end of 2007.

"The first phase of the project received official approval {hellip} two months ahead of the expected schedule," said a spokesperson for MTL, which owns 65 per cent of phase one. "Reclamation is under way; the plan is to develop Dachan Bay in four phases."

In all, the Dachan project is expected to add 20 berths - 15 for deep-sea vessels - to the south China port mix.

Approval comes just over a year after planning authorities in the mainland unofficially called a moratorium on port development in the Pearl River Delta region, delaying construction of Dachan, phase IIIb of Hutchison's Yantian complex and several other ambitious projects at secondary ports.

"I don't think this signals a shift in policy. Approval processes usually go in cycles in China. Dachan is probably in the 11th five-year plan," said a veteran China port executive. "[Mainland planning authorities] want to encourage an open market by encouraging different players. This will balance Yantian."

Phase one is expected to be complete by the end of 2008 and have the capacity to handle 2.5 million teu (20-foot equivalent units) a year. Vessels calling at the port will benefit from a revamped Tonggu Channel, which Shenzhen authorities began dredging in December at a reported cost of $1.9 billion plus maintenance expenses.

Phase two is scheduled to have four deep-sea berths, phase four will have six while phase three is planned to have five berths catering to river and intra-Asia trade routes, which typically use smaller vessels or barges.

Dachan's approval comes as Hong Kong operators scramble for business amid almost no comparative volume growth at the world's biggest port in the first quarter.

"The future looks more and more crowded. It appears to be a bit of a high-stakes gamble," said Michael Chan, head of transport research at the Bank of China (International). "Dachan may not have a significant impact until late 2008 but overall capacity may come back to haunt people."

Another veteran of the Hong Kong port scene said he expected operators' margins, which have been declining since the turn of the century, to come under further pressure.

"There eventually has to be a price war," he said. "Not right away but it will happen, probably within the next five years."

According to a recent report by Citigroup analyst Charles de Trenck, Hong Kong's main terminals, where there are three idle berths, have as much as nine million teu in spare capacity, or six years' worth at last year's growth rate. Growth rates, however, have slowed since then.

State-owned Shanghai International Port Group, in which Hong Kong-listed China Merchants Holdings (International) holds a 30 per cent stake, yesterday agreed to pay 370 million yuan for a majority stake in the port of Wuhan.

China shipbuilding enters new era
Cosco agrees on US$520m order for four of the biggest container vessels ever from a mainland yard
Russell Barling
5 May 2005
South China Morning Post

China's nascent shipbuilding industry has entered a new era with an arm of China Ocean Shipping Group (Cosco) preparing to spend up to US$520 million for the four biggest container vessels ever ordered at a mainland yard.

Cosco Container Lines (Coscon), which is expected to try to raise up to US$2 billion in a listing in Hong Kong later this year, has agreed to order four 10,000 20-foot equivalent unit (teu) capacity box ships from Nantong Cosco KHI Ship Engineering near Shanghai, according to a Cosco executive.

The deal is seen as proof that the rush of foreign and domestic capital into the country's shipbuilding sector in the past five years is paying dividends. But rampant ordering - Coscon has booked 80,000 teu in the past four months - will fuel fears the hugely cyclical industry is set for a downturn.

"It is very exciting. These are some of the biggest, if not the biggest, container ships ever built and the order is coming from a premier Chinese client," said Martin Rowe, a director for global ship broker Simpson, Spence and Young, adding such an order would not have been considered five years ago.

According to broker Clarkson, the global order book was a record 4.1 million teu as of last month, or about 56 per cent of the present fleet, up from 52 per cent in March.

Concerns about the size of the book extended this year's contract negotiating season on the Pacific, as key US buyers such as Wal-Mart Stores and Home Depot tried to leverage the pending capacity influx into cheaper freight rates despite double-digit volume growth on eastbound trade.

Citigroup's chief transport analyst in Asia, Charles de Trenck, a noted bear, warned last month the industry was in a "freight bubble" that was about to burst. "The mind-numbing 54 to 56 per cent of the container fleet on order continues to point to the cyclical exit door for us," his report said.

Nevertheless, carriers are using low interest rates and swollen bank accounts after a three-year profit run to renew and expand.

The Cosco executive would not disclose the price of the vessels yesterday. Brokers estimated they would cost US$125 million to US$130 million per ship.

Nantong Cosco is a US$240 million joint venture set up in 1999 by Cosco and Kawasaki Heavy Industries, using the technology of its Japanese partner to become China's most advanced yard.

It was the first mainland shipyard to build big car carriers for export and boasts China's fastest turnaround times for very large crude carriers - typically 150,000 to 320,000 deadweight tonnes.

However, because the order is domestic, it is thought Nantong Cosco will remain outside the shipbuilding big leagues until more orders come from overseas.

"It's another stage [in the shipyard's progress]," said a Hong Kong-based broker. "It's a domestic order but, if you look at how Korea became the dominant [liquefied natural gas] builders, they started with domestic orders. This is a step in that direction."

Coscon in January ordered four 10,000-teu vessels from South Korea's Hyundai Heavy Industries for about the same price and delivery in 2007.

Coscon, the world's No7 container carrier by fleet size, is aggressively expanding to keep pace with China's manufactured exports. It is battling China Shipping Group - whose spin-off China Shipping Container Lines debuted in Hong Kong last year - for the title of the mainland's biggest shipping line.

Coscon had almost 192,000 teu in capacity on order at global shipyards before the Nantong order, according to industry website CI Online. Rival CSCL's order book is at 241,000 teu and both are in the top five in terms of capacity on order.

Philippine operator eyes China ports
Mainland network from Bohai rim to Pearl delta key plank of expansion strategy
Russell Barling
9 May 2005
South China Morning Post

South China's crowded port scene may soon add another player after the Philippines' largest port operator said it was looking to invest in a mainland portfolio of up to five terminals in the next three years.

International Container Terminal Services (ICTSI), which is back on the expansion trail after selling its international port assets to Hutchison Port Holdings four years ago, is targeting China's secondary ports for a foothold in the world's most promising market, according to its top executive in China, Paul Lo Po-lau.

"We have spent about US$130 million in the past two years developing our facilities in South America and Europe and we wouldn't be averse to spending a similar amount to establish our China portfolio if the right opportunities present themselves," Mr Lo said.

ICTSI's facility in Suape, Brazil, was the only one to survive the international purge in June 2001. Last year, it added Baltic Container Terminals in Gdynia, Poland.

Mr Lo, who formerly worked for Hutchison's Yantian facility and Maersk Sealand, said ICTSI intended to develop a network of mainland ports from the northern Bohai rim area to the Pearl River Delta.

The delta is destined to become an even more crowded arena after China's state planners this month approved the development of at least another 11 berths for international trade, four of which will comprise the seven billion yuan first phase of the new Dachan Bay complex.

The flurry of approvals has again raised the spectre that Hong Kong's days as the region's premier port may be numbered, even given the robust projections for growth in regional cargo volumes.

According to Master Plan 2020, the government's de facto forecast compiled by consultants GHK, Hong Kong's throughput is expected to grow 4.2 per cent annually to 40.23 million boxes by 2020.

But the projection was based on assumptions that the port's land-based connections to its cargo hinterland would be dramatically enhanced. There has been little progress on that front in the year since the report was released.

Mr Lo would not be drawn on potential locations for its capital outlay other than to say ICTSI was "actively looking at a few projects" in China.

Zhuhai's port at Gaolan could be a possible target. State planners last week approved a two-berth expansion of the port.

Zhuhai officials have been unhappy with the way Gaolan, south China's second best natural deep-sea facility after Yantian, has been developed under Hutchison's watch and are entertaining rival international operators to compete with the world's biggest terminal developer.

Mr Lo said the type of facility ICTSI is looking to develop would typically have a design capacity for 500,000 to 1.5 million boxes a year and an established track record of growth.

"We are interested in ports that are established gateways for a specific city or region and which also may act as trade outlets for markets that have not yet fully matured," he said. "Some secondary coastal ports would fit the bill, but river ports may offer greater potential because they could start from a lower [volume] base."

Mr Lo said the booming Pearl and Yangtze river deltas were the obvious locations where secondary ports "could use a substantial investment in equipment to speed up their efficiency".

ICTSI more than doubled net earnings last year to $153.2 million and Mr Lo said it would prefer to invest in a joint venture - with private or public sector partners - rather than go it alone.

But he said cash was not the only thing ICTSI brought to the table. "Cash is important, but China's leaders don't just want foreign capital.

"They want foreign know-how. That has become as important as the capital."

South China Morning Post
May 9, 2005
Port operator looks to recent investments - China Merchants Holdings

China Merchants Holdings (International), one of the mainland's largest port operators, will spend the year digesting its recent investments rather than continuing to expand its network of port facilities, according to company officials.

Chairman Fu Yuning said the central government was expected to soon approve its 5.57 billion yuan purchase of a 30 per cent stake in Shanghai International Port Group - operator of the world's third-largest port.

The company has completed its strategic layout of ports in Hong Kong and on the mainland, and plans to focus on strengthening management control and logistics services.

The purchase will give China Merchants, which operates ports mainly in Shenzhen and Hong Kong, a foothold in the Yangtze River Delta through Shanghai's Waigaoqiao and Yangshan ports.

Consolidated net profit for the 12 months to December last year jumped 40 per cent to $ 2.06 billion.

China Merchants handled 7.2 million teu (20-ft equivalent units) at its mainland terminals last year, an increase of 44 per cent, while throughput at its Hong Kong terminals - it owns a 22 per cent stake in Modern Terminals - rose 13 per cent to 5.6 million teu.

Container volume is projected to increase at least 15 per cent this year and to include a hefty contribution from the Shanghai ports' 14 million-teu throughput. Across its network, the company is expected to handle 37 million containers next year, rising to 45 million by 2008.

The company's turnover for the year rose 13 per cent to $ 2.41 billion, with port-related businesses contributing about $ 950 million to earnings, and container manufacturing $ 624 million.

COSCO orders four more of biggest container ships

HONG KONG, May 23 (Reuters) - China's biggest shipping company, China Ocean Shipping (Group) Co. (COSCO), has ordered another four 10,000 TEU (twenty-foot equivalent unit) container ships, it said on Monday.

The order for four of the largest container vessels in the world, at a cost of more than US$100 million each, follows a similar order in January.

The vessels will be delivered in late 2008 or 2009, said Wei Jiafu, COSCO President and Chief Executive Officer.

State-run COSCO is seeking a listing in Hong Kong for its container business as early as June to raise an estimated US$1.5 billion to fund its expansion, sources said earlier this year.

Wei declined to comment on the IPO plan.

South Korea's Hyundai Heavy Industries Co. , the world's largest ship builder, said in January that it had won contracts to build four 10,000 TEU container ships for COSCO.

The latest order is from a mainland Chinese shipbuilder.

"We are the first to order 10,000-TEU ships," Wei told Reuters on the sideline of an international world conference.

The combined capacity of the eight container ships on order is equivalent to roughly 27 percent of that of COSCO's container arm, COSCO Container Lines Co. (COSCON), at the end of last year. COSCON had capacity of nearly 300,000 TEU at the end of 2004, shipping analysts said.

COSCO has said that it plans to spin off its newly created China COSCO Holdings Co. Ltd., which will hold its 52 percent stake in sea container leasing and terminal unit, COSCO Pacific Ltd. , COSCON and other container shipping related businesses.

INTERVIEW-China port plans won't create glut-official
By Alison Leung

SHANGHAI, May 23 (Reuters) - A top Chinese infrastructure official expressed confidence that mammoth port expansion plans to meet demand for handling containers, bulk goods and oil would not lead to overcapacity.

Communications Minister Zhang Chunxian told Reuters in an interview on Monday on the sidelines of a ports conference that the country's shipping container throughput could double by 2010.

"It is not a question of over-building in Chinese ports, it is a question of being able to meet demand," said Zhang, whose ministry oversees ports.

To ease congestion and meet rising demand, China plans to build new terminals and upgrade old ones in its three major economic zones: the Pearl River Delta, in Guangdong province; the Yangtze River Delta region around Shanghai; and the Bohai Rim area, which covers Qingdao, Dalian and Tianjin.

"The current development is based on market demand and integrating with central government (policy)," he said.

"Some of the ports cannot be upgraded and so we would build new ones," he added.

China is expected to handle 120 million to 140 million twenty-foot-equivalent units (TEU) of shipped goods a year by 2010, doubling its throughput of 61.8 million TEU in 2004, Zhang told the conference earlier in the day.

The ministry has said it expects that the country could move more than 75 million TEU this year, up about 22 percent from 2004.

Beijing has said it plans to spend 40 billion yuan (US$4.83 billion) this year on ports-related infrastructure, with 120 new berths set to open during the year.

Port operators in Shanghai, Xiamen and Dalian all plan initial public offerings to help finance their expansion plans.

A global trade boom has fuelled demand for container shipping and terminals. Hearty global appetite for cheaply priced Chinese goods and imports of the raw materials used to make them have put pressure on China's ports and other infrastructure facilities, such as railways and power plants.

The country's imports and exports last year were worth US$1.15 trillion, underpinning buoyant container traffic in the mainland, Hong Kong, Singapore and other Pacific ports.

Zhang also said that Hong Kong would continue to be the major container port in the Pearl River Delta, working more in cooperation than competition with the neighbouring mainland port of Shenzhen.

"Their relationship is complimentary," Zhang said.

Hong Kong, which lost title as world's busiest container port to Singapore earlier this year, has been losing market share to the southern Chinese boomtown of Shenzhen, which has cheaper services.

Shenzhen, ranked the fourth on the global container port list after Hong Kong, and Shanghai are on track to eventually overtake Hong Kong and Singapore.

CHINA PRESS: Container Traffic To Reach 140M TEUs In 2010
24 May 2005

SHANGHAI (Dow Jones)--China's container throughput in 2010 is expected to reach 140 million 20-foot equivalent units, or TEUs, in 2010 from 61.5 million TEUs last year, the Shanghai Daily reports.

The paper also cites Minister of Communications Zhang Chunxian as saying the volume of bulk shipping through China's ports will reach 6.1 billion tons in five years, from 4 billion tons last year.

Zhang was speaking at a ports conference in Shanghai.

China COSCO to start marketing IPO next week

HONG KONG, May 26 (Reuters) - China COSCO Holdings Co. Ltd., the container shipping arm of COSCO group, is poised to kick off marketing of its US$1.5 billion IPO, after winning a go-ahead from the Hong Kong bourse on Thursday, a source close to the deal said.

The newly created China COSCO will hold China Ocean Shipping (Group) Co.'s container shipping arm -- Container Lines Co. Ltd. and a 52 percent stake in COSCO Pacific Ltd. , the sea container leasing and terminal unit of COSCO group.

Earliest China COSCO HK Listing Last Week Of June -Source
27 May 2005

HONG KONG (Dow Jones)--China COSCO Holdings Ltd., a unit of the mainland's largest shipping firm, is aiming to list on the Hong Kong Stock Exchange in the last week of June or the first week of July, a person familiar with the situation said Friday.

The person said he understands China COSCO's listing has been approved by bourse regulators.

The company plans to raise US$1.5 billion from its initial public offering, making it one of the top three listings earmarked for the coming months, along with mainland coal producer China Shenhua Energy Co. and Bank of Communications Co.

China COSCO will be the listed entity of state-owned China Ocean Shipping (Group) Co.

China COSCO Hldgs Net Pft Seen Down 18% In 2006 - HSBC
31 May 2005

HONG KONG (Dow Jones)--Listing candidate China COSCO Holdings will likely post an 18% drop in 2006 net profit on falling container shipping rates, said a research report by HSBC Holdings plc (HBC), one of its listing sponsors.

The company, a unit of China's largest shipping firm China Ocean Shipping (Group) Co., will likely record a 30% drop in container shipping profits in 2006 as shipping rates fall on excess capacity while demand slows, HSBC said in a report seen by Dow Jones Newswires Tuesday.

China COSCO is planning to raise up to US$1.7 billion in an initial public offering in Hong Kong.

Its net profit is expected to fall to CNY3.54 billion in 2006, from a forecast CNY4.33 billion this year. It made a net profit of CNY4.16 billion last year.

Container shipping accounted for about 70% of China COSCO's 2004 pretax profit.

"This (profit) forecast is mainly driven by our belief that container shipping profits will suffer as a result of an imbalance in the supply-demand picture in 2006 and the disappearance of the one-off gain booked by the container terminals segment for the disposal of Shekou," HSBC said.

In March, China COSCO's ports unit sold its 17.5% stake in Shekou Container Terminals to rival China Merchants Holdings (International) Co. (0144.HK), in a deal worth HK$610 million.

For this year, HSBC said it expects average shipping rates to rise 5%, because of a sharp increase in bunker prices and a strong market for new ships and charters.

The company is planning to raise between US$1.35 billion and US$1.7 billion in the IPO ahead of a targeted early July listing, banking sources have told Dow Jones Newswires.

Apart from HSBC, UBS AG (UBS) is also managing the IPO.

The IPO will allow the company to sell some 36.5% of its shares to the public.

Apart from the container shipping operations, China COSCO owns a 52% stake in Hong Kong-listed port operator and container leasing firm COSCO Pacific Ltd. (1199.HK).

China COSCO will be the third company with interests in container shipping to list in Hong Kong, after Orient Overseas (International) Ltd. (0316.HK) and China Shipping Container Lines Ltd. (2866.HK).

- By Ruby Chan and Jeffrey Ng, Dow Jones Newswires

Tanker Shares May Sink Further
China's Softer Oil Demand Weighs on Shipping Firms; Shorts Circle the Waters
Russell Gold
2 June 2005
The Asian Wall Street Journal

SOME SHORT SELLERS are betting that tanker stocks will keep falling.

Last year, companies that own and operate giant crude-oil tankers were doing well. Unexpectedly strong demand for crude in China stretched the ability of the fleet to transport all that oil, and short-term rental rates soared in the final months of the year. This left tanker companies flush with cash and sent their stock prices higher.

Tanker-company rental rates and stock prices typically fall during the northern hemisphere's spring, when demand for oil slumps between the winter heating season and the summer driving months. This year the trend is even more pronounced than usual because of the launch of more than 30 new tankers able to transport more than two million barrels of crude apiece.

During the past four weeks, tanker-rental rates were off 42% from the same period a year earlier, according to Swedish ship broker P.F. Bassoe. Just as troubling for investors: Growth in oil demand in China and the U.S. is slowing, says the International Energy Agency, the industrialized nations' energy watchdog that is based in Paris.

The stock prices for many tanker companies have fallen significantly this year, but they still are holding on to most of last year's gains. This has attracted the interest of short sellers -- investors who borrow stock and sell it, hoping the price will decline so they can buy it back later at a lower price and pocket the difference. The shorts are increasing their positions in tanker operators across the sector.

This includes companies such as Teekay Shipping Corp., OMI Corp., Knightsbridge Tankers Ltd. and General Maritime Corp. All of them are subject to the whims of rental rates for very large crude carriers, or VLCCs, and could be hurt if overall fleet capacity continues to increase and growth of demand for crude continues to slow.

The most exposed is Frontline Ltd., the largest independent tanker operator. Frontline is a leveraged play on tanker rates. It spun off most of its physical assets -- the actual tankers -- into Ship Finance International Ltd., which takes the first $28,000 from daily VLCC rental rates. Frontline gets anything above that and is therefore more exposed to the ups and downs of rental rates. Shorts now comprise 6.9% of Frontline's public float, or 2.7 million shares. While other industries attract more attention from short sellers, that is one of the biggest short positions anywhere in the red-hot energy industry.

The Hamilton, Bermuda, company has seen its stock fall about 32% from a peak of $62.80 a share in late November, when rental rates for VLCCs hit a 30-year high of more than $200,000 a day. The stock -- which was down 88 cents at $42.57 late yesterday morning in New York Stock Exchange composite trading -- still is up 64% since the beginning of 2004.

While high oil prices help most oil-sector companies, they aren't the main driver in the tanker business. Tanker profits are most affected by whether there is too much or too little capacity and what is happening with global demand. So, if oil prices were to fall significantly, oil-exploration companies would be hurt, but countries might gobble up more of the cheaper oil, and that would help tanker companies.

"There has been so much money pouring into the energy sector, people are just looking for places to put it. But the value of tanker stocks isn't necessarily correlated to the price of oil," says Shannon Collins, manager of 5549 Ltd., a Dallas hedge fund. He had recently expired put options on Frontline, essentially betting the stock price would drop.

Frontline's management thinks its critics are missing the big picture. "Even though we see a bit of depressed market today, we see the fundamentals for a good market to come," says Oscar Spieler, chief executive of Frontline's Norway-based management unit. He says that crude-carrying capacity should increase 5% to 6% a year through 2008 and that seaborne shipments of crude would rise by nearly that much.

As for the falling value of Frontline shares, he says the company "doesn't comment on the share price. That is up to the investors to consider." In February, Frontline reported fourth-quarter net income of $498.2 million, up from $36.7 million a year earlier. Revenue more than doubled to $656.3 million.

Others hold a dim view of tanker stocks such as Frontline for macroeconomic reasons. Larry Fuller, manager of the Merrill Lynch Global Growth Fund, says he expects global economic growth to slow this year. If that happens, there would be less need for the extra tankers to move crude around the world and rental rates would drop. Mr. Fuller sold the fund's entire holdings in Frontline, valued at about $5.8 million, in December and January. The stock was trading "at the upper end of the historic range," he said, and it was time to get out.

Frontline still has fans. Magnus Fyhr, a shipping analyst at Jefferies & Co., rates Frontline a "buy." He estimates that tanker capacity will grow this year by 20 million deadweight tons -- a typical industry measure -- after accounting for older ships hitting the scrapyard. But he says that demand will grow nearly as much, adding about 15 million deadweight tons.

"Is that going to be enough to cause a collapse of tanker rates? We don't think so," says Mr. Fyhr, who doesn't own any Frontline shares.

In the past year, Jefferies has advised Frontline on the issuance of preregistered equity.

China COSCO Hldgs Faces '06 Freight Rate Slump -JP Morgan
1 June 2005

HONG KONG (Dow Jones)--China COSCO Holdings is expected to grapple with a slump in freight rates next year, but its diversified revenue streams puts it in a better position to survive downturns than a pure container shipping play, said a research report by one of its listing bookrunners, JP Morgan.

The company, a unit of China's largest shipping firm China Ocean Shipping (Group) Co., is planning to raise up to US$1.7 billion in an initial public offering in Hong Kong.

China COSCO has a container shipping unit, COSCON, and a 52.4% stake in Hong Kong-listed ports operator and container leasing firm COSCO Pacific Ltd. (1199.HK).

According to a research report by JP Morgan seen by Dow Jones Newswires, China COSCO's average freight rates in 2005 will rise 2.9% and then fall 7.4% in 2006, as the industry is hit by overcapacity. JP Morgan declined to comment.

Net profit, the JP Morgan report said, should fall to CNY3.97 billion in 2006, from a forecast CNY4.31 billion this year, and CNY4.16 billion in 2004.

While China COSCO has operations in container leasing, ports operations, and freight forwarding, its container shipping operations through COSCON remains its most important revenue and profit contributor. Last year, COSCON accounted for 85% of revenue and 70% of operating profit, according to the report.

Still, the report said China COSCO has a 'greater ability' to weather industry downturns than its pure-container shipping competitors, 'because its container terminal and container leasing and manufacturing units provide diversified revenue streams and are less cyclical than the container shipping business alone.'

As of May 2005, the largest container liner is Maersk Sealand (MAS.YY), with 312 vessels and over 868,000 twenty-foot equivalent units or TEUs. With a fleet of 118 vessels and 294,000 TEUs, COSCON was ranked seventh in the world.

A research report by one of its listings sponsors, HSBC, said China COSCO will likely record a 30% drop in container shipping profits in 2006, as shipping rates fall on excess capacity while demand slows.

China COSCO is expected to report net profit in 2006 of CNY3.54 billion, from a forecast CNY4.33 billion this year, HSBC said, due to excess capacity and its sale of its stake in Shekou Container Terminals in March.

The company is planning to raise between US$1.35 billion and US$1.7 billion in the IPO ahead of a targeted early July listing, banking sources have told Dow Jones Newswires.

HSBC and UBS AG (UBS) are the global coordinators of the IPO. JP Morgan, along with HSBC and UBS, is a bookrunner.

COSCO to invest heavily in marine transport industry in S. China
31 May 2005
Xinhua's China Economic Information Service

HAIKOU, May 31 (CEIS) -- China Ocean Shipping (Group) Company ( COSCO) was to invest more than 10 billion yuan (1.2 billion US dollars) in marine transport-related industries in southernmost China's Hainan Province, local authorities said here on May 30.

An agreement on strategic cooperation between COSCO and the provincial government was signed in the afternoon of May 30. The cooperation areas include harbor, logistics, shipping, ship-repairing bases as well as the Boao Forum for Asia.

Marine transport-related industries played an important role in the economic development of the island province of Hainan, said Wei Jiafu, president of COSCO.

"The efforts have to be made to speed the construction of harbors and the development of shipping and logistics, making full use of the international shipping channels in South China Sea," he said.

Wang Xiaofeng, secretary of Hainan Provincial Committee of the Communist Party of China, said he believed it was of vital importance for the province to open up the shipping industry and to make Hainan a developed area of ocean industries.

He welcomed and appreciated the investment of COSCO, saying the province would provide investors and builders with the most favorable economic policies.

Fears over Zhuhai port are dismissed
Leu Siew Ying in Zhuhai
7 June 2005
South China Morning Post

Fears that a new container port being built in Zhuhai will siphon off cargo bound for Hong Kong and Shenzhen from the western Pearl River Delta have been dismissed.

An analyst says the market was growing and there would soon be enough business for all ports.

Investment in terminal construction in Gaolan port, undertaken largely with Li Ka-shing's Hutchison Delta Ports, will expand Zhuhai's annual container-handling capacity more than fivefold by 2010, from its existing 448,000 20-foot equivalent units (teu) to 2.3 million teus in 2010, said Zhuhai Port Authority section chief Liu Weidong .

Professor Zheng Tianxiang , of Sun Yat-sen University's Pearl River Delta Research Centre, said Zhuhai's industrialisation was accelerating, aided by a change in its development strategy which had attracted local and foreign investors. Professor Zheng predicted the container throughput of the western Pearl River Delta cities of Zhongshan , Jiangmen and Foshan would double in 10 years.

All three river ports feed cargo to Hong Kong or Shenzhen. But going directly to Zhuhai, with its deep-water harbour and international links, could save shippers 1,000 yuan to 2,000 yuan per container.

Shenzhen and Hong Kong will be most affected when Zhuhai's container handling comes of age. But Guangzhou's Nansha port will also compete for business from Foshan, Zhongshan and Dongguan. In addition, Zhanjiang will compete for goods from Yangjiang.

Professor Zheng said there was no need to fear overcapacity. "The Pearl River Delta will boom for another 10 years. The pie is getting bigger."

Hutchison Delta Ports, which has a badly silted 10,000-tonne terminal in Jiuzhou, signed a joint-venture agreement last month to build two 50,000-tonne terminals in Gaolan, with plans to build three to four 100,000-tonne terminals.

"Li Ka-shing is a shrewd investor, so if he is going ahead with the Gaolan port investment he must have been convinced by his feasibility studies," a representative of an international shipping company said in Zhuhai.

"I personally don't see anything happening in the next three years because that's how long it will take to build the ports but the longer-term prospects are good," she said.

Another representative said: "Zhuhai is growing very fast. There are more than 3,000 foreign-invested enterprises that account for 70 per cent of industrial output and about 81 per cent of exports."

Shippers are worried that Gaolan has a silting problem requiring annual dredging and the cost of that would be passed on to them.

Shanghai Begins Work On "World's Largest Shipyard"
6 June 2005

SHANGHAI (AP)--Construction has begun on what China says will eventually be the world's biggest shipyard, part of the country's plan for taking a dominant role in the industry.

China's biggest shipbuilding company, China State Shipbuilding Corp., began building the eight-kilometer-long facility late last week on an island in the Yangtze river, north of Shanghai, state media reported.

The US$3.6 billion shipyard is meant to quadruple Shanghai's current shipbuilding capacity to 12 million deadweight tons by 2015.

China, the world's third-largest shipbuilder, has been eager to cash in on a global boom in shipping resulting largely from its own surging exports and demand for raw materials.

China now holds about 10% of the world shipbuilding market. South Korea and Japan combined now make three-quarters of the world's ships.

The 130-year-old Jiangnan Shipyard, which once operated along the Huangpu River in the center of Shanghai, will move to the new facility once it is built.

Shanghai handles almost half of China's shipbuilding orders, with an annual capacity of more than 3 million tons, accounting for 4.6% of the world total.

Koreans keep flocking to China for hull work
10 June 2005
Tradewinds

China is continuing to attract Korean shipbuilding companies wanting to establish hull-building facilities in the country.

An STX Shipbuilding official says the company will invest $100m in the province of Shandong to construct a hull-block factory. Construction of the factory is likely to take place from the middle of next year and production of the blocks may start three months later.

STX did not say how big the site would be but some reports put it at 1.6 million to two million square metres.

"Our initial production for the blocks is about 30,000 tonnes per year. Thereafter, the volume will increase but we have not worked out how much that will be," said the STX official.

Besides STX, Korea's third major shipbuilder, Samsung Heavy Industries, is also planning to build a block factory in Shandong.

Samsung was the first Korean shipbuilding company to turn to China for hull blocks. It built its first block-fabrication factory in Ningbo six years ago but the manufacturing plant is no longer able to meet Samsung's demand.

It is not known how much Samsung is pumping into Shandong but the site will be capable of producing 200,000 tonnes of blocks annually.

STX says China's cheaper labour costs and lower land prices are the main attractions.

"In Korea, we are facing a shortage of land and land prices here are a lot higher than in China," said the STX official.

The company calculates that even with the transportation costs of close to $70,000 per load for the blocks to be moved from Shandong to Chinhae, it is still cheaper to have them manufactured there.

"However, we are not able to have all the blocks manufactured in China because some shipowners prefer to have them made in Korea," said the STX official.

Some industry players say the Koreans are likely to turn these block-fabrication factories into shipbuilding yards in the future. The STX official agrees with the speculation and says the company would like to repair or build ships there but Chinese policy is a complicating the issue.

"As a block-fabrication factory, we can own 100% stake in the company. But if it becomes a shiprepair or shipbuilding yard, we will need a Chinese partner and he may hold more than 50% of the stake," said the STX official.

Last month, Daewoo Shipbuilding was reported to be investing $100m on a hull-block factory in Yantai, Shandong province, as well.

The yard could start the production of blocks in 2007, with a target of 50,000 tonnes per year, to increase to 300,000 tonnes by 2016.

Daewoo's move into China was spurred by the decision of two Korean major suppliers of blocks, DongYang and SungDong Heavy Industries, to switch over to the newbuilding business.

COSCO Plans 25% Div Payout Of Distributable Pft Post-IPO
13 June 2005

HONG KONG (Dow Jones)--China COSCO Holdings Ltd., China's largest shipping firm, plans to pay at least 25% of its annual profits as dividends to shareholders after its listing, according to a draft listing prospectus seen by Dow Jones Newswires.

The roadshow for China COSCO's initial public offering got underway Monday, ahead of a listing on the Hong Kong stock exchange tentatively scheduled on June 30. Some 90% of COSCO's shares have been earmarked for institutional investors.

COSCO expects net profit in 2005 of at least CNY4.15 billion, down from CNY4.16 billion in 2004.

The prospectus was prepared by sponsors HSBC and UBS. JPMorgan is a joint bookrunner of the deal.

The prospectus identifies several possible risks to COSCO's business outlook, including cyclical factors that could slow demand for container shipping, which in turn would depress freight rates.

The sponsors noted COSCO has a high level of debt that could adversely affect its liquidity and profitability.

COSCO's debt at end-2004 totaled CNY17.85 billion, which represents a gearing ratio of 40%.

Furthermore, a revaluation of the Chinese currency, the yuan, may "materially and adversely affect...(COSCO's) operations and financial results." As the yuan is COSCO's reporting unit, and it conducts significant business in other currencies, a fluctuation in the exchange rate may negatively affect the value of the company's assets and earnings, said the prospectus.

Proceeds from the IPO are mainly planned for fleet expansion and the repayment of loans.

The company, a unit of China's largest shipping firm China Ocean Shipping (Group) Co., set an indicative price range of HK$4.25 to HK$5.75 a share for its listing.

Three strategic investors are subscribing to about US$400 million worth of COSCO's IPO: Hutchison Whampoa Ltd. (0013.HK), owned by tycoon Li Ka-shing, will buy US$150 million worth of shares; Lee Shau-kee, the chairman of Henderson Land Development Co. (0012.HK), will subscribe to US$100 million; and the rest will be bought by Singapore's state-owned investment arm, Temasek Holdings Ltd.

COSCO Holdings' businesses include container shipping, container terminal, container leasing and freight forwarding services.

At the peak of the business cycle, the only way is down
15 June 2005
South China Morning Post

Few industries are as cyclical as the container shipping sector, and China Cosco is coming to market at the very top of its business cycle.

That will not unduly trouble the management of China's largest shipping company. According to bankers close to the deal, the institutional tranche of Cosco's initial public offering was fully covered by the end of business on Monday, the first day of the roadshow.

By the time Cosco's executives have swung through Singapore, London and New York, the $9.5 billion to $12.9 billion deal should be comfortably oversubscribed.

Cosco's lead managers, HSBC, JP Morgan and UBS, are pitching the company as a direct play on China's growth as a trading economy. With businesses from container manufacturing, to terminals to freight-forwarding, Cosco offers services along the whole freight chain, which bankers contend places the company head and shoulders above pure shippers such as CSCL or OOIL.

To bolster investor confidence, Cosco has enlisted the usual parade of big-name corporate investors, and to sweeten the deal further, it has promised to pay out as much as 35 per cent of this year's earnings in dividends. According to projections by HSBC, that will mean a windfall of at least $624 million for investors in the first year.

Nevertheless, Cosco is carrying some uncomfortable risks. Although the syndicate banks are stressing the breadth of the company's businesses, Cosco still made 79 per cent of its net profit last year from plain old container shipping. For the past couple of years, this has been a great business to be in as soaring demand after China's 2001 accession to the World Trade Organisation sent freight rates skyward, more than doubling Cosco's earnings last year.

Owners have rushed to order more ships, and today half as many container ships are being built as are already at sea. For the biggest vessels, which can carry 4,000 or more 20-foot containers, the ratio is even higher, at 78 per cent. Next year, global container shipping capacity will grow by more than 14 per cent, according to Drewry Shipping Consultants.

The worry is that much of this new capacity will be launched just as trade growth begins to soften. The Organisation for Economic Co-operation and Development's widely-followed composite leading indicators fell for the fourth consecutive month in April to enter negative territory, pointing to a slowdown in economic activity ahead.

Drewry forecasts that demand growth for container shipping will slow to 8 per cent next year, from 12 per cent this year and 13 per cent in 2004. Shipbrokers in Hong Kong say freight rates are already beginning to slide, and even Cosco's investment bankers admit that the company's margins are going to be squeezed.

Excess capacity and slackening demand are not the only concerns. Like most shipping companies, Cosco is highly leveraged and vulnerable to rising interest rates. With its dependence on demand for Chinese exports, yuan-denominated costs and foreign currency revenues, Cosco's earnings are also more exposed than those of most companies to any appreciation of the Chinese currency.

The company's position in the market still makes it an attractive long-term investment, but Cosco is a company at the peak of its business cycle. Investors may well want to consider whether its stock will be an even better buy in two years.

Greater links with China

16 Jun 05

Shipping Agreement to be enhanced, allowing shipping companies in both countries to set up wholly-owned subsidiaries, with no geographical limitation

CHINA is Singapore's top investment destination, and one of its top trading partners. In 2004, Singapore's total trade with China reached $53 billion, a 44.5 per cent growth over the previous year.

http://business-times.asia1.com.sg/mnt/media/image/launched/2005-06-16/net-211140.jpg

In recent years, the Singapore government has been paving the way for more maritime links with China. On March 29, Singapore and China signed a protocol to enhance the existing Maritime Transport Agreement between the two countries. The protocol was signed by Singapore Minister for Transport Yeo Cheow Tong and his counterpart, Zhang Chunxian, Minister for Communications from the People's Republic of China, in Beijing.

Also known as the Shipping Agreement, the Maritime Transport Agreement between Singapore and China was first signed in 1989 to provide the shipping lines of both countries access to each other's ports, and to accord Most Favoured Nation status to each other's vessels.

The recent protocol signed will allow Chinese and Singapore shipping companies to establish wholly-owned subsidiaries in Singapore and China respectively, without any geographical limitation.

It will also facilitate their engagement in shipping-related activities, such as ship agency services for the vessels they operate and to sign services contracts with their customers.

For SS Teo, managing director of Pacific International Lines (PIL) and head of Singamas, the container manufacturer, his fortunes are increasingly aligned with the growth of China.

'We have been in China since 1967 when PIL was founded,' says Mr Teo. 'Starting with breakbulk, our growth out of China has been at 20 per cent over the past 20 years.'

PIL now has 10 branch offices and 16 representative offices, plus four logistics centres across the mainland. Now that PIL is well represented across China's key coastal cities, the plan is to move further inland and further west to build up a strong national network.

For the first time since 1990, PIL, which has been ordering ships in Japan, returned to a Chinese shipyard last year to order four 2,500 TEU containerships at Dalian New Shipbuilding (DNS). And, Mr Teo says, PIL is in negotiations with DNS for a fifth vessel.

The line entered the Asia-Europe trade last year with Wan Hai Lines of Taiwan, calling at Shanghai, Ningbo and Shenzhen. Furthermore, PIL started a new service from China to Australia in May 2004.

As far as Singamas, the world's second largest box manufacturer, goes, these are extraordinary boom times. The company currently operates eight plants in China.

During Chinese New Year, three plants were upgraded and the Tianjin plant is presently being relocated to a new, larger site, while a new facility is under construction in the eastern Guandong province, bringing the number of facilities up to nine by year-end.

Last year, Singamas's annual maximum capacity in China was about 620,000 TEU, this year it will hit 830,000 TEU and next year 1.2 million TEU.

'As a result of steel shortages,' comments Mr Teo, 'prices are going up, so we do not quote very far in advance and have to obtain regular quotes from the steel mills.

The cycle for a manufacturing job quotation is now very short.' Last March, a TEU cost US$1,400; it now costs US$2,300, and continues to rise.

Eddie Teh is a man on a mission. The group chief executive officer of PSA International is determined to make more inroads in China's box handling operations.

PSA China, a newly-created arm of the Singapore-based terminal operator, has set up a team to fast-track terminal acquisitions in China headed by Aaron Mak.

Together, the pair has roamed the mainland in the past year or so, concluding port deals rapidly, with many more on the negotiating table.

Most crucial of these is the much-sought-after Phase Two development of Yangshan, to the south-east of Shanghai - a facility every operator is eyeing and one that will eventually spawn 52 berths.

At the start of the year, PSA International teamed up with Orient Overseas (International) Ltd - parent of Orient Overseas Container Lines - P&O Nedlloyd and Shanghai-listed Tianjin Port Group and announced a US$200 million expansion of the north-east port, situated on Bohai Bay.

The three foreign firms will each take a 20 per cent stake in the project which will see three berths added over a 1.1km strip of quayside. Construction starts next year, following a signing ceremony in January.

CSX World Terminals were the only foreign operators in the coal city, that is two hours' drive from Beijing, but CSXWT, for which PSA mounted a strong bid, has just been bought out by Dubai Ports International.

Tianjin finds itself locked in a battle for North China hub supremacy with both Dalian to the north, where PSA invested in 1996, and Qingdao to the south.

In Dalian, in Liaoning province, PSA China took part in a major joint venture with a combined investment of 240 million renminbi (S$48.5 million) last September, with Cosco Pacific, Dalian Port Container Co and APM Terminals, for two terminals in the Phase Two development of the port.

Meanwhile, at another site where PSA has maintained a presence since 2000, construction of Berths Two and Three of the Fuzhou Jiangyin International Container Terminals started last September.

Some 840 million renminbi has been invested in the 50,000dwt, with Berth One having been completed in December 2002. Each berth has a quay length of 375 metres, a 14m draught and a navigation channel 15.5m deep with a handling capacity of 30,000 TEU on 350,000 sq m of terminal.

Most recently, and complementing its investments around China, which also include Guangzhou in the Pearl River Delta, PSA International gained a foothold in Hong Kong, paying HK$3 billion (S$645 million) for a major share in container terminal 8 West.

Finally, in a hectic 12 months of activity for the Singapore firm in China, PSA Marine, the fully-owned marine services unit of PSA International made its first foray into China's towage services market through a joint venture with the Fuzhou Port Authority in 2004.

PSA Marine now provides towage services to shipping lines calling at the port of Jiangyin, which includes PSA's own Fuzhou-Jiangyin International Container Terminals.

Singapore-based oil trader Titan, owned by mainland Chinese entrepreneur Tsoi Tin Chun, is rapidly increasing its tanker fleet on the back of Chinese demand as well as building up its oil storage facilities across the mainland.

Perhaps most impressively, the group has carried out groundbreaking for a shipyard and a maritime training school in China.

UPDATED: 15:19, June 14, 2005
China's development fuels world's ocean shipping industry
By People's Daily Online

The international shipping giants, including The Maersk Company Ltd, Hutchison Whampoa, China Merchants Holdings (International) Company Limited and PSA Corporation Limited, expressed recently at the 24th World Ports Conference held in Shanghai that the construction of Shanghai International Shipping Center is expected to bring a change to the layout of Asian-Pacific Pacific seaways.

It is the first time that the biennial international meeting, the highest level and the largest of its kind in the world, was convened in China. China's recent impact on international shipping industry is the underlying reason.

Port expansion to shift the Asian-Pacific hub

In 2004, the throughput of Shanghai harbor reached 14.55 million TEU, ranking the third in the world. The Yangshan deep-water port, scheduled to be operational this year, will turn Shanghai into a real deep-water sea port from a river port.

Its 15-meter-deep water can hold the biggest ship in the world loaded with 8,500 containers. This means that the loading volume of this ship model will be more than doubled compared with that when anchored at the old port.

So far the top five container ports in the world are all located in the Asian-Pacific region. A port chain has thus been formed, running from Pusan and Kobe and southward Shanghai, Kaohsiung, Shenzhen, Hong Kong and Singapore. Hong Kong and Singapore in the southern Asia-Pacific area are recognized as international shipping centers. But insiders forecast the establishment of the Yangshan port will make the Asian-Pacific navigation hub shift to Shanghai.

Chinese Minister of Communications Zhang Chunxian said that there were 1,430 ports and 34,000 berths in China by the end of last year, with total throughput of 4.17 billion tons, up 19 times if compared with that in 1980. The ports is one of the leaders in the world in terms of total ports' scale and handling records, with eight among the big ones in the world handling 100 million tons.

From a perspective of the national strategy, there are three port groups in China: the Pearl River Delta group in South China with Hong Kong as an international shipping center; Yangtze River Delta in East China with Shanghai as the center and the one along the Bohai Bay in the north with Dalian, Tianjin and Qingdao as the main ports.

Economic development offers valuable opportunities to ports

Zhang Chunxian forecast that China's ports are facing rare development opportunities. On one hand, China will maintain a fast economic growth in the comparatively long time to come. By 2020 China will quadruple its GDP on the basis of nearly 1trillion US dollars in 2000. On the other hand, China will continue to adhere to the reform and opening-up policy, further expand its economic links with the world and maintain stable and fast growth of trade which stands 1.15 trillion USD currently.

According to the analysis by Zhang Chunxian, with economic globalization and the readjustment of industrial structure, China will gradually become a world's manufacturing center and accelerate the diversion of heavy chemical industries and processing manufacturers towards ports and traffic trunks, bringing about the rapid development of the industries close to ports.

Foreign investors are welcome to participate in China's port construction. The Chinese government has adopted a series of policies and measures to encourage social fund and foreign capital to engage in the construction and management of port facilities,

Besides, the central and local governments have put forward preferential policies, including special funds for port construction, favorable land and taxation treatment so that port construction will be guaranteed to adapt to the development of national economy and foreign trade.

Trade growth will stimulate world ocean shipping industry to restore prosperity

In 1970s, the shipbuilding sector suffered 25-year long bubbles due to the over-supply of vessels. It was not until year 2000 that the ocean shipping business began the balanced growth cycle. Dr. Martin Stopford, director and general manager with Clarkson Research Studies under The Clarkson Company, a well-known consulting company of the world's shipping industry, believed that the first driving force for the revival is the functioning of the business cycle, and China's trade growth is the second most important momentum.

In the past two years, China has attracted the attention of the industry in the world and its oceanic trade growth accounted for more than 60 per cent of the world's total. Although still making up of 10 per cent of the world's ocean transportation imports and 5 per cent of the exports, China exerts an important impact on the industry due to its fast growth.

"The imports and exports of China's goods will continue to grow, and more than 90 per cent of them will be delivered by sea". Tu Deming, director of the China Ports and Harbors Association, told reporters that the Ministry of Commerce made a conservative estimation that the foreign trade growth will be up 15 per cent in 2005, and specialists forecast it will be up about 20 per cent. That will be good news for port business.

Denmark's AP Moeller-Maersk mulls new regional headquarters in Beijing -report
15 June 2005

BEIJING (AFX) - AP Moeller-Maersk AS, the world's largest shipping company, is planning to set up a regional headquarters in Beijing to manage its operations in mainland China, Hong Kong and Taiwan, the Ta Kung Pao reported, citing a senior company official.

The Hong Kong paper cited the Danish company's executive vice president Knud Pontoppidan as saying that the company has submitted an application to establish a holding company, to China's Ministry of Commerce.

Pontoppidan told a forum in Shanghai last week that Maersk needs to integrate management of its shipping, logistics, port and rail services operations.

Company officials were not immediately available for comment.

Shipper may buy parent's bulk carriers
15 June 2005
Hong Kong Standard

China Shipping Development, the mainland's biggest shipper of oil, may buy its parent's dry bulk carriers or spin off its bulk cargo vessels for a separate listing under the group's restructuring plan, people familiar with the situation said.

Sources close to China Shipping Development said the company and its parent, China Shipping Group, are still considering the restructuring plan on their bulk cargo vessels business, and will probably come up with a decision in the next few weeks.

Under the two proposals, China Shipping Development may acquire the 72 bulk cargo vessels from its parent, which can almost double its dry bulk fleet, or spin off the bulk shipping business and group it together with its parent's bulk vessels for a separate listing, the sources said.

"One of the problems for China Shipping Development to acquire the assets from its parent is that the move will increase its financial burden, considering that its capital expenditure is already huge over the next few years," the source said.

On the other hand, spinning off the bulk shipping business can draw fresh capital from the market, but the timing for an initial public offering may not be good with falling commodities freight rates in the international market, the source added.

The Baltic Dry Index, which tracks commodity freight rates, plunged 56 percent from 6,208 on December 6 to a one-year low of 2,762 Monday.

China Shipping Development said in a stock exchange announcement on June 10 that the group is considering a restructuring which involves the company's assets. Its company secretary Yao Qiaohong could not be reached for comment Tuesday.

"We believe any asset acquisition for China Shipping Development may relate to 72 vessels currently managed by [the firm] on behalf of its sister companies," said Credit Suisse First Boston vice president Karen Chan.

China Shipping Development has a fleet of 166 vessels, including 73 bulk cargo ships, 80 oil tankers and 13 container ships. CSFB values the other 72 bulk carriers with its parent at two to three billion yuan (HK$1.88-2.82 billion) and the purchase will boost the company's profit by 30 percent. The spin-off of China Shipping Development's dry bulk business would result in three distinctive shipping plays within the group _ dry bulk carrier, crude oil tanker and ship leasing.

China Shipping Development said in March it will add six new oil tankers and six new bulk carriers, and plans to boost capital spending to 4 to 5 billion yuan this year, up from 1.8 billion yuan a year ago.

Ships from parent may steer CSD towards oil
Injection may involve 72 bulk vessels worth up to 3b yuan and a spin-off
Russell Barling
17 June 2005
South China Morning Post

China Shipping Development may receive an injection of assets from its state-owned parent company and spin off an enlarged bulk shipping firm, according to the company, confirming reports that have sent its stock value spiralling downwards this week.

The injection could involve as many 72 mostly older bulk vessels - with an estimated asset value of two billion yuan to three billion yuan - that the parent China Shipping Group mostly uses to distribute goods such as coal, steel and grain between coastal cities.

"[The group] is considering having its own restructuring which may involve the injection of certain dry bulk cargo carriers into a new company {hellip} to be separately listed," company secretary Yao Qiaohong said in statement filed with the stock exchange yesterday.

Mr Yao said nothing had been finalised and the proposal might not proceed.

The value of China Shipping shares has fallen 9.3 per cent to $5.85 since Friday, when news of the proposal emerged.

Analysts and investors this week reacted cooly to the proposal, which could see China Shipping's core revenue base switch from domestic coal distribution to a more volatile international oil sector.

"This development could totally change [China Shipping Development's] investment thesis," CLSA analyst Mike Lu said in a report on Monday. "We recommend investors stay on the sidelines until further details are given."

According to a report by Credit Suisse First Boston analyst Karen Chan, the assets are likely to be 72 bulk vessels operated by the group's unlisted subsidiaries Dalian Shipping and Guangzhou Maritime Transport.

Ms Chan estimated that the injection, provided there was no spin-off, could add 30 per cent to China Shipping's profit and sales.

Bulk shipping accounted for about 43 per cent of its earnings in the first half.

It is understood that any attempt to create the group's third listed shipping play - it also is the controlling shareholder of listed China Shipping Container Lines - would have to be approved by most of the A and H-share owners.

"I don't think the earnings dilution would be material," said an analyst at a western investment bank. "But if they spin off, the valuation dilution may be enough for shareholders to reject the proposal."

Oil shipping firms typically trade at half the earnings multiples of their bulk counterparts.

China COSCO Says Global Economy To Support Company Growth
19 June 2005

HONG KONG (Dow Jones)--China COSCO Holdings Ltd. (1919.HK) says company growth will be underpinned by strong global economic expansion in coming years.

China COSCO's Chairman Wei Jiafu said shipping demand will continue to outstrip supply in the next few years, despite a significant increase in shipping capacity.

"It's quite clear that we are experiencing an uptrend in the market," Wei said in a news conference Sunday to kick off the retail tranche of China COSCO's US$1.65 billion initial public offering in Hong Kong. "This is due to strong demand supported by global economic growth and increased containerization."

He expects the global shipping industry to continue its rapid growth until 2009 on the back of a "golden economic growth" period for the world.

Wei's comments come amid concerns among analysts that the global shipping cycle will experience a downturn in 2006 after several years of rapid expansion.

The joint bookrunners of COSCO Holdings - UBS, JP Morgan and HSBC - forecast that the company's net profit will decline by 8%-18% in 2006, due to an imbalance between supply and demand of container vessels as shipping rates fall on excess capacity while demand slows.

For this year, China COSCO is projecting a net profit of at least CNY4.15 billion, compared with CNY4.16 billion in 2004, according to its listing prospectus.

However, Wei said he doesn't agree that the shipping cycle will slow down next year. "We are quite pleased with the company's operational data in the first five months of 2005, which were better than we expected. This indicates optimism in the industry."

He expects three more increases in shipping rates this year in the months of July, September and October after a "satisfactory" rate rise in April. However, he didn't specify on the extent of those increases.

China COSCO, a unit of China's largest shipping firm China Ocean Shipping (Group) Co., is selling 2.24 billion shares, or 36.5% of its enlarged share capital, at a price range of HK$4.25 to HK$5.75 each ahead of a planned listing in Hong Kong's stock exchange on June 30.

The price range values the company at a price-earnings ratio of 6.69 to 9.06 times 2005 earnings, the company said.

Some 90% of the IPO will be earmarked for institutional investors, with the rest for retail subscription.

The institutional tranche, which started June 13, has been three times covered so far, according to a banker involved with the deal. The retail offering begins Monday.

China COSCO is slated to become Hong Kong's third biggest IPO this year. The company is an integrated shipping firm that covers container shipping business, as well as container terminal and container leasing operations, with the latter held under its 52%-owned COSCO Pacific Ltd. (1199.HK).

Sun Jiakang, an executive vice president of China COSCO, said COSCO Pacific plans to raise US$300 million through syndicated loans. It will use the funds for loan repayment and investment on new container boxes.

For China COSCO, Wei said the company plans to spend CNY13.5 billion in 2005 and 2006 as capital expenditure, with CNY4.5 billion allocated for fleet expansion, CNY3 billion for port investments, and the remainder to manufacture container boxes.

The company is looking to pay at least 25% of its distributable annual profits to shareholders through dividends, though one banker said the company is targeting a 35% dividend payout this year.

UBS and HSBC are the joint global coordinators for the listing, while JP Morgan is a joint bookrunner.

China iron ore delays seen weighing on freights
By Nao Nakanishi

HONG KONG, June 17 (Reuters) - China's attempts to delay iron ore shipments are likely to weigh down dry bulk cargo freight rates for at least another month, industry sources said on Friday.

Rates have lost more than a third in about a month, and shipping company officials saw little chance of an early rebound with steel prices continuing to slide and with close to 40 million tonnes of iron ore piling up at Chinese ports.

"The freight market will stabilise around this level or go down a little bit further until end-July," said a senior official at a Chinese company that ships iron ore cargoes from Brazil and Australia to Chinese steel mills.

"Now every steel mill in China is trying to delay import cargoes. There are not enough cargoes to support this market...I think they'll delay the imports by up to two months."

The Baltic Dry Index <.BADI>, a benchmark for rates for dry cargoes such as minerals, sugar and grain, dropped to 2,586 on Thursday, down 36 percent since the current downturn began in May.

The index for large cape-size ships <.BACI>, mostly used for hauling iron ore or coal, slid to 2,783 from 5,727 in May.

One legal source specialising in commodities trade, who declined to be named, said the fall in freight rates had led to many disputes between ship owners and charterers.

"There're lots of iron ore disputes going on," said the source. "It's basically people trying to get out of the contracts because freight rates have fallen."

PRODUCTION CUTS

Shipping officials and iron ore traders said Chinese steel mills were now reducing output -- as were European rivals such as Arcelor , Corus and ThyssenKrupp , which announced cuts on Thursday.

That should lead to a slowdown in iron ore consumption despite a 34 percent year-on-year increase in iron ore imports in May, when crude steel output showed a year-on-year jump of 37.5 percent to 29.73 million tonnes.

"Some have already stopped for maintenance and repair -- even the big ones. So consumption of iron ore should come down," the shipping official said.

An iron ore trader said: "About 60-70 percent of mills with annual capacity of 300,000-500,000 tonnes have stopped production."

Another trader said new facilities were still coming on stream but that small mills could no longer cover their production costs following drops in steel prices.

Yet some officials were puzzled by the very bearish sentiment in the Chinese steel market, especially as both May fixed asset investment and industrial production showed solid year-on-year growth of 28.2 percent and 16.6 percent respectively.

"There may be an additional factor at play. Some are putting off orders intentionally to cool down the market," said another shipping official based in Tokyo.

"It might be a form of a rebellion against the mines, who have pushed through the 71.5 percent price hike," the official said, referring to price increases for term iron ore contracts early this year.

China's Tianjin Port Sees Rise in Auto Imports From S.Korea

TIANJIN, June 28 Asia Pulse - Tianjin Port imported 2,245 motor vehicles from South Korea in May this year, accounting for 52 per cent of the total auto import via the port in the month, according to statistics provided by Tianjin Municipal Entry and Exit Inspection and Quarantine Bureau.

South Korea has for the first time exceeded Japan and Germany in terms of its auto export to China via Tianjin Port.

China's import auto market used to be dominated by Japan-made and German-made cars.

However, with influx of motor vehicles from South Korea in recent years, South Korean-made cars have become a new favorite on the Chinese market.

The municipal entry and exit inspection and quarantine bureau attributes sharp increase in auto import from South Korea mainly to two reasons:

- South Korean-made cars are of high function/price ratio.

- Prices of cars imported from South Korea have continued to slide, almost to the price level of China-made ones.

(XIC)

Norway shipping group to invest in shipbuilding in central China
4 July 2005
Xinhua's China Economic Information Service

WUHAN, July 4 (CEIS) – Skaugen Group headquartered in Oslo, Norway, has decided that it will continue to invest in shipbuilding industry in central China’s Hubei Province.

During his recent visit to Hebei Province, President Morits Skaugen Jr. of Skaugen Group said his group would launch a marine equipment industrial park in Wuhan, capital of Hubei Province, and set up a shipyard jointly with the Yangtze River Shipping (Group) Company.

President Skaugen said that his group would also establish an international shipping management company, a joint venture with the Yangtze River Shipping Group, to undertake the transportation and trade of LPG and chemicals.

The president noted that Wuhan is an ideal place for developing shipbuilding industry as the city boasts good shipyards, R&D institutions and strong abilities to supply auxiliary products.

He held the view that in developing shipbuilding industry, Hubei should focus on building medium-size and small vessels, including special-purpose ships, high-speed ships and ships with hi-tech contents.

Skaugen Group has been active in China since 1995. It established a joint venture, Hubei Tian En Petroleum Gas Transportation Co. Ltd, with Hebei Tian Fa Group in 1996. The company is now the largest LPG shipping enterprise along the Yangtze River.

In 1998, Skaugen Group set up the WTU-STC Training Center in cooperation of Wuhan University of Technology. So far the center has trained more than 4,000 seafarers, including some 500 now working on foreign vessels.

Skaugen Group, founded 100 years ago, is engaged in worldwide marine transportation of petrochemicals, gas, LPG and organic chemicals.

China's Dalian Port Sees Throughput Surge Over 30 PCT in H1

DALIAN, July 4 Asia Pulse - Dalian Port in Northeast China put through 60.032 million tons of cargo in January-June 2005, 14.659 million tons or 32.2 per cent more than in the same period of 2004.

The port also handled 1.223 million TEUs of containers, a year-on-year rise of 24.6 per cent.

In June alone, the ports cargo throughput totaled 10.046 million tons, up 1.479 million tons or 17.3 per cent over the same period of last year and the container throughput was 233,000 million TEUs, surging by 31.2 per cent.

The two 300,000-tonnage wharves, which were put into service last year, have become the main engines of growth in the ports operations. The 300,000-ton oil terminal received and unloaded 24 large tankers carrying 5.553 million tons of crude oil. The ore wharf unloaded 28 vessels with 3.816 million tons of ore.

Of the total net growth of 14.659 million tons in total throughput, nearly 10 million tons were attributed to the two new wharves. The ore and crude oil handling capacity all increased at least 100 per cent in the first half. The growth in the first quarter was 31 per cent, ranking first among the major ports in the country. The growth in April reached a record 59.9 per cent.

Collision causes oil spill off Dalian
5 July 2005
Lloyd's List

A LARGE clean-up operation involving at least 26 vessels is taking place off the port of Dalian in northeast China after a tanker spilt oil following a collision with a foreign-flagged containership on Saturday, writes Mike Grinter in Hong Kong.

The accident happened at 1130 hrs when the 2,500 tonne oil tanker Qian Dao You No.1 (above) and the Malaysia registered Bunga Mas were about five nautical miles from Dalian Port.

The report cites the Liaoning Maritime Salvage Association as saying that both vessels were sailing slowly at the time of the incident and no casualties were reported.

While it has been suggested that it was a “big” spill, the exact extent has not been determined due to heavy sea fog.

The Qian Dao You No.1, which is owned by Zhousan Qiandao Shipping, was carrying 3,800 tonnes of diesel fuel oil on its way to Guangzhou when it collided with Bunga Mas amid heavy fog and poor visibility on its journey to Dalian from Japan.

Xinhua Economic News Service
China’s ports handle 250 million tons of cargoes in June

BEIJING, July 13 (CEIS) – China’s major ports handled 250 million tons of cargoes in June 2005, up 16.7 percent year-on-year, according to statistics released by the water transport department under the Ministry of Communications.

In June, the ports handled 100 million tons of goods for foreign trade and 5.584 million TEUs, up 17.9 percent and 22.6 percent year- on-year respectively.

For coal transport, major port along the coast and rivers in June handled 31.69 million tons of coal, up 2.8 percent year-on-year, including 5.78 million tons for foreign trade, down 26.5 percent, and 25.91 million tons for domestic trade, up 12.9 percent.

In the first six months of this year, the ports totally handled 185.03 million tons of coal, up 11.7 percent year-on-year, including 36.62 million tons for foreign trade, down 19.8 percent, and 148.41 million tons for domestic trade, up 23.7 percent. At the end of June, coal in stored at the ports came to 16.03 million tons, 1.24 million tons more than that at the end of the previous month.

For crude oil transport, the ports across the country in June handled 10.256 million tons of imported crude oil and 1.693 million tons of offshore oil, up 5.4 percent and 20.5 percent year-on-year respectively.

In the first six months of this year, the ports totally handled 62. 599 million tons of imported crude oil and 9.834 million tons of offshore oil, up 9.6 percent and 1.2 percent year-on-year respectively.

For iron ore transport, major ports along the coast and rivers in June handled 21.29 million tons of import iron ore, up 53.1 percent year-on-year.

In the first half of the year, the ports totally handled 132.71 million tons of imported iron ore, up 30.3 percent year on year. By the end of June, iron ore stored at the ports stood at 35.10 million tons, almost the same as compared the same period of last year.

For grains transport, major ports across the country handled 2.30 million tons of imported grains, down 20.5 percent year-on-year. In the first six months of this year, the ports totally handled 11.11 million tons of import grains, down 7.1 percent.

For chemical fertilizers transport, major ports handled imported chemical fertilizers of 0.38 million tons, down 59.9 percent year-on- year. In the first half of this year, the ports totally handled 6.18 million tons of imported chemical fertilizers, down 9.7 percent.

China Port Operator Mulls IPO Next Year
Dow Jones Newswires
14 July 2005

SHANGHAI -- Shanghai International Port (Group) Co., the operator of one of the world's busiest ports, is considering an initial public offering as early as the second half of next year after recently restructuring into a shareholding company.

While the port operator's first choice is to list shares in Hong Kong, it hasn't decided on a listing destination or fund-raising goal, Wang Qingwei, general manager of the investment and development department, said in an interview. It also has yet to select an investment bank to underwrite the deal.

If SIPG begins planning its initial offering now, it could list in one year, Mr. Wang said, adding the IPO timing depends on market conditions. SIPG is the controlling shareholder of Shanghai-listed Shanghai Port Container Co., one of more than 40 companies picked by the government recently to float their large quantities of nontradable shares.

The group's overseas fund-raising plan highlights the growing prominence of China's port and shipping firms, as the traffic of goods flowing in and out of the country expands along with the booming economy. China this week reported exports jumped 33% in the first six months of 2005 from a year earlier, while imports grew 14% over the same period.

Yet investors may be cautious about buying shipping-related offerings, after shares of shipping company China Cosco Holdings Ltd. fared badly last month in their debut in Hong Kong.

China Shipping Postpones HK Spinoff
By Keri Geiger
18 July 2005

HONG KONG (Dow Jones)--China Shipping Development Co. (1138.HK) has postponed a plan to inject its dry-bulk cargo carrier operations into a new company to be listed on the Hong Kong Stock Exchange, citing market conditions and mainland China regulatory requirements.

While Hong Kong and Shanghai-listed China Shipping didn't elaborate on the market conditions in a disclosure Monday, analysts said the weak state of the dry bulk - or non-containerized - market caused by a slump in prices may have prompted the move.

Michael Chan, a research analyst at BOCI Research Ltd., said a number of large China Shipping shareholders, which include fund managers holding its China-listed A shares, opposed the spin-off on concerns their holdings would be diluted.

"They had a lot of opposition from A-share fund managers who weren't receptive to the spin-off," said Chan.

China Shipping, a unit of state-owned China Shipping (Group) Co., didn't say how long the postponement would last, but said an announcement would be made at the appropriate time.

Overcapacity in the international dry bulk market has caused shipping rates - as measured by the Baltic Dry Index - to plunge 62.5% since the end of 2004.

China Shipping, however, has been less severely hit than many of its competitors, as more than 40% of its dry shipping business comes from domestic customers who lock in contract rates at the beginning of each year.

In 2004, revenue of China Shipping's dry bulk business totaled CNY2.7 billion and comprised 42% of its total revenue.

Analysts agree that market conditions weren't the only factor behind the spinoff's postponement.

"Investors were worried they would be spinning off the most profitable part of the business," said Gideon Lo, a research analyst at DBS Vickers, noting that even though the dry bulk operations aren't as big as China Shipping's oil transport business they are nevertheless a major earnings driver.

Some analysts said COSCO Holdings Ltd.'s (1919.HK) poorly received US$1.22 billion public offering in Hong Kong late last month may have also cast a shadow of the spin-off plan.

Investors were concerned that the global shipping cycle had peaked after two strong years of growth.

The postponement comes after a steady decline in China Shipping's share price after it hit a high so far this year of HK$7.75 in March. The shares closed at HK$5.55 Monday.

BOCI's Chan attributed the decline to the spinoff plan rather than deteriorating fundamentals.

MTL to develop Shenzhen terminal
Alman Loong, Hong Kong Standard
July 20, 2005

Modern Terminals (MTL), the port operator 55.3 percent-owned by Wharf (Holdings), said it has agreed to set up a venture to develop a container terminal in Shenzhen with total investment of 7 billion yuan (HK$6.58 billion).

MTL said it entered into an agreement with the Shenzhen government to form Shenzhen Dachan Bay Container Terminals to develop five berths at the first of the port's five phases. MTL expects the project to provide profits from 2009.

MTL will own 65 percent interest in the terminal, which will have a total 24 berths, while the remainder will be held by municipal government-owned Shenzhen Dachan Bay Port Investment and Development Company.

Frankie Yick, Wharf's chief manager, said MTL will finance the investment from internal resources and bank loans. He declined to reveal the total investment for the whole project.

MTL, which is based in Kwai Chung terminal, hopes to use Dachan Bay as its base in southern China and Shanghai and Suzhou as bases in the Yangtze River Delta area amid more competition from rivals like Hutchison Whampoa, China Merchants Holdings (International) and Singapore's PSA Corp.

MTL has teamed with China Shipping Terminal Development, an offshoot of China's second-largest shipping company, to bid for a project in Shanghai's Yangshan port.

"We are confident of getting the project," Yick said.

He said construction of the first phase of the Dachan Bay project is scheduled to start in the final quarter of 2007 and be completed at the end of 2008. It will have capacity to handle 2.5 million 20-foot container boxes a year.

Investment in Dachan Bay was approved by the National Development and Reform Commission in March this year, a year after the Chinese government unofficially slowed port development in the Pearl River Delta to minimize competition with Hong Kong.

The moratorium delayed construction work at Dachan Bay, the third phase of Yantian project, which is controlled by Hutchison Whampoa, as well as several other ambitious projects at secondary ports.

Dachan Bay, the second-largest port in Shenzhen, will benefit from a revamped Dongguan Channel to improve traffic. Shenzhen authorities began the dredging in December.

Meanwhile, Hong Kong International Terminals, a Hutchison port unit, and MTL plan to buy Hong Kong's Container 3 from PSA Corp and Dubai Port to merge it into their respective terminals, Hong Kong Economic Times said. Total investment will involve HK$2-3 billion, it said.

Hutchison and MTL spokesmen declined to comment on the Economic Times report.

China State Shipbuilding 1H Tonnage Up 61% On Yr - Xinhua
20 July 2005

BEIJING (Dow Jones)--China State Shipbuilding Corp. built 2.87 million metric tons of new ships in the first half of 2005, an increase of 61% from the year-earlier period, the official state media reported Wednesday.

Nearly 80% of the total tonnage was for export, the official Xinhua News Agency reported China State Shipbuilding General Manager Chen Xiaojin as saying.

Chen said the company will become one of the top five shipbuilding companies in the world by the end of this year.

China State Shipbuilding built 3.57 million tons of new ships in 2004, a rise of 64.5% from 2003, of which 73.8% was exported, Xinhua said.

China built 8.8 million tons of ships last year, accounting for 14% of the world's total, the report said.

China has been the third-largest shipbuilder in the world for the last 10 years behind South Korea and Japan.

It is expected to build more than 10 million tons of ships this year, accounting for 18% of the world total, Xinhua said.

China softens grip on single-hull ban
22 July 2005
Tradewinds

China is allowing ports to grant entry to single hulls on a case-by-case basis.

Tanker charterers are finding a way around a Chinese ban on the use of old single-hull tankers carrying heavy fuel oil into its ports.

There are indications that Chinese authorities are relaxing the rules that bar single hulls of more than 20 years of age from entering mainland ports after 5 April.

The Chinese communications ministry raised the ire of oil traders who saw the age restriction as placing them at a disadvantage. The Chinese ban is more restrictive than the International Maritime Organisation (IMO)'s regulations, which bar single-hull tankers older than 25 years.

An industry source says the government, having publicised the ban, did not want to be seen as bowing to public pressure.

However, it is making a concession by giving port authorities around the country the discretion to approve the entry of single hulls on a case-by-case basis.

A Shanghai-based tanker broker said: "As a result, traders fix ships on a 'subjects' basis.''

He says charterers who fix single-hull tankers of between 20 and 25 years of age should transmit the ships details to the authorities overseeing the port they plan to enter.

"The port authorities usually give their endorsement within 24 hours. Once the green light is received, the charterer confirms the vessel,'' he said.

It is understood that approval is being granted in almost all cases.

In one rare instance, a Liberian-registered, 64,000-dwt single-hull tanker (built 1983) was denied entry to Rizhao Port in the eastern province of Shandong last month. The vessel was carrying around 36,000 tonnes of heavy fuel.

The Shanghai-based broker says charterers have also learned that some ports are more accommodating than others. Approval seems to be granted more quickly in smaller ports, such as Zhuhai, that are hungrier for business, than in busier ports, like Huangpu or Shanghai.

The tanker broker says oil majors are unaffected by the ban because they stay away from old tonnage.

However, small oil traders are willing to take the risk of employing such tankers because of the significantly lower costs.

He said: "A trader can save around $100,000 per voyage. It costs around $400,000 to charter a panamax that is more than 20 years old from Russia to China, compared to $480,000 to $500,000 for a newer ship.''

Mainland shipping giants in US$350m debt deals
Tim LeeMaster, Hong Kong Standard
August 9, 2005

Two of the mainland's largest shipping companies, China Shipping Container Lines (Asia) and China Ocean Shipping, are seeking just over US$350 million (HK$2.73 billion) in debt financing, according to bankers familiar with the situations.

China Shipping Container Lines (Asia) has arranged to borrow US$100 million to buy new containers, said a banker. The firm is a unit of Hong Kong-listed China Shipping Container Lines, controlled by China Shipping Group.

The loan, financed by Germany's Commerz (East Asia), ING Bank and Bank of China (Hong Kong), will consist of a 5½-year, US$20 million tranche and a 4½-year, US$80 million tranche, which will be sold down to a syndicate of banks by the end of the month.

Banks providing US$12 million will earn a fee of 60 basis points while those contributing US$8 million will earn five basis points less.

ING, the bank with the original mandate, will solely fund the US$20 million tranche.

The shipping firm will pay an interest margin of 40 basis points over the London interbank offered rate. The three-month Libor, an average of rates set daily by banks and used as a borrowing benchmark, was quoted at 3.76 percent Monday.

China Shipping Group is the world's 10th largest container liner and second largest ship owner in the mainland behind China Ocean.

China Ocean, more commonly known as COSCO Group, operates 115 ships that can handle a total of 275,500 TEUs (20-foot equivalent units), the standard instrument of the shipping industry.

China Shipping can carry 254,000 TEUs on its 105 vessels.

Mainland shippers are expanding fleet sizes, and snapping up more of the twenty and forty-foot containers they carry, as China's exports continue to rise on the back of strong economic growth.

COSCO Group plans to sell two billion yuan (HK$1.91 billion) in bonds with a maturity of 10 and 20 years in the domestic market.

The shorter-dated paper will carry an annual coupon of 4.95 percent while the 20-year debt will pay investors a higher 5.3 percent, said a banker familiar with the situation.

The bonds are likely to be popular with China's insurers, who suffer from a dearth of long-term investment products and are hard pressed to match their long-term liabilities with similar kinds of assets.

Long-term bonds are a scarce commodity in the mainland since many investors are skeptical of the ability of many mainland companies to service debt over that long a period.

CITIC Securities is managing the COSCO deal, which could come to market as early as next month.

Beijing has been easing approvals of corporate bond sales in an effort to open up an alternative funding channel for mainland companies as previous popular sources such as the stock market have become less attractive.

Shanghai Jan-July container traffic up 26.8 pct; Shenzhen up 22 pct - report
12 August 2005
AFX Asia

BEIJING (XFN-ASIA) - Container throughput at Shanghai port, the largest in mainland China, was up 26.8 pct from a year earlier at 10.16 mln twenty-foot equivalent units (TEUs) in the first seven months, while Shenzhen port handled 8.82 mln TEUs, up 22 pct, the Hong Kong-based Wen Wei Po reported.

The newspaper quoted unidentified sources as saying that Shanghai port's July container throughput was 1.6 mln TEUs, up 27.9 pct year-on-year.

The report also said that container throughput at Shenzhen port in July was 1.39 mln TEUs, up 20 pct year-on-year.

Shanghai and Shenzhen are the third and the fourth busiest container ports in the world, after Singapore and Hong Kong.

MTL seeks $5b loan for expansion
Tim LeeMaster and Wong Ka-chun, Hong Kong Standard
August 19, 2005

Modern Terminals (MTL), the port operator majority-owned by Wharf, is seeking a HK$5 billion loan to fund expansion in Shenzhen and refinance existing debt, bankers familiar with the situation said.

The five-year loan will likely be priced between five and 10 basis points below a HK$2.6 billion loan led by HSBC and joined by eight other banks that was arranged in 2002, the bankers said. The original banks and a number of other banks are expected to fund the new deal, which the company plans to close within the next month.

Three years ago, Modern Terminals enlisted HSBC, Banc of America Securities, Bank of China, Hang Seng Bank, Mizuho Financial Group, Salomon Smith Barney, Standard Chartered and UFJ Bank in a two-part floating-rate loan.

The five-year loan consisted of a HK$1.3 billion revolving loan and term loan of equal size. The loan was finalized as a club deal, in which each bank takes an equal stake, and pricing details were not publicly disclosed, according to Dealogic. Bankers described pricing on the original loan as "already tight."

Earlier this month, MTL signed a joint-venture agreement with the Shenzhen government to develop five container vessel berths at Dachan Bay. MTL will own 65 percent of the venture called Shenzhen Dachan Bay Container Terminals, with the rest held by the municipal government-owned Shenzhen Dachan Bay Port Investment and Development. The total combined investment in the project is seven billion yuan (HK$6.71 billion).

At the time of the announcement, Wharf's chief manager Frankie Yick said the venture would be financed from internal resources and bank loans.

Construction is slated to be finished on the five berths, the first of five phases that will house a total of 24 berths, at the end of 2008. The first phase will be able to handle 2.5 million 20-foot containers. Dachan Bay, the second-largest port in Shenzhen, is part of the larger Yantian project controlled by Li Ka-shing's Hutchison Whampoa.

Farther north, MTL is bidding to win the right to build berths in Shanghai's Yangshan port along with partner China Shipping Terminal Development, a unit of the mainland's second-largest shipping company.

Hong Kong port operators such as MTL and its top competitors Hutchison Whampoa, Hong Kong International Terminals and Singapore's PSA are eager to expand onto the mainland to capture some of China's booming external trade. Mainland exports rose 32.7 percent in the first half on growing foreign demand for cheap products made in China while imports increased 14 percent.

Wharf's stake in MTL is set to rise to 67.94 percent as Swire Pacific said earlier this month that it plans to sell its 17.62 percent stake to both Wharf and China Mechants.

China Merchants will now own 27.1 percent of MTL while the privately-held Jebsen Securities will own the remainder.

Container shipper net up 40pc on higher rates
Alman Loong, Hong Kong Standard
August 23, 2005

China Shipping Container Lines posted first-half profit of 2.1 billion yuan (HK$2.01 billion), up 40 percent from 1.5 billion yuan a year earlier, helped by increased freight rates and capacity expansion.

Shanghai-based CSCL, the world's 10th-largest container shipper by operating capacity, said turnover rose to 13.5 billion yuan from 9.8 billion yuan.

No interim dividend was declared.

According to Credit Suisse First Boston, CSCL carried 30 percent more cargo in the first six months of the year, when average freight rates rose by 4 to 5 percent.

CSCL's main strength is above-industry volume growth in markets where rates have remained firm, Citigroup said in a report issued last week.

The company plans to take delivery of new vessels to increase its capacity by 37 percent to 349,000 20-foot equivalent units (TEUs) by year-end.

Alan Lam, an analyst at Guotai Junan Securities, said the container shipping business could be headed for overcapacity and higher operating costs in 2006.

CSCL this month raised fuel surcharges on US and Australian routes and announced an increase from September in surcharges on European and African routes. "Apart from fuel surcharges, there is limited room for CSCL to hedge oil prices," Lam said.

Citigroup estimated that fuel could account for 5 percent of CSCL's costs this year, versus 2 to 3 percent in 2004.

Some analysts also said that in the next two years, the company's expanded capacity growth could easily become a liability instead of an asset.

Shares of CSCL fell 2.2 percent to close at HK$3.325 Monday, before its latest results were released. The shares are down about 19 percent from their peak of HK$4.125 in April.

Sinotrans plans 500m yuan projects at secondary ports
Russell Barling
27 August 2005
South China Morning Post

Sinotrans plans to invest 500 million yuan at secondary ports in the mainland and set up support facilities for the 18 billion yuan Yangshan deepwater development as it looks to broaden its revenue base.

President Zhang Jianwei said Sinotrans was looking to invest in smaller container and multi-purpose terminals in key Yangtze and Pearl river delta commercial areas and build container yards and freight stations to support the Yangshan port project which comes on stream in November.

He said the new assets would support Sinotrans's diversified trade-transport activities in China.

The listed small-cap firm, which generates about 70 per cent of sales from freight forwarding, saw earnings rise 32.5 per cent to 498.7 million yuan as demand grew for transport services to distribute China's booming trade volumes.

"With China's reforms deepening, we are seeing much stronger competition. But we do not fear that as we are now better adjusted to the new competitive environment," said Mr Zhang. "We can continue our growth momentum. We do not see any obstacles."

Interim sales grew 33.7 per cent to 13.25 billion yuan, as the peak of the shipping cycle saw it receive a strong contribution from its marine transport unit where operating profit surged a comparative 42 per cent to 124.6 million yuan.

Mr Zhang said a core strategy was to expand revenue streams by adding services and products such as warehouse financing and rejuvenating its project logistics division to support heavy industries such as hydroelectric projects.

Sinotrans will also increase its focus on the distribution of domestic express products, a 15-billion yuan sector led by China Post.

"In the past, our focus was on international express but we will be putting renewed focus on the domestic sector," said secretary Gao Wei. He said Sinotrans had about 20 per cent of China's lucrative international express market.

While the firm's combined express business accounted for slightly more than 8 per cent of interim sales, it contributed 172 million yuan, or 23.7 per cent, to operating profit.

But competition from foreign rivals eroded operating margins 4.4 percentage points year on year to 15.9 per cent. Sinotrans's interim net margin fell to 4.9 per cent from 5.47 per cent year on year.

The board recommended a dividend of 3.8 fen per share.

COSCO jumps to world's No 2 shipping company
29 August 2005
China Daily Information Company

The China Ocean Shipping (Group) Company (COSCO), with a transport capacity of over 35 million tons and more than 600 merchant ships cruising in the world, has grown into the world's second largest shipping company.

According to COSCO's vice-president Zhang Fusheng, the company registered a profit of over 12 billion yuan (US$1.48 billion) in 2004. In the first half of 2005, it gained a stunning 10.8 billion yuan (US$1.33 billion) in profit.

"We always stress honesty and mutual trust to maintain a good relationship between customers, staff and our partners," said Zhang.

COSCO's shipping lines cover more than 160 countries and regions and over 1,300 ports in the world. The company's assets total 140 billion yuan (US$17.26 billion). It has 600 branches in over 50 countries and regions in the world.

On June 30 this year, China COSCO Holdings Company Ltd was listed in Hong Kong, making it COSCO's eighth company to go public overseas. Up to now, COSCO's main businesses, shipping, logistics and shipbuilding, have entered into the capital market, accounting for 50 percent of the company's assets.

"With standardized corporate governance, COSCO's competitiveness keeps enhancing," said Zhang, who also noted that the company's shipping quantity may exceed 300 million tons this year.

China's Dalian Port Sees Sharp Fall in Auto Imports, Jan-Jul

DALIAN, Aug 30 Asia Pulse - The latest statistics released by Dalian Customs in northeast China's Liaoning Province show that Dalian Port imported 8,024 vehicles valued at US$240 million in the first seven months of this year, down 48.6 per cent and 50.2 per cent year-on-year respectively.

Customs officials analyzed that the factors causing the sharp decline in vehicle imports include a series of new policies set by the government related to the management of automobile brand marketing and the license issuance for automatic import of auto products.

Due to the influence of exchange rates, the vehicle imports from South Korea increased by 56.6 per cent, while that from Japan and Germany decreased by 41.5 per cent and 66.9 per cent respectively. Strong euro and Japanese yen has resulted in high cost for importing vehicles from Germany and Japan and also given an impetus to the import of vehicles with lower prices from South Korea.

In addition, new home-made car brands are much attractive in terms of prices in comparison with imported vehicles, scrambling the market space for imported vehicles, especially for sedans.

However, cross-country vehicles with the discharge from 2.5L to 3.0L become new favorite among imported vehicles, customs sources said.

(XIC)

Cosco Pacific's Net Profit More Than Doubles
By Jeffrey Ng
9 September 2005
Dow Jones

HONG KONG -- Cosco Pacific Ltd. said its first-half net profit more than doubled from a year earlier on strong shipping demand in China and gain from the disposal of assets.

The blue-chip port investor on Thursday said net profit for the six months ended June 30 rose to US$214.8 million from US$93.2 million, as revenue rose 9.4% to US$141.9 million.

The company said it expects new port-handling capacity to drive profit growth for the rest of the year. Cosco Pacific, a unit of newly listed China Cosco Holdings Ltd., has stakes in container leasing, container terminals, logistics and container-manufacturing businesses.

On top of its first-half dividend of 28.1 HK cents (3.6 U.S. cents), Cosco Pacific recommended a special dividend of 11.3 HK cents. The special dividends come from a gain of US$61.9 million from the sale of its 17.5% stake in Shekou Container Terminals Ltd. in March.

Excluding the gain, Cosco Pacific's profit rose 64% to US$153 million, the highest growth rate in half-year earnings since it listed in Hong Kong in 1994.

Managing Director Sun Jiakang said Cosco Pacific's container-leasing and port investments drove profit growth. "Benefiting from the growth in China's trade and the containerization trend in the transportation industry, the group achieved positive results in the container-leasing operation," Mr. Sun said.

The division's profit rose 25% to US$53.4 million, as its container capacity increased 19% to 1.03 million twenty-foot equivalent units, or TEUs.

"Demand for container boxes had been particularly strong in the first half as companies feared for a lack of supply amid high raw-materials prices and the government's economic cooling measures," said Kelvin Wong, deputy managing director of Cosco Pacific.

The container-terminals division's profit rose 11% to US$44 million, as it handled 18% more cargo, at 12.13 million TEUs.

"The company's container-terminal business recorded good growth boosted by the growth of China's economy," Mr. Sun said.

Cosco Pacific's bottom line was further lifted by the first contribution from its 16.2%-owned container-manufacturing firm, China International Marine Containers (Group) Co. The company acquired the CIMC stake in December last year.

The world's largest container-box maker by market capitalization contributed US$40.2 million to Cosco Pacific's profit in the first half.

For the second half, Mr. Sun said he expects the initial contributions of two port investments in the cities of Nanjing and Dalian to drive the company's growth, while a still-strong shipping market will increase demand for more port capacity.

"With the group's investment presence in many major ports in the world, the company is well-positioned to take advantage of the growth in throughput in the second half of the year," he said.

Cosco Pacific holds stakes in a number of Chinese ports in the Pearl River Delta, the Yangtze River Delta and the Bohai Rim in northern China. Outside China, it has a 49% stake in a terminal in Singapore and a 25% stake in Belgium's Antwerp port.

Chinese yards look outside industry for engineers, designers
9 September 2005
Tradewinds

China's shipbuilding boom has resulted in a shortage of experienced ship-design engineers, forcing shipyards and designers to look outside the industry for mechanical and electrical engineers.

Industry sources TradeWinds spoke with are unable to say how severe the shortage is in terms of numbers but are able to provide anecdotal examples. The tight talent market has also driven up the pay of design engineers. It is said that a ship-design engineer with around 10 years of working experience now commands a salary of CNY 15,000 ($1,850) a month, or triple the level of three years ago.

In comparison, the average Chinese engineer who has worked 10 years in the technical department of a machinery factory draws CNY 6,000 to CNY 7,000 a month, according to a Shanghai-based headhunter.

The shortage is caused by the entry of new ventures and by expansion. For instance, the Sino-Norwegian ship-design and newbuilding consultancy Barber CS Marine has increased its staff to 50 from around 20 when the joint venture was formed in June last year. The company, which specialises in tankers, chemical tankers, LPG carriers, pure car/truck carriers and small bulkers, plans to move into containerships and larger bulkers.

Another factor aggravating the manpower situation is that several experienced ship-design engineers have ventured out to set up shops for themselves. A shipbuilding source said: "Everyone wants to be his own boss and no one wants to be an employee."

Although Chinese universities are increasing their student intake, not just in maritime studies but also in other fields, the lament is that young graduates do not stay on the job long enough to develop their skills. Employees are ready to job-hop for a couple of hundred yuan more a month.

To resolve their manpower problems, companies such as Sino-Japanese shipyard Nantong Cosco Kawasaki Shipbuilding and Barber CS Marine have been casting their net further afield to recruit and retrain engineers from outside the shipping industry.

Xu Jiandong, general manager of Barber CS Marine, sees a silver lining in the labour market. He said: "People are now driven only by money. I believe, though, that more will stay longer in their jobs in the future because of the increase in the number of college graduates each year."

Overall, more than three million students graduated from Chinese universities this year, compared with 1.2 million in 2001. A third of the 3.4 million college graduates find it difficult to secure a job commensurate with their educational qualifications.

COSCO Pacific to take 14pc stake in Tianjin port
13 September 2005
Hong Kong Standard

COSCO Pacific, a Hong Kong-listed unit of the mainland's largest shipper China Ocean Shipping, plans to buy a 14 percent stake in a Tianjin port by year's end.

Four other global shipping firms, including Maersk, will also invest in Tianjin Five Continent Port, an analyst who attended a meeting with COSCO's management said.

COSCO Pacific, which in 2004 signed a deal with Tianjin Port Authority to buy a port stake, plans to buy two terminals this year, deputy managing director Wang Zhi said earlier.

The company plans to invest US$700 million (HK$5.46 billion) this year to buy terminals and container vessels to capture a share of China's booming external trade.

Its first-half net profit jumped 131 percent year-on-year to US$214.8 million. Tianjin Five Continent Port, which has two berths, opened early last year. The port handled 200,000 TEUs (twenty-foot equivalent units) in 2004 and aims to raise throughput to 600,000 TEUs this year.

It moved 306,704 TEUs in the first four months of the year.

Tianjin Port Authority has four port terminals, one of which is CSX Orient (Tianjin) Container Terminals, 18 percent owned by Hong Kong-listed NWS Holdings. That is the city's largest port, with four container berths and one coal berth in Tianjin's Xingang district. It handled about 560,000 TEUs in the first half.

"Tianjin Five Continent Port is too small and can generate only limited revenues to COSCO Pacific in 2006," DBS Vickers Securities analyst Oscar Choi said. He said China's strategy to focus on major hubs such as Shanghai, Shenzhen and Qingdao will cap development of small to medium-sized ports.

COSCO Pacific container throughput rose 17.6 percent to 14.4 million TEUs in the first seven months of 2005, driven mainly by Shenzhen's Yantian port, COSCO-HIT in Hong Kong and Qingdao's Qianwan port, a DBS Vickers report said.

The firm's growth trailed the industry average of 24.2 percent in China, but Choi said he remains positive on the company due to its expansion plans in Qingdao, Tianjin and Dalian.

Seem like he is only person posting on this thread. :sleepy:

http://www.tdctrade.com/Photo/cms/article/shippers/30905.JPG

Fee hike for Waigaoqiao likely to boost rival port
Shanghai's Waigaoqiao terminal has received Communications Ministry permission to raise its container handling fees by 10 percent from January 1, a move that should benefit its nearby competitor Yangshan Port, whose first phase is scheduled to open next year.

Alman Loong
Hong Kong Standard
Wednesday, October 05, 2005

Shanghai's Waigaoqiao terminal has received Communications Ministry permission to raise its container handling fees by 10 percent from January 1, a move that should benefit its nearby competitor Yangshan Port, whose first phase is scheduled to open next year.
Yangshan's handling fees will be 31 percent cheaper than Waigaoqiao's. The two ports are 45 kilometers apart.

At Waigaoqiao, handling fees will increase to 506 yuan (HK$485.25) from 460 yuan per TEU (20-foot equivalent unit) for loaded boxes, and to 352 yuan from 320 yuan per TEU for empty boxes. The port most recently increased its fees by 10 percent last January.

Yangshan Port plans to charge 350 yuan per TEU for loaded boxes.

The highest handling fees in the region belong to Hutchison Whampoa's Shanghai Container Terminal, which charges 550 yuan per TEU.

Yangshan Port is China's most expensive container handling facility yet. It is being built in phases at a total cost of 100 billion yuan.

Can anyone send me a chart of China's Shipping Freight rate over the years including the year 2005? Thank a lotzz...

Guangzhou Expected to Pass Hong Kong in Cargo Handling
18 October 2005
SinoCast China Business Daily News

GUANGZHOU, October 18, SinoCast -- The cargo handling capacity of Guangzhou City reached 215 million tons in 2004, ranking the world's seventh, only next to Hong Kong's 221 million tons.

Guangzhou Port has been the favorable port for bulk cargo in southern China for its advantageous geographic location. From January to September of the year, cargos handled through Guangzhou Port reached over 170 million tons, an increase of 12.3% (or 16.8 million tons) compared with the same period of last year.

And the containers handled through the port reached 3.25 million TEUs, a year-on-year increase of 40.7%.

The throughput in Guangzhou Port is forecasted to surpass Hong Kong this year and rank the sixth place.

In addition, Guangzhou Port loaded 1.12 million tons of crude oil in the first nine months, and refined oils of 10 million tons, which is slightly lower than the same period of last year.

Competition takes toll on Shanghai Port
Charlotte So
22 October 2005
South China Morning Post

Shanghai Port Container reported disappointing third-quarter results yesterday in a sign that competition between mainland port operators was getting tougher.

"There's a tightness in the supply of port handling capacity in China and competition among the operators will get a lot more severe from now on," said a European securities firm analyst.

Shipping lines such as AP Moeller-Maersk and P&O Nedlloyd have been investing heavily in mainland ports, making it more difficult for operators outside the main lines to grow their business.

The pressure on the ports would be even greater without the backing of the major shipping lines, analysts said.

Shanghai Port Container's net income in the quarter rose 2 per cent year on year to 329 million yuan - a major decline from the 20 per cent growth for the same period a year ago.

The company said profits were cut by a massive rise in the cost of finance which increased 135.4 per cent to 77 million yuan.

Sales increased 14 per cent to 11.6 billion yuan.

Over the nine months, profit rose 9 per cent to 966.9 million yuan on sales that jumped 13 per cent to 3.36 billion yuan.

Shanghai handled 14.6 million teu (20-foot equivalent unit) containers last year and aims to surpass Hong Kong and Singapore as the world's biggest container handler by 2020.

Shanghai Port Container is one of the major revenue engines of China Merchants Group which holds the unit indirectly through Shanghai International Port (Group).

Shanghai International Port has asked shipping lines to route their European services through Yangshan port by December.

Profit blow hits China oil carrier
Carol Chan
26 October 2005
Hong Kong Standard

Shares of China Shipping Development, the mainland's largest carrier of crude oil, fell after third-quarter profit came in less than expected on lower freight rates and higher bunker costs.

Net profit rose 18 percent to 548.6 million yuan (HK$526 million) for the three months ended September from 465.9 million yuan a year earlier, based on Chinese accounting standards.

The shares, which have declined 18 percent this year, fell 2.6 percent to HK$5.65 Tuesday.

International freight rates for bulk and oil hit a more than two-year low in August before recovering as carriers introduced more vessels to take advantage of burgeoning demand, fueled by China's surging economy.

China Shipping said third-quarter turnover jumped 27 percent to 2.07 billion yuan, from 1.63 billion yuan a year earlier.

The Hong Kong- and Shanghai- listed firm, which owns 77 tankers and 89 bulk ships, transports oil, coal and other cargo along China's eastern coast and to other countries.

Profit for the nine months ended September jumped 58 percent to 2.16 billion yuan from 1.36 billion yuan.

Turnover increased 34 percent to 6.367 billion yuan with a gross profit margin of 41.4 percent.

China Shipping suffers rating cut
27 October 2005
Lloyd's List

BROKERS offered a mixed outlook yesterday for China Shipping Development a day after the company reported a 17.8% rise in third-quarter net profit to Yuan548.63m (US$67.65m), writes Keith Wallis in Hong Kong.

DBS Vickers Securities and KGI both downgraded their ratings on the company based on its “disappointing” results. DBS changed its rating from “fully valued” to “sell” while KGI cut its rating from “neutral” to “underperform”. Meanwhile, Macquarie Securities maintained its “outperform” rating.

While China Shipping posted higher quarterly net profits year on year, the third-quarter profits were down 29.5% compared with the second quarter.

DBS said this reflected falling tanker freight rates in the last quarter. “China Shipping could not stay immune to the shipping downcycle, despite solid coastal markets in China,” said DBS.

On a more positive note, Macquarie said China Shipping’s fourth quarter earnings would improve to reflect the seasonal peak.

In a research note, Macquarie said: “We believe the market may react negatively to China Shipping’s third-quarter results. However, in our view, such weakness is a good buying opportunity for investors to take advantage of the seasonal upturn in the fourth quarter 2005.”

It predicted freight rates would rise and bunker costs would fall, thus helping China Shipping’s gross margin and drive earnings.

Merrill Lynch, though, cut China Shipping’s full-year earnings by 11% for 2005, 8% for 2006 and 6% for 2007.

“The recent weakness in the domestic steel market has also made us a little more cautious on the outlook of the domestic coastal shipping market,” Merrill Lynch said.

Analysts’ negative sentiment was reflected in a 3.54% fall to HK$5.45 (¢70) in China Shipping’s share price yesterday. Macquarie, however, is maintaining its target price of HK$8.90.

Cosco confident five-year fleet expansion plan will pay off
28 October 2005
Lloyd's List

CHINA Ocean Shipping Group is embarking on a major expansion of its container, dry and wet bulk fleets as it seeks to build capacity in the face of mixed market conditions.

The firm won approval earlier this month from the National Development and Reform Commission, China’s highest decision-making body, to issue Yuan2bn ($246.6m) worth of bonds to finance the acquisition of 10 ships over the next five years.

The cash, comprising Yuan1bn worth of 10-year bonds and Yuan1bn worth of 20-year bonds, will help pay for six oil tankers and four bulk carriers.

Proceeds from the bond issue are expected to help finance two 76,000 dwt panamax bulkers ordered at about $35m each by Cosco Qingdao from Jiangnan shipyard in May. The vessels are due delivery in November 2007.

Cosco Qingdao is one of five bulker companies controlled by Beijing-headquartered Cosco that together operate more than 200 ships with a total carrying capacity of 12m dwt.

Dalian Ocean Shipping, Cosco’s tanker division, has five very large crude carriers on order at yards in China and Japan and is thought to be eyeing orders for around 10 ships. This follows China’s pledge that 50% of oil imports should be handled by Chinese vessels, up from the current 10%.

Dalian Ocean Shipping currently operates about 20 tankers, totalling around 2m dwt, including three VLCCs.

China Cosco Holdings, the holding company for Cosco Container Lines, is dipping into the $1.2bn proceeds of its Hong Kong share listing in June with a plan to expand its box fleet.

The firm has placed an order worth about $520m with Nantong Cosco KHI Ship Engineering for four 10,000 teu containerships for delivery from October 2008 onwards. The deal follows an order placed by Cosco with South Korea’s Hyundai Heavy Industries at the beginning of this year for four 10,000 teu boxships. Brokers said the firm could place further boxship orders.

At the time, Cosco chairman Captain Wei Jiafu said Cosco was the first Chinese shipowner to place orders for 10,000 teu containerships. The first 349m long vessel is due to be delivered in 2007.

The orders came as China Cosco enjoyed a bull run in the first half of this year, reflected in a 42% surge in net profit to Yuan2.77bn and a 22% rise in liftings to 2.16m teu.

But volatile freights rates in both the bulk and container trades will place a strain on future earnings.

China Cosco already warned in its listing prospectus of a 0.28% fall in net profit next year. But analysts have suggested tougher times ahead for the liner sector as capacity growth accelerated and demand growth slowed. One analyst tells Lloyd’s List that he “would be very surprised if they could avoid the industry trends”.

This is a far cry from Capt Wei’s upbeat forecast at the time of the listing when he said: “We believe that from now until 2009, we will see a golden growth period that will reflect on the shipping cycle as well. With regard to some people predicting profit to drop next year, I can tell you if I forecast that it will decrease next year I would not go for an IPO this year.”

Capt Wei’s comments, though, landed him in hot water with commentators and his fellow directors who were forced to reaffirm their forecast of a decline in profit next year.

With spot bulker charter rates averaging about $21,500 a day in October after falling to $9,500-$10,000 a day in August and charterers having little appetite for two- or three-year time charters, bulker earnings also look set to be hit.

Enter the dragon as a trade power to be reckoned with
China’s entry into the world economy has serious maritime consequences, writes Keith Wallis
28 October 2005
Lloyd's List

WITH freight rates surging to record highs on the back of a massive inflow of iron ore, coal and agricultural products, China appeared insatiable as it became the factory to the world.

Early central government estimates of 7%-8% GDP growth were dismissed as wild underestimates by economists and observers, who believed true economic growth was closer to 13%-14%.

The Chinese dragon that had been sleeping for so long was not only awake but on steroids.

However, soaring oil and raw material prices, economic hiccups in the US and Europe and the central government’s own measures to slow an overheating economy have cooled the dragon’s excesses.

Observers believe the government’s economic figures now more accurately reflect true economic growth, which China’s National Bureau of Statistics estimated at 9.4% in the third quarter year-on-year.

The bureau said specific areas of the economy still grew much faster than average. Retail sales climbed 13% to Yuan4.5tr ($556bn) in the first nine months of this year, while the sale of domestically produced passenger vehicles grew by 16.8% to 2.8m vehicles in the same period.

Economists believe the pace of growth will continue as disposable income rises.

National Bureau of Statistics spokesman Zheng Jingping says China is capable of maintaining high growth rates for a long time, although there could be constraints in energy supplies and weaknesses in the agriculture sector.

This has ramifications for the maritime industry with massive expansion forecast in port construction, growth in shipbuilding and ship repair activities and opportunities for maritime services such as shipbroking and ship management. All along China’s coast port developers are investing in additional container and bulk terminals. In the south, work started last month on berth seven, which forms the first section of the third phase of Shekou Container Terminal, one of the Shenzhen ports in southern China.

Further north at Taicang Terminals near Shanghai, the Modern Terminals-backed facility is bringing in new cargo handling equipment while ultimately planning a third phase expansion.

Elsewhere, China State Shipbuilding Corp and China Shipbuilding Industry Corp are expanding shipyard facilities in Shanghai, Guangzhou and Dalian.

Cosco Shipbuilding Industry, an offshoot of China’s largest shipping company, is aiming to spend up to Yuan6bn expanding its shipbuilding capacity by about 3m dwt a year at facilities in Dalian and Nantong.

The growth in shipyard construction, part of a government aim for China to become the world’s largest shipbuilding nation by 2015, has caused alarm among some shipbrokers, who warn of the dangers of massive overcapacity in the industry.

At the same time, China’s merchant fleet is set to grow.

Lloyd’s Register executive chairman David Moorhouse, says the Chinese-owned classed fleet, which currently stands at about 26m gross tonnes, is set for continuous growth.

This includes the contribution by shipowning farmer co-operatives on China’s east coast. Farmers, realising the potential from historically high freight rates, have contributed financially to acquire a ship. Several of these deals have been arranged by SSY Shanghai and the ships are then given to Cosco to manage.

This innovative approach to shipowning embodies the Chinese spirit of a country that always wants to achieve more — whether it is building liquefied natural gas carriers or putting their citizens in space.

Top shipping container maker CIMC's Q3 slides

SHANGHAI, Oct 29 (Reuters) - China's CIMC , the world's top maker of shipping containers, posted on Saturday a 29 percent dive in quarterly earnings, as rising steel costs took the edge off strong sales.

China International Marine Containers Co. Ltd. , an arm of ports-to-roads conglomerate China Merchants Holdings , gave no reason for its first fall in profit in seven quarters but it has previously warned that high prices for the steel it uses to make containers would hurt this year.

CIMC reported net earnings of 598.61 million yuan ($74.05 million) in the quarter to September, versus 848.02 million in the same quarter of 2004. Turnover edged up 2.3 percent to 7.64 billion yuan.

That came after a 52 percent surge in second quarter earnings on the back of a shipping boom as the world's seventh-largest economy gobbled up raw materials to feed its fast-growing factories.

Steel prices remain high in China, although they have eased from decade-highs in March. Analysts say CIMC's earnings could also be hit by a small rise in the value of the yuan.

China revalued its currency 2.1 percent on July 21, a move seen as boosting corporate buying power and domestic consumption in the long run but hitting exporters such as CIMC.

Container makers, including CIMC and closest rival Singamas Container Holdings Ltd. , also face a slowdown in a global shipping boom that began in 2003, analysts have said.

Freight rates have been hit by slower Chinese demand and a glut of container ships.

CIMC, which with Singamas dominates the worldwide manufacture of containers, said it had sold 1.15 million TEU (20-ft equivalent units) of containers in the first nine months of the year, up 0.52 percent from the same period last year.

The boom helped CIMC's net profit to jump by half to 2.65 billion yuan in the first three quarters of the year as turnover jumped 39 percent.

CIMC, which claims a 40 percent global market share, saw its shares climb 4.5 percent in the third quarter, underperforming the market's 7 percent rise. (US$1=8.0840 Yuan)

COSCO to take 10pc of Shanghai Yangshan II
Alman Loong in Shanghai
2 November 2005
Hong Kong Standard

COSCO Pacific, which is controlled by the mainland's largest shipper, China Ocean Shipping, will have at least a 10 percent stake in Shanghai Yangshan deepwater port Phase II, company president Wei Jiafu said.

"Yangshan port is a benchmark for the strategic development of Chinese ports," he told reporters in Shanghai Monday. "The port should have support from state-owned companies such as COSCO Pacific." Cosco Pacific owns 20 percent of the first phase of another Shanghai port, Waigaoqiao.

Denmark's AP Moller-Maersk Sealand is also interested in a 20 percent stake in Shanghai Yangshan Phase II, executive vice president Knud Pontoppidan said. He hopes to conclude an agreement in the first quarter of next year.

A consortium of Hutchison Port Holdings, APM Terminals - a unit of AP Moller-Maersk - COSCO Pacific, China Shipping Terminal Development and Shanghai International Port Group may be awarded the Phase II stake, according to a newspaper report, but a decision may be delayed due to strong opposition. Shanghai International Port Group and its wholly owned listed A share, Shanghai Port Containers, were last year awarded Phase I.

Formal operations at Phase I, which has an annual designed capacity of 2.2 million TEUs (20-foot equivalent units), are scheduled to start this month. Phase II should add 2.4 million TEUs of operational capacity at the end of next year. Throughput at Shanghai ports excluding the Yangshan facilities will reach 18 million TEUs this year and 20 million in 2006, according to the Ministry of Communication Monday.

"As the biggest project in China's container terminal history, Yangshan will monopolize Shanghai's future capacity in the next 15 years, with a total of 50 berths to be completed by 2020." a Decussate Bank report said. It estimated Shanghai could overtake Hong Kong and Singapore to become the world's busiest port in 2007 to 2008.

Due to the port's capital costs of US$820 million (HK$6.39 billion), Decussate Bank estimated the earnings return for Phase I to be just 8 percent, compared with 15 percent or above for major port projects in China. Pontoppidan refused to speculate.

Cosco confirms APM stake plan in Nansha port project
Chief of mainland's top shipping group hails benefits of deal
Charlotte So in Shanghai
2 November 2005
South China Morning Post

Senior management from the mainland's biggest shipping group yesterday said APM Terminals would take a stake in the second phase of the Nansha port project, confirming a deal first reported by the South China Morning Post.

China Ocean Shipping (Group) chairman Wei Jiafu said with the participation of APM's sister firm Maersk Sealand, the world's biggest shipping line, the port could secure more cargo and services.

"It is very crucial and the benefit is obvious," Mr Wei said after an industry conference in Shanghai. But he did not reveal the stake size or when the agreement would be signed.

In September, Cosco Holdings subsidiary Cosco Pacific signed a provisional agreement to sell 20 per cent of its stake in the four billion yuan Nansha second phase to APM. Cosco Pacific is the 56 per cent owner of phase two.

The deal will give APM, a wholly owned subsidiary of the giant AP Moller Group, an effective 11.2 per cent interest in the six-berth second phase, a stake that could be worth as much as $430 million, based on the facility's 4.01 billion yuan development cost.

Mr Wei also said the group would be part of Shanghai's mega-port project, Yangshan Phase II. "Without the support from Cosco Group, Yangshan Port could not achieve the role as the national hub of shipping," he said. Mr Wei did not provide details of the investment.

It is believed Cosco Pacific could gain a 10 per cent stake in the port, which the city government aims to turn into an international hub. Throughput is projected to increase to 20 million teu (20-foot equivalent units) next year from 18 million teu this year.

On the outlook for the shipping industry, Mr Wei was confident global economic growth would support the sector until at least 2009.

"Although the growth in supply is four percentage points higher than that of the trade volume growth, bear in mind that the basis of the two figures is different. The former is eight million teu and the latter is 350 million teu," Mr Wei said.

Despite his optimism, he said the company was reluctant to commit to new vessels. In June, the firm had an order book of 12 ships with a total capacity of 100,000 teu. It also has long-term charters of 11 vessels with a total capacity of 80,000 teu.

The company aims to have a capacity to ship 800,000 20-foot containers by the end of 2010 from 310,000 boxes in September, according to its initial public offering roadshow in June.

The firm, with more than 20 projects in the mainland, Hong Kong, Singapore and Antwerp, was on the lookout for other investment opportunities, Mr Wei said.

More Cargo Projected for China Ports
2 November 2005

SHANGHAI, China (AP) - With China's economy booming, its ports are projected to handle 25 percent more cargo traffic over the next five years, state media reported Wednesday, citing a senior transport official.

By the year 2010, cargo at Chinese ports will rise to more than 5 billion tons, up from last year's 4.1 billion tons, Zhang Chunxian, minister of communications, told a shipping conference in Shanghai.

Container throughput, measured by TEUs, or twenty-foot equivalent units, is expected to more than double by 2010 to 130 million TEUs from last year's 62 million TEUs, he said.

"China's fast economic growth and its reinforced role as a global trading power will secure huge transport demand in the coming years," the state-run newspaper Shanghai Daily cited Zhang as saying.

China owns 210,000 ocean transport ships with the capacity for more than 86 million tons of cargo, the report said.

Trial operations at Shanghai's a new deepwater port, at Yangshan, are due to begin in late November. Yangshan is expected to be able to handle 2.2 million TEUs when its $1.8 billion first phase is completed, with an eventual annual capacity of 20 million TEUs by 2020.

Trial operations of the $1.8 billion first phase of the port are due to begin in late November, state media reported.

The second phase of the Yangshan port project has been awarded to an international consortium. Shanghai International Port Group has a 40 percent share; Wharf Holdings Ltd., a unit of Hong Kong tycoon Li Ka-shing's Hutchison Whampoa Ltd., has a 20 percent share; state-owned China Ocean Shipping Group (COSCO) has a 20 percent; Danish shipping giant A.P. Moller-Maersk A/S is taking a 10 percent stake and a consortium headed by Hong Kong port operator Modern Terminals Ltd. taking the remaining 10 percent, the newspaper China Business News reported.

Total investment in Yangshan port's second phase is expected to be about 100 billion yuan ($12 billion).

Shanghai Eyes Becoming World's Largest Freight Port

SHANGHAI, Nov 3 Asia Pulse - Shanghai Port handled 363 million tons of cargoes by the end of October this year, according to the statistics released by Shanghai Municipal Port Administration.

It is expected the port will handle a total of 443 million tons of cargoes this year, which will exceed the volume of freight handled by Singapore Port, forecast to handle 420 million tons of cargoes this year.

Shanghai is thus set to become the world's largest freight port.

The port administration disclosed that in the first 10 months this year, Shanghai Port handled 14.891 million TEUs (20-foot equivalent unit), surpassing the figure of 14.55 million TEUs handled in the whole year of 2004.

The port is expected to handle 18 million TEUs this year, ranking third in the world.

In addition, five container berths with a combined designed handling capacity of 2.2 million TEUs for the first-phase project at Yangshan Port will start operation early next month.

Japan lines take stake in Guangzhou vehicle hub
4 November 2005
Lloyd's List

JAPANESE shipping lines NYK and Mitsui OSK Lines have agreed to each take a 12.5% stake in a joint venture established by the Guangzhou Port Group and two other partners to develop a dedicated vehicle terminal in Guangzhou, southern China, writes Keith Wallis

The move solidifies plans outlined to Lloyd’s List 16 months ago by NYK president Koji Miyahara.

Formal contracts between NYK, MOL and its Chinese partners are expected soon. The joint venture will be capitalised at ¥200m (US$24.7m)

The complex will handle 600,000 vehicles a year, making it one of the largest car shipment terminals in China.

Its inauguration will coincide with the start of car production by Japan’s Toyota Motor at a factory developed with Guangzhou Automobile. Toyota will use the terminal to ship vehicles to northern China to eliminate transportation bottlenecks.

Dubai DP World to set up $500 mln terminal in China

DUBAI, Nov 14 (Reuters) - Dubai's port operator DP World said on Monday it would set up a $500 million container terminal at Qingdao in China.

DP World said in a statement the terminal, which will be open in 2008/2009, will have a capacity of more than 2 million twenty-foot equivalent units (TEUs).

It will consist of a quay measuring 1,320 metres (4,331 feet) in length across four deep draft berths. The terminal is wholly owned by DP World.

Qingdao, in eastern China, is home to the country's third largest container port which handles more than 6 million TEU annually.

The operator has a presence in the Chinese ports of Tianjin and Yantai.

"This is a very important step for DP World," said Jamal Majid Al Thaniah, CEO of Dubai Ports and Free Zone Authority.

"The new terminal at Qingdao is a crucial development in our strategy of investing and developing ports in the world's growth markets, particularly in China and North Asia."

In September, Dubai Ports Authority and DPI Terminals merged to form DP World, creating one of the largest port operators in the world.

China bunker in dire straits

Oil tankers, container ships and bulk carriers are calling at Chinese ports in big numbers, but when it comes to filling up their tanks, they look elsewhere.

Wednesday, December 07, 2005
Reuters

Oil tankers, container ships and bulk carriers are calling at Chinese ports in big numbers, but when it comes to filling up their tanks, they look elsewhere.

The mainland's marine fuel market, dominated by a single supplier barely a year before the country is due to open up its domestic wholesale oil sector under the terms of its World Trade Organization entry, remains a bit player in the global bunker fuels trade.

This is despite the world's fastest- growing economy importing more raw materials than ever before, while exports are projected to grow at over 20 percent next year.

Without a transparent and competitive climate, a reform of inefficient procedures and lower prices, mainland ports will struggle to vie with Hong Kong and Singapore to sell the millions of tonnes of diesel and fuel oil that power the world's ships.

"Shipowners bunker in China only under emergency," said Robert Chandran, president and chief executive of US marine fuels supplier Chemoil-ITC, half-owned by Itochu of Japan.

Industry experts say China has the potential to be the world's top bunker fuel market, but it has to get things right.

Beijing has not made clear how it would open up the market for bonded bunkers - non-taxable marine fuels taken by global vessels or Chinese ships plying international routes - after end- 2006, when the WTO deadline expires.

The mainland's bunker market is dominated by Chimbusco, a joint-venture between the nation's biggest oil producer, PetroChina, and the country's top shipping firm, Cosco Group. It accounts for 95 percent of the annual volume of bonded bunkers.

The market remains tiny, with an annual volume of 2.5-3.0 million tonnes for the international market deemed a record high. That is almost a tenth of the volume in Singapore, the world's biggest bunkering port.

Chimbusco sold 2.04 million tonnes in the first nine months of 2005, up 33 percent from the year before.

Shipping throughput in China's largest port, Shanghai, has almost doubled to 14.65 million 20-foot equivalent units last year. Volumes in Hong Kong, the world's largest container port, are at 20.4 million TEUs and Singapore are at 20.1 million TEUs for 2004.

Shippers complain about poor transparency in China, where prices are the highest in Asia, averaging at US$30 (HK$234) a tonne more than Singapore levels this year, US$17 above Hong Kong and US$69 over Rotterdam. A flat barging fee of US$3-US$5 a tonne is also levied, while red tape mars the process of refueling in China, wasting valuable time.

"We only buy what we absolutely need and that's always in small volumes of several hundred tonnes," said a bunker buyer with an international shipping firm, adding that more efficient and price-transparent ports, such as Singapore and Hong Kong, are within easy reach.

"The Chinese will have to change drastically to become a viable bunker port and right now, they are miles away."

Chimbusco is perceived as unwilling to share its monopoly and has cornered the market by owning most of the storage facilities in the best locations. "Almost every major oil company has approached us with a view to engage in some partnership to penetrate the domestic bunkers market," general manager Leng Ping said.

"It would be difficult for us to realize any of these discussions. We are regarded by the government as a domestic oil company and this recognition has certain benefits, which we would not want to lose."

Chimbusco's deputy managing director Fu Bin said the firm is bracing itself for competition.

Chimbusco is unable to compete with international suppliers on price because of the high costs of fuel - the ready-made 380-centistoke grade - that it buys from Singapore and South Korea and resells directly to the market. To cut costs, Chimbusco plans to blend its own bunkers grade fuel. But Beijing has encouraged competition in non- bonded fuel, which supplies vessels plying domestic routes, and allowed two local firms to be formed.

Chemoil's Chandran said the government did not invite foreign firms when it issued new licenses for the domestic market. "It would seem that the government wants local companies to be so in control of the market that it would be impossible for foreign companies to enter," he said.

Mainland giant agrees to slow down production
10 December 2005
South China Morning Post

China International Marine Containers (CIMC), the world's largest container manufacturer, has agreed to follow the industry association's recommendation to suspend production for two months next year to rein in an oversupply on the global market.

CIMC, in which China Merchants and Cosco Pacific have equity interests, agreed to double to two months its normal one-month Lunar New Year production shutdown.

The company has more than 50 per cent of the global market for containers.

The China Container Industry Association (CCIA) - which counts China Shipping and Maersk Sealand among its members - yesterday urged CIMC to slow production.

According to CCIA figures, the company's container production plant produced 4.5 million teu (20-foot equivalent unit) worth of containers while the forecast demand for the year was only 2.4 million teu.

Exacerbating the situation is that a further 1.3 million teu of production capacity is under construction and total capacity is expected to increase to 5.8 million teu by 2007.

The price of boxes already reflects slackening demand in the market, with the cost per teu dropping to US$1,600, compared with US$2,300 at its peak this year.

"We will trim down our production by less than 200,000 teu this year, since the first quarter is traditionally a low season for us," said Wang Xinjin, representative for security affairs at CIMC.

Singamas Container Holdings, the second-largest manufacturer, said it would not be following the CCIA recommendation.

"It is not a mandatory requirement for container manufacturers to comply with in China. We will stick to our normal practice of suspending production for not more than four weeks next year," said Sylvia S.P. Tam, company secretary at Singamas.

Xiamen Port raises US$151.8 mln in HK IPO - source

HONG KONG, Dec 10 (Reuters) - Xiamen International Port Co. has raised HK$1.18 billion (US$151.8 million) after pricing its initial public offering near the top of an indicated range, a source close to the deal said on Saturday.

The company, which controls 80 percent of the container traffic at China's seventh-busiest port, sold 858 million shares at HK$1.38 each, within a proposed range of HK$1.18 to HK$1.42.

The deal attracted retail orders worth HK$11.5 billion, or 94 times the shares initially earmarked for them, the source said. As a result, the retail portion of the offering was lifted to 40 percent from 10 percent.

The IPO values Xiamen Port at 15.5 times 2005 earnings per share of HK$0.089, in line with bigger mainland rival China Merchants Holdings (International) Co. Ltd. .

Xiamen Port plans to use 450 million yuan (US$55.7 million) to repay bank loans, lowering its gearing ratio to 7 percent from 32 percent, and another 450 million yuan to fund the construction of new berths in the Haicang port area in Xiamen.

China Shipping (Group) Co. has bought 5 percent of the enlarged share capital, or 130.46 million shares, in Xiamen Port.

Shares in Xiamen Port will begin trading on Dec. 19. (US$1=HK$7.8, 8.08 yuan)

Port expansion for Shenzhen
China Merchants envisages up to nine bulk cargo berths besides it existing facilities
Keith Wallis in Hong Kong
16 December 2005
Lloyd's List

PORT areas at Shekou and Chiwan, on the western side of Shenzhen in southern China, are to be expanded following a HK$2.07bn (US$265.4m) land deal by China Merchants Holdings (International), a Hong Kong listed offshoot of China’s communications ministry.

Under the plan about 965,000 sq m will be reclaimed from the sea to provide land for additional port facilities at Qianhaiwan, close to the existing Shekou and Chiwan container terminals.

The land will be bought by China Merchants Holdings (International) from two associate companies, China Merchants Shekou Industrial Zone and China Merchants Holdings (Hong Kong).

China Merchants has developed the entire Shekou peninsula under an agreement as China’s oldest trading company. This includes developing container terminals at Shekou and Chiwan.

Outlining the reasons for the deal, China Merchants Holdings (International) said it was “in line with the group’s strategy to expand in port and port-related businesses”.

It added this was important because it would “maintain the group’s sustainable growth and will strengthen its leading position in western Shenzhen ports”.

China Merchants envisages building up to nine bulk cargo berths to consolidate the group’s existing facilities at Qianhaiwan.

The company will also pay HK$396m for a 380,000 sq m site at Shekou Container Terminals for use as a stacking yard.

The investment will be financed through the issue of 85m new shares and HK$639m in cash.

The move by China Merchants to expand its port facilities comes just weeks after Modern Terminals said it would spend Yuan7bn (US$866m) developing the second phase of Dachan Bay, which only received the go-ahead in March.

Phase one of the development, which is also costing Yuan7bn, is due to be come on stream in 2008.

- Box volumes through Hong Kong port edged up 1.2% to 20.48m teu in the first 11 months of this year, according to provisional estimates by the Port Development Council .

The figures reflected the continued year-on-year decline in container throughput at the river trade terminal and midstream terminal operators.

The council said estimates showed box volumes at these facilities were down 7.4% to 7.37m teu in the 11 months to November compared with the same period last year.

In comparison, throughput at the nine Kwai Chung container terminals was up 6.8% to 13.1m teu.

600m yuan investment in Mawan port
Alman Loong
7 January 2006
Hong Kong Standard

China Merchants Holding (International), a state-owned port operator, said it and its partner will boost their investment in Shenzhen's Mawan terminal by 50 percent to 600 million yuan (HK$576.9 million) to meet rising demand. The Hong Kong-based company operates the facility in a joint venture with Shenzhen Nanyou Group.

The unit, set up in 2002, operates two berths, No6 and No7, at the Shenzhen port. The increased investment will be used to expand berth No7, China Merchants said in a statement.

The company, which specializes in ports and port-related activities, is already a major investor in the port of Shenzhen, the second largest in the mainland, with a majority stake in the berths at Shekou.

Because of lower operating costs, Shenzhen has been steadily draining business away from the port of Hong Kong.

China Merchants hopes to use Shenzhen as its southern China base amid fierce competition from Hong Kong- based rivals such as Hutchison Whampoa and Modern Terminals, which have also invested heavily in Shenzhen. Hutchison holds a majority stake in Yantian, another Shenzhen port, while Modern Terminals is building new facilities at the Dachan Bay Container Terminals.

According to a Morgan Stanley report released earlier, China Merchants could build two more container berths in Shekou capable of handling 1.2 million 20-foot equivalent units by 2008.

The berths would be built on two plots the firm bought from parent China Merchants Group for a total HK$2.07 billion. The report said China Merchants would spend HK$800 million building the new berths, No8 and No9, on the 180,000-square-meter plot.

http://www.tdctrade.com/Photo/cms/article/shippers/36614.jpg

Source : Shippers Today - http://www.tdctrade.com/shippers/vol28_5/content.htm

Shenzhen Port 2005 Container Throughput Up 19% On Exports
24 January 2006

HONG KONG (Dow Jones)--Container shipping traffic through the port of Shenzhen rose 19% last year on robust demand for Chinese exports, a port official said Tuesday.

Container terminals in the southern Chinese city handled 16.19 million twenty-foot equivalent units, or TEUs, in 2005, said Zhou Tianlin, director of Shenzhen's Municipal Port Bureau. The port's throughput also rose 19% in 2004.

Still-strong expansion in China's trade underpinned growth in the world's fourth busiest port last year. The country's exports grew 28.4% by value in 2005.

The port's throughput growth far outpaced the estimated 2% expansion in adjacent Hong Kong, which in 2005 lost its title as the world's busiest port to Singapore. More cargo passed through Shenzhen because of cheaper handling charges there.

Analysts expect Shenzhen's port to continue reporting a similar rate of growth in the next several years, as new container terminals become operational.

The port arm of Hong Kong conglomerate Hutchison Whampoa Ltd. (0013.HK) in November last year signed a joint venture contract to invest a total of more than CNY10 billion to add six berths at Yantian Container Terminals, the largest of several ports in Shenzhen. The first berth is expected to come on stream in the second half of this year.

Modern Terminals Ltd., a unit of Hong Kong-listed Wharf Holdings Ltd. (0004.HK), is investing in the new Da Chan Bay Container Terminals in a partnership with the Shenzhen municipal government. The first phase of the port with five berths is scheduled for completion by the end of 2007.

Separately, ports investor COSCO Pacific Ltd. (1199.HK), which has a small stake in Yantian Terminals, said throughput at its ports rose 16% last year to 26.08 million TEUs from 22.44 million TEUs.

The company, with terminal investments located mainly in China, said it recorded the strongest growth in the northeastern Bohai Rim region.

HK China Merchants: To Raise Shenzhen Port Charges In 06
25 January 2006

HONG KONG (Dow Jones)--Port operator China Merchants Holdings (International) Ltd. (0144.HK) said Wednesday it will raise handling charges at its western Shenzhen container terminals this year because of strong cargo demand.

'We have some room with which to raise our port charges to shipping companies this year as we improve our overall service,' Deputy Managing Director To Wing Sing said on the sidelines of an extraordinary general meeting Wednesday. He declined to elaborate.

To said the fees charged by the company's ports are lower than those of Yantian Container Terminal, located in east Shenzhen, because of a lack of road connectivity to the western part of the city.

But as new highways come into operation, the western ports are becoming more accessible, said To. 'We should be able to close the gap in the fees we charge as west Shenzhen becomes better developed.'

'So I don't see as much room for (Yantian port) to raise their charges.'

China Merchants is one of the largest port operators in the city of Shenzhen. It has a majority stake in Shekou Container Terminal Ltd., which operates six container berths in west Shenzhen. It also has a stake in neighboring Shenzhen Chiwan Wharf Holdings Ltd. (000022.SZ), which operates five berths.

Yantian Terminals, which is partly owned by Hong Kong conglomerate Hutchison Whampoa Ltd. (0013.HK), operates nine berths in east Shenzhen.

To said he expects port charges to continue to rise in Shenzhen as a result of still-strong demand for cargo shipments.

Container shipping traffic through the port of Shenzhen rose 19% last year to 16.2 million twenty-foot equivalent units on robust demand for Chinese exports.

China Merchants also has port investments in Hong Kong, the Pearl River Delta, the Yangtze River Delta, and the Bohai Rim in eastern China.

Merchants to spend 3b yuan on Shekou, Qingdao berths
Alman Loong
26 January 2006
Hong Kong Standard

China Merchants Holdings, the Hong Kong-listed port operator controlled by the Ministry of Communications, plans to spend three billion yuan (HK$2.89 billion) this year to build another container berth in Shekou and one in Qingdao. Chief financial officer Cynthia Wong said the projects will be funded from internal resources, adding that the firm has HK$800 million cash on hand.

At the end of June, China Merchants' ratio of net debt to shareholder equity was 50.3 percent. Of its HK$7.42 billion of debt, HK$628 million was repayable within a year, while the remaining HK$6.7 billion consisted of medium- to long-term borrowings.

China Merchants' shareholders on Wednesday approved the HK$2 billion purchase of 180,000 square meters of land at Shekou container terminal and a 2.3-kilometer stretch of shoreline at Qianhaiwan Port in Shenzhen.

Chairman Fu Yuning said the acquisition will allow the company to consolidate western Shenzhen's bulk cargo business at Qianhaiwan. Fu said Phase 1 of Shanghai's largest terminal, Yangshan Port _ run by China Merchants' 30 percent-owned Shanghai International Port Group _ moved 200,000 TEUs (20-foot equivalent units) in the last three months of the year after opening in October. He expects Phase 1 to handle 2.5 million TEUs in the full year.

China Merchants also expects the 10 percent rise in container handling fees granted to Shanghai's Waigaoqiao terminal from January 1 to benefit Yangshan Port. Handling fees at Yangshan are 31 percent lower than at Waigaoqiao, located only 45 kilometers away.

China Shipping Container Lines In $307M Containers Pact
31 January 2006

HONG KONG (Dow Jones)--China Shipping Container Lines Co. (2866.HK) said Wednesday it agreed to buy shipping containers from its parent company for a total of no more than US$307 million through the end of 2008.

CSCL said it signed a pact to buy containers from its state-owned parent, China Shipping (Group) Co., because it expects to increase its shipping capacity in the next few years. The agreement runs from December 2006 to 2008.

CSCL entered into the agreement because "the terms of sale provided by China Shipping Group are generally more favorable than those provided by an independent third party."

CSCL, which operates and manages international and domestic container marine transportation, said it will use internal resources or bank borrowing to fund the purchases.

Ningbo in talks to expand Zhoushan facilities
1 March 2006
Lloyd's List

NINGBO Port Group is planning a Yuan10bn ($1.23bn) expansion of its newly combined port facilities at Zhoushan in Zhejiang province, writes Keith Wallis in Hong Kong.

The state-owned firm’s vice president, Wang Xinnia, said talks are already taking place with China Shipping Group, Cosco Pacific and Orient Overseas (International) about financing the scheme.

This would include possible terminal development rights or an equity stake.

He said a list of possible foreign investors would finalised in the next two years.

Mr Wang said Ningbo Port Group would partner with Zhoushan Port Authority to develop the 12-berth facility, the Standard reported.

Construction of the port is expected to start in 2008 and the first two berths will be operational in 2010.

Ningbo and Zhoushan ports, which merged last month, will be managed by a single committee.

Foreign box terminal operators are already active at Ningbo, which handled 500,000 teu last month, a 35% increase year-on-year.

Hong Kong’s Hutchison Port Holdings has a stake in Ningbo Beilun International Container Terminals.

Hong Kong-listed Cosco Pacific and Orient Overseas Container Line signed a letter of intent with Ningbo Port Group in January 2005 for the $650m development of phase five of Ningbo Beilun container terminal.

NWS joins 1.4b yuan Wenzhou Port project
Hong Kong Standard
Friday, March 03, 2006

NWS Holdings, the infrastructure and service unit of New World Development, said it will invest in a 1.4 billion yuan (HK$1.35 billion) joint venture with Wenzhou Port Authority to strengthen its presence on the mainland.

The company's spokeswoman Maria Cheung said the investment will be made through its subsidiary NWS Ports Management, which will hold a 55 percent stake in the venture. Wenzhou Port Authority will hold a 45 percent stake.

"Wenzhou is one of the fastest growing cities in the mainland, and we are optimistic to its future exports and imports trading business," Cheung said.

The project, with two 50,000 tonnes multi-purpose berths and capacity to handle 700,000 standard 20-foot container boxes per year, is expected to be operational by 2007, she added.

Wenzhou port will be NWS's eighth port investment in China. The company also operates ports in Tianjin and Xiamen.

The company's infrastructure business, which includes energy, water, roads and ports projects, posted HK$1 billion operating profit in 2005, or a slight increase of HK$4 million over a year earlier.

It did not provide a breakdown for port business.

Many Hong Kong firms are expanding their investment in the mainland's ports to capture China's booming external trade.

China's exports amounted to US$762 billion (HK$5.94 trillion) in 2005, up 28.4 percent year-to-year, while imports rose 17.6 percent to US$660 billion.

"Given the progressively improving comprehensive of [NWS's] business, combined with the continued delivery of sustained earning growth, we believe it could see a significant share price re-rating," said DBS Vickers securities analyst Oscar Choi in a research report.

Choi said NWS, which also runs water supply, sewage treatment and transportation ventures in China, is poised to benefit from the next five-year plan, which aims to make a greater commitment to environmental protection, energy, and transportation efficiency.

He assigned a "buy" rating to the stock with a one-year target price of HK$15.90. Shares of NWS closed at HK$13.10 Thursday, up 30 HK cents or 2.34 percent.

News from Xinhua Agency:
Shanghai aims to be logistics hub for Asia-Pacific area (http://news.xinhuanet.com/english/2006-03/15/content_4306733.htm)

Exports surge boosts Cosco earnings 31pc
12 April 2006
South China Morning Post

China Cosco Holdings, owner of the mainland's second-largest container shipping line, posted a larger than expected 31 per cent jump in profit last year, after exports from China and other Asian countries grew.

The company also successfully increased freight rates in the highly competitive Asia-Europe route.

Net profit rose to 5.45 billion yuan, or a basic 1.06 yuan a share, from 4.15 billion yuan, or 1.01 yuan, a year earlier, the company said.

Sales increased 22 per cent to 39.16 billion yuan.

Chairman Wei Jiafu plans to almost double the firm's capacity by 2008 to take advantage of rising trade, after the country's exports increased 28 per cent last year.

The firm has four vessels on order that can carry 10,050 standard 20-foot boxes each, the world's biggest container ships.

Senior management said yesterday it would spend 1.2 billion yuan to increase its fleet size, bringing the number of vessels to 137 by the end of this year from 124 last year. The expansion is expected to boost capacity 22 per cent by the end of this year.

The company said it would continue to source its fuel stock in bulk from Singapore in order to lower the fuel bill.

Fuel costs, which rose 61 per cent to 4.7 billion yuan last year, accounted for 28 per cent of the company's costs.

Fuel surcharges from exporters helped to balance the rise in fuel cost by 3.2 billion yuan.

Cosco's shares yesterday closed unchanged at $3.625 each.

Chinese ships to dock at Port of Miami

By Suzy Valentine
As many as seven ships from the Far East will dock at the Port of Miami each week when another service begins at the end of this month.
Evergreen/COSCO is providing a China express service expected to reach the seaport next week. After that, one of three vessels the owner rotates will visit the Port of Miami weekly as part of the itinerary.
Each ship is to pick up cargo in Shanghai, Yiantin and Hong Kong before sailing to Cristobal, Panama, and Savannah, GA, and arriving at the Port of Miami.
The vessel's return journey is to involve stops in Cristobal and Shanghai.
The route is the result of several months of negotiations and complements an existing schedule that has facilitated China's movement up Miami's trade rankings from 15th in 2003 to top trading partner for the year ended Sept. 30. China accounted for almost 1 million tons of goods flowing in and out of the seaport last year - about 10% of all trade.
Services between the Far East and Miami average four to six per week, though that rises in summer.
Eleven steamship companies offer service between Miami and the Far East.
"The service should arrive within a week or two," said Steve Erb, vice president of P&O Ports Florida Inc. "We've been working on the logistics for a couple of months, but the lines have probably been planning this for longer. This is a full service, so there will be inbound and outbound cargoes."
Officials are unclear which day of the week the first vessel will dock at the seaport.
"It'll be next week," said port director Charles Towsley, "though we don't have an estimated time of arrival yet. Each of the three vessels will have 500 moves a call. They'll be carrying general goods and electronics from the Far East."
Officials stopped short of making projections about how the additional route will boost trade.
"Until the ships get up and running, it's very difficult to tell how much trade will be done," said Mr. Towsley. "How exports develop remains to be seen. But, where there is one-way traffic, the aim is always to build that into two-way by boosting outbound product."
"It's premature to say what the volumes and 20-foot equivalent (container) unit counts will be," agreed Mr. Erb, who said it was a coup for the seaport to land the deal during a time of increased rivalry with Port Everglades. "In the containerization world, all ports are very competitive."
More services are in the cards, said Mr. Towsley.
"We're in talks to secure additional Far East services later this year," he said, "as well as boosting services to Northern Europe. Both can be expected in the last quarter of this year."
His colleague agreed.
"We're very optimistic for 2006," said Mr. Erb. "There are leads going forward for Far East and other trade lanes."

Miami Today News

Xiamen predicts slowdown
Hong Kong Standard
Carol Chan
Thursday, April 20, 2006

Xiamen International Port, which reported profit growth of less than 5percent last year, expects its rate of increase of container throughput to slow this year, as some vessels turn to ports with larger and deeper berths.

The company, whose shares have gained 31 percent since listing in Hong Kong in December, said throughput growth may slow to 10 to 15 percent from 18.6 percent last year when the company moved 2.63 million TEUs (20-foot equivalent units). Xiamen International is the largest terminal operator in China's seventh-largest container port.

"As shipowners increase the use of large vessels which can transport more boxes, they opt for using Shanghai and Shenzhen ports that have larger and deeper berths first," Xiamen International chairman Zeng Yingguo said Wednesday.

Throughput growth rate at the company, which has brought in customer China Shipping (Group) as a strategic investor, was faster than the 16.4 percent increase at Xiamen port while lagging the 23 percent national increase to 75.8 million TEUs in 2005.

The situation will improve gradually after completion later this year of three new berths under construction in the Haicang Port area that will allow large vessels to anchor, Zeng said.

Two berths, 4 and 5, are expected to be completed in June and will increase the company's designed annual container throughput from the present 2.8 million TEUs to 2.91 million TEUs. The other, berth 1, is expected to be completed by the end of 2006, taking throughput to 3.26 million TEUs.

Xiamen International will set aside 707 million yuan (HK$683.9 million) for capital spending this year to build the three berths, funded mainly with proceeds of the company's HK$1.36 billion initial public offering in December.

The company, which operates 13 berths, said net profit rose 4.7 percent to 243.6 million yuan last year, from 232.7 million yuan in 2004, as turnover rose to 1.3 billion yuan from 1.2 billion.

Gross profit margin declined 2 percentage points to 42.7 percent last year, partly on competition from a new rival in its tallying business, where turnover slumped 32 percent.

The Ministry of Communications in late 2004 ruled that every port should at least have two tally companies in an effort to curb monopolies.

Zeng said services charges at its tallying business, which fell 40-50 percent last year, should stabilize in 2006 or even make gains as its competitor has pledged not to cut prices further. Xiamen International shares closed down 1 percent at HK$1.93 Wednesday.

China in radical move to end crew shortage
21 April 2006
Lloyd's List

LIKE any other maritime nation, China is suffering from a shortage of qualified seafarers, writes Mike Grinter.

Now it aims to take sweeping measures to combat the problem.

At a forum in Shenzhen, China’s maritime safety administration said the country’s ship-ping industry lacked at least 13,000 qualified seafarers.

It proposed discarding the old rules where only graduates from maritime colleges are allowed to sit seafaring examinations.

Soon it will be possible for college students who major in engineering sciences and express an interest in a career at sea to be eligible to qualify as seafarers.

The administration will also look further afield for likely candidates. A spokesman said that traditionally China’s seafarers had come from the eastern coastal cities.

Now efforts would be made to source cadets from the poverty-stricken western provinces.

Due to the shortage fewer than 40,000 Chinese sailors work on foreign-flagged vessels.

Maersk chief eyes more China investment

BOAO, China, April 22 (Reuters) - A.P. Moeller-Maersk wants to invest in more Chinese ports and other business areas after agreeing to take a stake in the second phase of a $12 billion port in Shanghai, its chief executive said on Saturday.

Danish shipping group and oil group Maersk <MAERSKb.CO> signed an agreement with Hutchison Whampoa Ltd. in December to buy into Phase II of the Yangshan deepwater port near Shanghai, becoming the first international investor to join the container project.

Asked if Maersk was considering more investment in Chinese ports, chief executive Jess Soderberg said: "Yes, we would like to invest further in China but there isn't any specific that I can talk about at this time."

He declined to comment on how much the company might invest, but said that ports would be just one main area of interest.

Maersk was constantly in active discussions with potential Chinese partners, he said on the sidelines of the Boao Forum, an annual gathering of business and political leaders on Hainan island off China's south coast.

Soderberg said international freight rates, which have declined as shipping capacity has grown faster than demand, may have stabilised.

"Freight rates have dropped but they will come up again," he said. "It has been historically fluctuating and I think that this will continue also in the future," he said.

If the market volume was as strong as he expected, it was possible freight rates could rise again from as early as this year, he said, adding that it was hard to predict market trends with any certainty.

Maersk operates the world's largest container shipping line and Morgan Stanley this month initiated coverage of the company's shares with an "underweight" rating, reflecting weakness in container rates that the brokerage expects in the next 12 to 18 months.

Soderberg said the recent decline in freight rates was not too much of a concern for the company. "We have gotten used to these fluctuations so we will take it as it comes," he said.

UAE ports giant to invest in Chinese container terminal

DUBAI, June 13, 2006 (AFP) - Dubai's DPWorld, one of the world's largest container-port operators, said Tuesday it plans to invest 500 million dollars in a new container terminal in the northeastern Chinese city of Tianjin.

DPWorld said it met with a visiting delegation from Tianjin municipality and signed a letter of intent with the Tianjin Port Group to develop a terminal being built on a man-made island off the city's coast.

The terminal will have a capacity of 2.2 million TEUs (20-foot equivalent container units) and is expected to be operational by 2011.

Tianjin is already home to China's fifth largest container port.

DPWorld, which is controlled by the Dubai government, became one of the world's top three container-port operators following its 6.9-billion-dollar acquisition of Britain's Peninsular and Oriental Steam Navigation Co earlier this year.

INTERVIEW-China river port firm hopes to break-even in 2007
By Alison Leung

HONG KONG, July 5 (Reuters) - River port operator CIG Yangtze Ports PLC. hopes to break even in 2007 despite tough competition, and will embark on a HK$500 million second-phase expansion in central China as early as next year.

CIG Chairman Edward Chow is placing all his bets on container terminals and logistics in the central China city of Wuhan, spurred by the city's growth potential -- especially as Beijing tries to develop the economy of its less affluent central region.

The firm is one of a number that run terminals along the Yangtze, which Chinese media have described as the world's busiest fresh-water route in terms of freight volume.

"We are investing in a high-growth industry," Chow told Reuters in an interview in a tiny office piled high with maps, documents and Chinese sculptures in downtown Hong Kong.

CIG has an 85 percent stake in the two-berth Phase I of Wuhan International Terminal (WIT) Port and is planning to develop four berths in Phase II via investment of HK$500 million -- lifting annual capacity to 1.2 million 20-foot-equivalent units (TEUs) by 2010 from 400,000 TEUs at the end of 2006, he said.

The company could use bank loans or other debt instruments to fund its next expansion. CIG has total debt of HK$130 million and up to HK$30 million cash on hand.

Chow was disappointed by CIG's listing on the city's Growth Enterprise Market last September, in an initial public offering that raised just HK$72 million.

"We are now looking at the possibility of listing in other markets such as London," he said.

CIG shares were untraded on Wednesday. They ended Tuesday at HK$0.56, down about 7 percent from an IPO price of HK$0.60.

The stock underperformed peers last year, including Xiamen International Port Co. , Dalian Port (PDA) Co. Ltd. and Tianjin Port Holdings Ltd. , which have gained between 20 percent and 49 percent from their IPO prices.

GROWTH POTENTIAL

WIT moved 51,000 TEUs of goods in the first half of 2006, compared with 59,000 TEUs for the whole of 2005.

The company forecasts throughput will exceed 100,000 TEUs this year, and rise by about 30 percent in 2007 with the second berth starting operations in the third quarter of this year.

"China has been enjoying double-digit growth in throughput, which is estimated at 2.8 times the country's GDP (gross domestic product) growth," Chow said.

But Chow said he expects his firm to stay in the red in 2006 following a net loss of HK$11.5 million in 2005, because it will take time for traffic at the two-year-old terminal to grow to a break-even point of 180,000-200,000 TEUs a year under the current low-tariff environment.

"We have complained to the government that handling charges of 220 yuan per TEU is far too low," compared with the government's guidance price of 425 yuan/TEU, Chow said.

Chow said WIT and its competitor, the Yangsi Terminal run by rival Wuhan Port (Group) Ltd., were charging an average of 220 yuan per TEU. But Yangsi gives transhipment customers priority at Shanghai Waigaoqiao terminals controlled by a shareholder, Shanghai International Port (Group) Co, Chow said.

He added that CIG was in talks with Mitsui O.S.K. Lines and others to establish sea routes between Wuhan and South Korea and Japan.

Shanghai port group looking to expand overseas: report

SHANGHAI, July 3, 2006 (AFP) - The Chinese company that runs Shanghai's port is aiming to acquire operations in the United States, Europe and Asia despite the risk of a political backlash, the Financial Times reported Monday.

Government-owned Shanghai International Ports Group is eyeing interests globally in line with Beijing's encouragement for its companies to invest overseas, the paper said.

"Our strategy of investing overseas has not been implemented yet but very soon you will see some projects," the paper quoted Shi Jingcun, an executive in the office of the group's board of directors, as saying.

"In order to benefit from stable and strong growth in our ports operation, we need to look at other opportunities."

Shi said the group would look at opportunities in the United States, Europe and Asia, according to the Financial Times.

But he acknowledged there could be political opposition in Europe and the United States to such moves, saying a "stable political environment" was essential before any acquisitions could be made.

A political storm erupted in the United States this year over an attempt by a United Arab Emirates government-owned company to manage six American ports.

DP World had won the rights to operate six main US ports through a multi-billion-dollar deal in which it acquired British P and O.

But in March it announced plans to sell the US part of its P and O acquisition following massive US Congress opposition that centered on security concerns over a deal involving an Arab state.

China suffered a similar defeat in the energy sector last year, when opposition in Washington scuppered an attempt by China National Offshore Oil Corp to buy the US oil firm Unocal.

The Shanghai port is the world's third biggest in terms of container operations and busiest in terms of cargo throughput.

Shanghai Port shareholders OK buyout by parent

SHANGHAI, Aug 8 (Reuters) - Shanghai Port Container Co. Ltd. , a cargo services operator, said on Tuesday its shareholders had approved a proposal by parent Shanghai International Port (Group) to buy it out.

More than 97 percent of shareholders who participated in a meeting on Monday agreed with the plan, the company said in a statement published in the official Shanghai Securities News.

Shanghai International Port (Group), China's biggest port, has announced a plan to list on the Shanghai Stock Exchange after buying out the listed company in a deal worth over $1 billion. No timetable has been announced for the deal.

Shanghai Port aims to buy into Zeebrugge terminal

SHANGHAI, Aug 7 (Reuters) - Shanghai International Port (Group) is likely to buy a minority stake in a container terminal in Zeebrugge, Belgium, company officials said on Monday.

Danish group A.P. Moeller-Maersk <MAERSKb.CO> has agreed in principle to sell a stake in the terminal operation, but the size and price are under negotiation, said Shi Jingcun, director of the policy research department for the board of SIPG's listed unit.

"We have a project in mind and there's an 80 percent probability that we will buy into the project," SIPG president Chen Xuyuan told a shareholder meeting.

SIPG plans a full listing on the Shanghai stock exchange in early September, if all goes smoothly with regulators, Chen also told the meeting. The listing would follow the buyout of its listed unit, Shanghai Port Container Co. Ltd. .

A majority of shareholders at the meeting on Monday voted to approve the buyout. SIPG offered investors either 16.50 yuan in cash or 4.5 shares in the parent, priced at 3.67 yuan each, under the terms of the 8.9 billion yuan ($1.1 billion) buyout.

SIPG is interested in investing in foreign ports to internationalise its business, Chen said.

It is developing its majority-controlled Yangshan port in Shanghai. Maersk is an investor in Yangshan and when completed, the 100-billion-yuan port could help Shanghai edge out Singapore and Hong Kong as the world's largest container destination.

APM Terminals, Maersk's container terminal arm, recently completed Phase I of its Zeebrugge facility and the first ship called in May. Jakob Larsen, an official at APM Terminals' communications office in the Hague, said on Monday that he could not confirm any talks with SIPG.

China Dalian Port suspends plan to buy rival

SHANGHAI, Sept 4 (Reuters) - Dalian Port , operator of China's third-largest oil port, has suspended its plan to buy Jinzhou Port Co. Ltd. , a smaller rival also located in northeast China. Jinzhou Port said in a brief statement on Monday that conditions were not ripe for Dalian to buy its shares. It did not elaborate.

Dalian Port raised US$277 million in an initial public offer in Hong Kong in April. It handles 10 percent of China's crude oil imports and 20 percent of its refined oil exports.

China's biggest port poised to list soon

SHANGHAI, Sept 22 (Reuters) - Shanghai International Port (Group) Co. Ltd., China's biggest port, said on Friday it would delist its cargo service unit in October and list the group soon after, as Beijing pushes China's top companies to issue equity in their home markets.

Shanghai Port will delist its Shanghai Port Container Co. Ltd. unit after it issues 2.422 billion A-shares at 3.67 yuan each, to buy out the unit, it said in a statement.

Although the deal will be worth 8.89 billion yuan ($1.1 billion), no proceeds will be raised because all new shares issued will be used to swap with existing shares in the unit at a proportion of 4.5 shares new shares versus one existing share, it said.

Investors unwilling to participate in the swap can sell shares in the unit at 16.50 yuan each to one of Shanghai Port's major shareholders -- Shanghai State-Owned Assets Management Co. and Merchants Securities -- who will swap and hold the newly issued shares.

Shanghai Port Container's A-shares, which are open to local investors, closed at 16.38 yuan on Thursday.

In recent years, many big Chinese companies have listed their shares outside mainland China due in part to the weakness and lack of transparency of their home stock markets.

Beijing is now encouraging a slew of firms, including many blue chips, to issue equity domestically, giving local investors the chance to buy shares in these firms for the first time.

INTERVIEW-Maersk urges China to open river transport

SHENZHEN, China, Nov 2 (Reuters) - Top global container shipping line A.P. Moller-Maersk <MAERSKb.CO> is lobbying China to open its fast-growing river transportation sector to foreign operators, saying they could make internal trade more efficient.

The Danish shipping giant wants to grab a slice of thriving shipping along the waterways of the Yangtze River Delta -- of which Shanghai forms the crux -- and other regions across the sprawling nation of 1.3 billion people.

Internal trade within the country amounted to some 1.25 billion tonnes in 2005 and is swelling, officials say.

Maersk partner Tommy Thomsen told Reuters his company had broached the issue with the Chinese government but did not anticipate a quick decision on the matter.

The river sector is now walled off to foreigners. Executives argue that foreign investment and expertise in China's logistics industry would help resolve transport bottlenecks now hampering the country's economic growth.

"Today as an international operator, you are not allowed to do so," Thomsen told Reuters in an interview on the sidelines of the shipping forum in the southern city of Shenzhen.

"The most encouraging thing is they are willing to have a debate."

Logjams at major ports and along internal transport routes have long been a business headache in China, pushing up the price of coal for instance, or rendering delivery times patchy for logistics-reliant industries from retail to auto-making.

And the situation in China is much worse than in other countries, Thomsen said.

LOGISTICS LOGJAM

"Logistics costs about 20 percent of GDP in China but only 5 percent in the United States and some 5 to 10 percent in European nations," he said.

"It takes a longer time for a container to be transported from Sichuan province to Shanghai than from Hamburg to Shanghai," he said, referring to the southwestern region of China.

River transportation has long been crucial to a massive country with inadequate roads and rail lines. Along the Yangtze River, smaller ships bring cargoes from Shanghai upriver to inland cities.

Foreign shipping companies now contract local vendors on the river, but the process can be cumbersome because operators often differ from province to province.

Maersk would initially like to consider forming partnerships with some of the existing operators, Thomsen said.

Then it would be more able to optimise flows from major ports to upriver locales. With continuous growth in river trade there might also be opportunities to invest in river ports, he added.

Maersk has investments in container ports throughout China, including at terminals in northern Dalian and Tianjin, southern Xiamen and Shenzhen, and eastern Shanghai -- the country's largest port of call.

China spends $2bln to buff Yangtze traffic -Xinhua

HONG KONG, Nov 29 (Reuters) - China will spend $2 billion over the coming five years to improve navigation and terminals along the Yangtze River, the world's third-longest waterway, the official Xinhua News Agency said on Wednesday.

By 2010, freight transport via the artery, which traverses the country's east and south, is projected to hit 1.3 billion tonnes a year, Xinhua quoted Li Jiansheng, an inspector with the Ministry of Communications' Water Transportation Department, as saying.

The ministry called on local governments to build ports and facilities for containers, oil and liquefied gas, mineral ore, coal and roll-on-roll-off car vessels.

Last year, China invited foreign and private shipping firms to build ports and logistics facilities along the river, especially direct river-to-ocean transportation facilities.

Cities along the river, such as Shanghai, Nanjing, Wuhan and Chongqing, would play a key role in coordinating the development, Li told provincial and city transportation officials at a meeting in Chongqing on Tuesday.

Seagoing vessels would be able to navigate the 2,838 kilometre-long main channel of the river all the way from Shanghai to Chongqing, after the Three Gorges Hydropower Project raised water levels.

The Yangtze river valley produces one-third of China's total grain output and one-third of the country's gross domestic product, Xinhua said.

About 80 percent of iron ore, 72 percent of crude oil and 83 percent of coal for power generation in the nearby area along the Yangtze river are transported by vessels, Xinhua quoted the official as saying.

Hutchison may bid for third phase of Yangshan port
South China Morning Post
December 8, 2006

Hutchison Whampoa, Modern Terminals and other international port operators may bid for the development of the third phase of Shanghai's Yangshan port, Shanghai International Port Group said.

Chen Xuyuan, the president of Shanghai International Port, said yesterday the company is inviting bids from strategic investors for the new deep-water port, whose first phase started operations late last year.

Several overseas port operators have shown interest, including Hutchison and Modern Terminals, Singapore's PSA and Denmark's AP Moller-Maersk, Mr Chen said.

"Our goal is to become a leading world port operator. We'll take a more open strategy to raise our operational and management ability to international standards," he said.

He said Shanghai's port has been co-operating well with Hutchison chairman Li Ka-shing for many years and that Mr Li has shown "keen interest" in the third phase of Yangshan.

The Shanghai company is studying the operational model for the third phase, which is expected to be announced early next year.

The third phase will be completed before 2010 with seven deep-water berths along a 2.6km stretch.

According to official forecasts, Shanghai will handle more than 20 million 20-foot boxes this year, making it the world's third-busiest port behind Singapore and Hong Kong.

It is expected that Yangshan will increase its capacity fivefold to 15 million boxes a year by 2012 from three million boxes now.

Mr Chen expects the company to complete the acquisition of a 40 per cent stake in Belgium's Zeebrugge port from Maersk and form a joint venture by the first half of next year in an effort to explore overseas markets.

The group is also looking for more potential acquisition targets.

Shares of Shanghai International Port fell 3.62 per cent to 6.66 yuan.

China top port builder prices IPO at top end-sources

HONG KONG, Dec 9 (Reuters) - China Communiations Construction Co., the country's top ports builder, raised US$2.1 billion after pricing its Hong Kong initial public offering at the top of an indicated range, sources familiar with the deal said on Saturday.

The firm, which is involved in infrastructure construction, design, dredging and port machinery manufacturing, sold 3.5 billion H shares, or 24.5 percent of its enlarged share capital, at HK$4.60 a share, compared with its price range of HK$3.40 to HK$4.60 per share.

The company's shares are set to begin trading on Dec.15 under the stock symbol "1800" <1800.HK>.

The offering was being sponsored by UBS <UBSN.VX>, Merrill Lynch <MER.N> and BOC International.

INTERVIEW-Maersk's port arm aims for major China expansion
By Fang Yan

SHANGHAI, Dec 11 (Reuters) - Greater China will generate about one-third of Danish shipping and oil giant A.P. Moeller-Maersk <MAERSKb.CO> port arm's container throughput by 2010 as it opens more terminals in the region.

APM Terminals, which started investing in Chinese terminals in the mid-1990s, has been speeding up expansion in the area since 2001 as robust global trade with Asian countries drives demand for freight services.

China, Hong Kong and Taiwan accounted for a quarter of the company's global volume of 24 million twenty-foot equivalent units (TEUs) in 2005, while the region made up 28 percent of the world's total container throughput, Richard Nicholson, vice president of APM's Greater China Area, told Reuters in an interview in Shanghai at weekend.

The region is forecast to have a 34 percent global market share by 2010, Nicholson said.

"We are a little bit below the global average, but we have a a number of projects on line and that will boost us to that level by 2010," he said.

He declined to disclose capital spending and profit projections or the region's historical sales contribution to overall revenue.

APM, which competes with Hutchison Whampoa Ltd. and others for global port investment, would have 11 terminals in Greater China up and running before 2010, he added.

It is scheduled to open at least four jointly-run terminals in major Chinese coastal cities, including Shanghai, Xiamen and Tianjin in coming years, he said.

Nicholson was in Shanghai -- on track to overtake Hong Kong and Singapore to become the world's largest container port -- to celebrate the completion of the the second phase of the multi-billion-dollar Shanghai Yangshan port. APM has a 32 percent stake in Yangshan, the city's first deepwater terminal.

While expressing an interest in investing more in Yangshan, which will be developed in five phases, Nicholson said he had no detailed plans as yet.

The company was currently focused on putting into operation the second phase -- which still needs roughly six months to go through the approval process, he said.

"We were involved in the existing part of Yangshan and everything in the future we will be interested in. But which phase, when are too soon to know."

Shanghai, the world's number three container port by volume, is inviting foreign investors to join Yangshan's third phase, which will have seven berths and is scheduled to start operations before 2010.

Other potential investors in Yangshan Phase III include Singapore port operator PSA International [PSA.UL], Hutchison Whampoa and the world's top 10 shipping firms.

Investors in Phase II include Hutchison's port arm, Hutchison Port Holdings, which also owns 32 percent. Shanghai International Port (Group) (SIPG), which is 30 percent-owned by China Merchant Holdings (International) , controls 16 percent. COSCO Pacific and China Shipping Group control 10 percent each.

Phase two, which cost $740-$870 million, brings the total number of berths at the existing Yangshan project to nine, with a designed annual capacity of 4.3 million TEUs.

Ports get priority as China caters for growth.
The nation’s economy has grown at double-digit rates for the past four years
26 January 2007
Lloyd's List

IN ORDER to cater for its rapidly growing economy China has prioritised expansion of its port network in the country’s 11th five-year plan.

The country’s port handling capacity was measured at 4.9bn tonnes.

But with double-digit growth in gross domestic product over the past four years, and the fastest growth for 15 years recorded at 10.7% last year, the authorities are determined to keep bottlenecks to a minimum over the next five years.

Last year, China’s total exports of primarily manufactured goods was estimated at $969.1bn, up 27.2% on the 2005 figure.

The value of total imports has been estimated at $791.6bn, up 20% on 2005.

At the end of the year China’s foreign reserves hit $1.06trn, a rise of $247.3bn from the end of 2005.

This year the focus will be on constructing and expanding docks for oil, containers and ore.

Last year much of the finance for expansion had come from state-owned companies listing in Hong Kong and Shanghai.

Tianjin, Dalian and Qingdao set records for their initial public offering values as investors have come to view terminals as gold plated long term assets.

Other ports such as Shanghai, Da Chan Bay and Ningbo have also benefited from foreign investment by the likes of Modern Terminals and Hutchison Port Holdings.

If China’s port expansion plans stay on course they will increase port handling capacity by more than 80% to 6.1bn tonnes.

Container capacity is likely to 140m teu at the same time.

In laying out such an ambitious expansion plan the Chinese authorities have been mindful of the more recent upward trend in domestic consumption.

Last year domestic consumption increased 13.7%, a statistic which is already putting pressure on the nation’s domestic fleet.

Philippines port operator in first venture in China

MANILA, Feb 13, 2007 (AFP) - Philippines-based International Container Terminal Services Inc. said Tuesday it is to acquire a majority stake in a Shandong province port operator in its first foray into the China market.

ICTSI said Hong Kong-based holding firm ICTSI (Hong Kong) Ltd. signed a joint venture accord with Yantai Port Group Co. Ltd. and SDIC Communication Co. to buy 60 percent of Yantai Gangtong Container Terminal Co Ltd.

State-owned Yantai Port Group and SDIC Co are to retain 20 percent each of Gangtong Container, subject to regulatory approvals, ICTSI said in its company magazine. The cost of the venture was not disclosed.

Yantai, the country's 10th busiest port, serves the heavy industrial base of northeastern China and handled 1.17 million 20-foot equivalent container units last year, a 68.4 percent increase over 2005, it added.

The Filipino firm also operates ports in Brazil, Indonesia, Japan, Madagascar, the Philippines, Poland and Syria.

China Merchants to invest in Tianjin terminal

HONG KONG, Feb 14 (Reuters) - Chinese port operator China Merchants Holdings (International) Co. Ltd. said on Wednesday it planned to invest in a 3 billion yuan-plus ($387 million) container terminal project in China's northern city of Tianjin.

Its state-owned parent, China Merchants Group, recently signed a framework agreement with Tianjin Port (Group) Co. Ltd. to develop port, logistic and real estate projects in the city's Dongjiang bonded zone.

Hong Kong-listed China Merchants will participate in the development of the container terminal, which will have four berths, worth more than 3 billion yuan, chairman Fu Yuning told reporters.

Fu, who signed the agreement with Tianjin Port this year, is also the president of the parent company.

Construction of the terminal was expected to start in 2010, Fu said.

Southern gateway eyes further expansion
15 March 2007
Lloyd's List

SHENZHEN, comprising the three ports of Yantian, Chiwan and Shekou, again saw a storming rise in throughput to 18.46m teu, up 14% year-on-year, to further widen the distance with fifth-placed Pusan, writes Keith Wallis.

The record growth again reflects Shenzhen’s position as one of the key export gateways for southern China’s manufacturing powerhouse in the Pearl River delta

Yantian in the east and Shekou and Chiwan in the west of Shenzhen have continued to see the strong growth reported last year after the Shenzhen municipal ports administration said box volumes rose 10% in January to almost 1.65m teu.

But last year was more than just increasing box volumes as terminal operators at Yantian and Shekou also sought to strengthen their presence at both terminals.

At Yantian, Hutchison Port Holdings, through its offshoot Yantian International Container Terminals (Phase III), went ahead with the third phase of the expansion of the container terminal. The project, costing more than Yuan10bn ($1.29bn), involves the construction of six deepwater container berths.

The first two berths became operational last September, while the remaining four berths are due to come on-stream by the end of 2009 and the entire project will be completed in 2010.

The new berths are expected to boost capacity at Yantian to about 13m teu, compared with throughput last year of about 9m teu.

Across the other side of Shenzhen at Shekou, the leading shareholder in Shekou Container Terminal, China Merchants Holdings (International), agreed to pay HK$3.17bn ($406.4m) to buy out the stakes held in SCT by two other shareholders.

Under the deal, which is expected to be approved by shareholders later this month, Hong Kong-listed China Merchants Holdings (International) will pay HK$1.78bn to P&O Dover (Holdings), an offshoot of DP World, and HK$1.39bn to Swire Pacific. The share purchase will boost China Merchants stake in SCT to 70%. Existing SCT shareholder Modern Terminals will also spend HK$3.17bn to increase its stake in SCT from 6% to 30%.

As part of the deal, China Merchants and Modern Terminals will form a joint venture company, Mega SCT, which will hold their investments in SCT. Modern Terminals will have an option to sell its 30% in Mega SCT to China Merchants for HK$3.96bn one year after the deal is completed. But Modern Terminals interest in Mega SCT will be gradually reduced to a 20% holding as SCT’s five-berth third phase becomes operational.

Modern Terminals will transfer a 3% interest to Mega SCT once berth 7 is completed, and transfer a further 2% stake when berth 8 comes on stream. The remaining 5% interest will be transferred when berth 9 is commercially operational at the end of 2009.

Overall, the third phase will boost SCT’s total capacity to about 4m teu.

The changes in shareholdings will clarify the ownership of SCT, which has been developed piecemeal.

Chiwan Container Terminals, next door to Shekou Container Terminal, has faced no such changes and has been able to concentrate developing its box business. The company, which is controlled by China Merchants, reported a key milestone at the end of last year when Chiwan Container Terminal handled more than 5m teu, up 22.5% on 2005.

INTERVIEW-Tianjin Port plans new projects, ups capex

HONG KONG, April 18 (Reuters) - Tianjin Port Development Holdings Ltd. said on Wednesday it planned to invest an initial 700 million yuan (US$90.7 million) in a logistics project and buy a 40 percent stake in a container terminal firm in China's northern port city of Tianjin.

The two projects will more than double the port operator's capital expenditure in 2007 to 1.7 billion yuan from an initial estimate of 800 million yuan, Zhang Jinming, an executive director, said.

The company, which operates China's fourth-largest port, listed in Hong Kong in June and is a unit of Tianjin Development Holdings Ltd. , which is controlled by the Tianjin municipal government.

Executive Director Yu Rumin, who will take over as chairman in May, told Reuters in an interview that Tianjin Port had signed a memorandum of understanding to buy a stake in Tianjin Port Alliance International Container Terminal Co. Ltd., which operates Beigangchi terminal phase A, from Tianjin Port Group.

Yu, who is also the president of Tianjin Port Group, would not say how much the investment in the terminal project was worth. However, he said the sale by Tianjin Port Group showed confidence in the Hong Kong-listed firm.

"We hope to complete the deal as soon as possible," said Yu, who is also chairman of Shanghai-listed Tianjin Port (Group) Co. Ltd. .

Hong Kong-listed Tianjin Port Development, which doubled its 2006 net profit to HK$304 million (US$39 million), operates five container berths in Tianjin port and moved 2.49 million twenty-foot-equivalent units (TEUs) of goods last year, up 22 percent.

However, its non-containerised cargo handling business fell 9.4 percent in volume to 16.6 million tonnes in 2006.

COMPETITION, GROWTH

Yu said there was no competition between Tianjin Port Development and sister firm Tianjin Port (Group), which is also owned by the Tianjin city government, although both operate container terminals in the city.

There was no immediate plans or discussions on possible shareholding restructuring between the two firms, he said.

Tianjin Port Development has teamed up with COSCO Pacific Ltd. and A.P. Moeller-Maersk's <MAERSKb.CO> unit APM Terminals to invest 3.6 billion yuan to develop Beigangchi terminal phase B with a planned capacity of 1.8 million TEU. Phase B will start operation in late 2008 or early 2009.

The two phases of the Beigangchi terminal will boost Tianjin Port Development's annual handling capacity to 6 million TEUs by 2010 from 1.92 million TEU last year, Yu said.

Tianjin Port Development agreed to invest 700 million yuan in the first phase of a logistics project in Dongjiang port in Tianjin and is in advance talks with an international logistics operator to form a joint venture to develop the project.

Tianjin will invest 300 million yuan this year in the project, Zhang said, without giving other details.

Shares in Tianjin Port have surged 56.5 percent this year to close at HK$3.85 on Wednesday, beating a 0.2 percent gain on the index for Chinese companies listed in Hong Kong <.HSCE>. (US$1=7.722 Yuan)

Shanghai port knocks Hong Kong off No2 spot Shenzhen expected to overtake the city by next year
19 April 2007
South China Morning Post

Shanghai has overtaken Hong Kong as the world's second-busiest port behind Singapore, according to first-quarter throughput figures released by the Hong Kong Port Development Council, marking another drop down the rankings for the former No1.

The mainland port outstripped Hong Kong by 380,000 20-foot equivalent units (teu) in the first three months and is expected by analysts to remain ahead at the end of the year.

Hong Kong lost its position as the world's busiest port in 2005, when it was overtaken by Singapore. Within two years, the city has slipped behind Shanghai and is poised to fall further, with fast-growing Shenzhen port expected to overtake it next year.

"It won't take long. Shenzhen will outstrip Hong Kong as the third-largest port next year," said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council.

Hong Kong port, including container terminals at Kwai Tsing, the river terminal and mid-stream services, handled 5.5 million teu in the first quarter, up 2.3 per cent over the same period last year. Shanghai moved 5.88 million teu, up 28 per cent. Shenzhen throughput rose 8.2 per cent to 4.26 million teu.

Throughput at Hong Kong declined 8.8 per cent last month after 5.4 per cent growth in January and a 14.2 per cent increase in February. Shenzhen also had mild growth last month.

Mr Ho attributed the slow growth at the start of the year to seasonal effects related to the Lunar New Year, which this year extended to March.

Hong Kong is being overtaken by mainland ports as the city's industrial plants have moved across the border and further up the Pearl River Delta, where exporters are increasingly choosing Shenzhen as their port of call.

In 1994, Hongkong International Terminals, the largest port operator in Hong Kong, started building a container terminal in Yantian to capitalise on the movement of shipments to Shenzhen.

Shanghai was a different story, said a transport analyst. The city is at the helm of the Yangtze River economic zone and cashing in on the economic growth of the region. The Shanghai government pressed hard to make the city the largest port in the world, let alone China, by constructing the 18 billion yuan Yangshan Port.

The local government has also introduced concessions and government instructions to divert shipments to Yangshan.

Relay handling charges for cargo containers moving to and from locations in the Yangtze River delta were cut 53 per cent and shuttle rates between Shanghai's older port at Waigaoqiao and Yangshan were lowered in May last year to 150 yuan from 350 yuan per teu.

After implementation of the measures and an order that Europe-Asia trade be reallocated to Yangshan from Waigaoqiao, Yangshan handled a remarkable 3.25 million teu throughput in its full-year of operation last year.

A second phase of the port, which went on stream in December, will add four more berths by next year.

Shanghai International Port Group, the main operator in Shanghai, is looking to its hinterland along the Yangtze River to lengthen its catchment area, reaching as far as Wuhan, in Hubei province.

As for Hong Kong, the problems of the terminal business have been addressed by the industry for years but the city's government has yet to implement effective measures to stem the damage.

A proposed bridge linking Hong Kong to Macau and Zhuhai has yet to be decided on, as has the construction of Container Terminal 10.

COSCO's container volume, revenue rise in Q1

HONG KONG, April 23 (Reuters) - China COSCO Holdings Co. Ltd. , the listed flagship of the country's premier shipping conglomerate, said container volume at its container shipping business and its container shipping revenue rose in the first quarter of 2007.

China COSCO said in a statement container shipping volume increased 14.5 percent to 1.30 million twenty-foot equivalent (TEU) units for the quarter ended in March, compared with the same period a year earlier. It gave no details on the increase.

Its total container shipping revenue rose 13.7 percent from a year earlier to 8.29 billion yuan (US$1.07 billion).

China COSCO said total throughput of its container terminal business rose 26.6 percent in the first quarter to 8.80 million TEUs.

Beijing rejects terminal charge hike by shipping cos

HONG KONG, May 3 (Reuters) - China's Ministry of Communications has rejected a proposal by shipping companies to raise terminal handling charges (THC) in south China by up to 339 percent, saying the increase was not justified.

The ministry said in a recent circular that the proposal by four shipping representative groups did not provide sufficient information and had no reason to justify such a hike.

The proposal was made by the Intra-Asia Discussion Agreement (IADA), the Informal Rate Agreement (IRA), the Informal Red Sea Agreement (ISAA) and the Informal South Asia Agreement (IRSA).

Shipping agreements, called conferences in the 1990s, are formed by shipping companies to discuss prices and other issues relating to the industry.

The groups aimed to raise terminal handling charges in South China, such as Guangzhou and Shenzhen, by 186 percent to 339 percent, or 691 yuan ($90) to 2,073 yuan per container box, depending on the size of the boxes and routes, from May 15.

Shipping firms introduced terminal handling charges to China in 2003.

They charge about HK$1,800 ($230) per 20-foot equivalent unit (TEU) in Hong Kong compared with 370 yuan in south China, Sunny Ho, Executive Director of the Hong Kong Shippers' Council, said on Thursday.

Shippers in Hong Kong have complained about a lack of transparency on the fixing of terminal handling charges and demanded a cut as terminal operators claimed they had adjusted down charges against shipping firms in the past few years.

"Shipping lines have been abusing the market. They continue to ignore the fact that terminal handling charges are part of the ocean freight rate," said Toland Lam of Shenzhen Shippers' Association.

"This is nothing more than blackmail," he said in a joint statement by shippers' associations in Hong Kong, Shenzhen and Macau.

High fuel costs and declining freight rates had put pressure on the margins of container shipping firms, which were eager to find ways to soothe cost pressures, analysts said.

Members of the shipping agreements include Coscon, the container shipping arm of China Cosco Holdings , Evergreen Marine Corp. , Hapag-Lloyd, Hyundai Marine , OOCL of Orient Overseas (International) Ltd. .

The ministry ordered the four agreements to cancel such collective raises and all members of ISAA and IRSA to cease carrying out any rate fixing-related agreements for one year. ($1=7.705 Yuan)

Workers at major southern Chinese port end strike for overtime payment
3 May 2007

HONG KONG (AP) - Workers at one of the world's busiest ports ended a rare strike for overtime payment after management agreed to come up with a solution next month, the company said Thursday.

Crane operators and truck drivers at the Chiwan Container Terminal in the southern Chinese boomtown of Shenzhen had stopped working at midnight on Tuesday, International Labor Day. They complained about wages and have accused management of failing to pay them overtime as required by labor laws.

Qu Jiandong, deputy general manager of the Chiwan Container Terminal, said management has set up a committee to settle the dispute with workers, but did not guarantee to agree to all their demands.

"The issue regarding workers' demands will be resolved in a month," Qu told The Associated Press by phone. "We cannot unconditionally fulfill all their demands. There are regulations in the labor market."

Operations at the port resumed at 5 p.m. Wednesday, said Qu, who refused to reveal how many of the 700 workers at the dock went on strike. Only "a small number of people participated," he said.

Hong Kong's South China Morning Post had reported that more than 400 workers staged a sit-in outside the container terminal's headquarters on Tuesday.

Hong Kong's Kerry Holdings Limited, who holds 25 percent of the container terminal, said the company was not in a position to comment as it did not handle the terminal's daily operation, said spokeswoman Emily Kwan.

Chiwan Container Terminal is one of the world's busiest. According to its Web site, it processed 5 million 20-foot equivalent units of containers in 2006.

It is a joint venture among Chiwan Wharf Holdings Limited, Kerry Holdings Limited and Hidoney Development Limited.

China Merchants says to invest in Shenzhen terminal

HONG KONG, June 26 (Reuters) - Chinese port operator China Merchants Holdings (International) said on Tuesday it plans to buy a 14 percent stake in a US$954 million container terminal in China's southern boom city of Shenzhen.

The news followed Danish shipping and oil group A.P. Moeller-Maersk's <MAERSKb.CO> announcement that its APM Terminals unit will take a 51 percent stake in a joint venture to develop, own and operate the Shenzhen Dachan Bay Phase 2 terminal.

Municipal government-backed Shenzhen Dachan Bay Port Investment and Development Co. will own 35 percent of the venture and China Merchants will have 14 percent.

China Merchants said a memorandum of understanding had been signed on the project with preliminary estimated total investment of 7.27 billion yuan (US$954.4 million). It will build four container berths with total designed capacity of 2 million twenty foot equivalent units (TEU) a year.

China Merchant's 27-percent owned unit, Modern Terminals Ltd., has a 65 percent stake in the first phase of Dachan Bay container terminal, which will have 5 berths with a designed capacity of 2.5 million TEUs and is scheduled to start operation by the end of 2007.

Shares of China Merchants surged to a record of HK$38.90 earlier on Tuesday before settling at HK$38.55, up 3.07 percent in late morning trade. They have gone up nearly 21 percent this year as a result of China's strong export growth, outperforming a 9.6 percent gain for the blue chip Hang Seng Index <.HSI>.

ANALYSIS-Investors steer warily as Chinese port glut looms

HONG KONG, Sept 7 (Reuters) - Who would have thought there might ever be empty docks in China given the country's racing export machine?

Despite soaring trade, China could have too much container port capacity in coming years if it continues to build facilities at a manic pace and U.S. demand slows.

Major projects alone will add about 60 million 20-foot equivalent units (TEUs) of capacity from now to the end of 2009, equivalent to about 73 percent of the country's capacity last year, Drewry Shipping Consultants estimates.

That's more than the Hong Kong and Singapore, two of the world's busiest ports, combined.

"Given the development plans in the next two and a half years there are concerns in the industry. There may be some overcapacity," said Philip Damas, Drewry's research director.

The pace of growth of China's economy -- now likely into its fifth year of double-digit expansion -- and its growing domestic consumption will help trade gallop ahead in the longer term.

But the rising value of the yuan, tensions between Beijing and trade partners and the spectre of a U.S. economic slowdown following the subprime mortgage crisis could dampen demand for goods made on the world's factory floor.

That is making investors who have feasted on China export stocks more selective, though analysts and industry executives remain bullish that port shares will outperform in the long haul.

"The market's major concern now is the U.S. subprime impact. What is its impact on global growth, not just the United States itself," said Qian Wang, Greater China Economist for JP Morgan.

Containers are used to transport mostly manufactured goods -- electronics, toys, clothes and the like -- and so don't directly benefit from China's rapacious demand for raw materials like iron ore or grain.

China has sunk billions into container ports in hopes of swelling trade, luring the likes of Hong Kong's Hutchison Whampoa , Singapore's PSA International [PSA.UL] and Danish shipping and oil group A.P. Moeller-Maersk <MAERSKb.CO>.

Maersk opened a terminal in southern China's Xiamen city on Thursday, saying ports must expand at a rapid clip to serve a tremendous amount of global trade and avert bottlenecks.

About half a dozen major ports such as Shanghai, Shenzhen and Qingdao are building capacity just ahead of demand, argues Richard Nicholson, vice president of AP Moeller's APM Terminals.

"The other half are building capacity far ahead of demand - whether to attract cargo, to attract business partners, or because they have the construction teams already in place," he said. "Of course, that has an impact on their economics."

"Going down the coast from Dalian to Tianjin, Ningbo and Xiamen -- those mid-sized ones might see a glut," he added.

Shares in port operators listed in Hong Kong have boomed in recent years, with many stocks doubling or tripling or more.

But the sector has lagged of late, with Xiamen International Port losing a tenth of its value in three months while the H-share index <.HSCE> for Chinese firms gained 32 percent.

"We now stay defensive. If you stay defensive on shipping or anything related to exports, you should reduce a little bit of the weighting," Yang Liu, managing director of Atlantis Investment in Hong Kong, told Reuters.

TRAFFIC - HOW MUCH?

For the longer term, Sun Hung Kai's Eva Yip recommends investors take another look at ports with less-volatile earnings.

Those that have entered a steady growth phase and are expanding capacity, or those who may buy assets from their parents, such as Dalian Port , may outperform, she said.

The stock has risen 16 percent in three months, broadly in line with the market but eclipsing rivals. The firm's business is also more diversified, boasting oil terminals and port services.

(For a table on major Chinese port operators' share performances, please click on [ID:nHKG347509])

The question is, will traffic grow enough?

Chinese ports, led by Shanghai, are now among the busiest in the world. But Shenzhen saw throughput growth slow to 10 percent in July from 13 percent in June, partly because there was a rush to get exports out before tax rebates were cut.

There is also mounting shift of global production to new areas such as India and Vietnam, analysts said.

The latest trade tensions -- spurred by a global backlash against the quality and safety of Chinese-made goods from toys to toothpaste -- might dampen commerce as well.

China's foreign trade growth peaked in 2003 at 37 percent, and fell to 24 percent in 2006. Economists say exports, which rose 28.6 percent in Jan-July, will lose steam in coming months.

Container traffic in China is expected to rise by 20 percent this year and 15 percent next year, compared with more than 25 percent in 2002-2004, Yip said.

"The overcapacity problem probably will occur after 2011 because currently the problem in the port sector is congestion. They do not have sufficient hardware, such as railway systems, to support port facilities," she said.

Additional reporting by Lucy Hornby in Beijing

First China-made 8,530-TEU container ship delivered


www.chinaview.cn 2007-09-09 16:04:35 Print


Super gigantic container vessel "Xin Ya Zhou," meaning "New Asia," China's first with complete proprietary intellectual property rights, is delivered to the owner in Shanghai, east China, Sept. 8, 2007.(Xinhua Photo/Zhang Haifeng)
Photo Gallery>>>

BEIJING, Sept. 9 (Xinhua) -- The first 8,530-TEU container ship, of which China owns the full intellectual property rights, had been delivered to China Shipping Container Lines Co. Ltd. (Shanghai) and left for its maiden voyage to the United States on Sunday.

It has made China the fourth country in the world, after the Republic of Korea, Japan and Denmark that is able to design and build such giant container ships, said experts.

The ship, named "New Asia," is the first of five container ships of the same type to be designed and built by Hudong-Zhonghua Shipbuilding (Group) Co. Ltd. for the China Shipping Container Lines Co., Ltd.

The 101,000-dwt container ship, 335 meters long and 42.8 meters wide, can sail at a speed of 25 knots an hour.

The Shanghai-based shipbuilding company spent six years to build the ship, the largest container ship independently designed and built by China. It is one of the mainstream type of container ships in the world.

So far the company has confirmed nine orders for its 8,530-TEU container ships, including four for the Greek Costamare Shipping Co.


http://news.xinhuanet.com/english/2007-09/09/content_6691961.htm

Riding the wave of growth
Hong Kong-based companies are reaping the rewards of getting into China early, with major projects under way
21 September 2007
South China Morning Post

It has taken 15 years of rapid industrialisation to transform the Middle Kingdom into the "world's factory". With the production of clothing, toys and mechanical goods, China's ports are booming at an incredible rate. More than 90 per cent of the country's exports and imports transit through its seaports.

According to official statistics, the mainland sifted through 4.85billion tonnes of throughput in 2005. This is expected to exceed 7.5billion in 2010 while its coastal throughput of containers, as measured in teu (20-foot equivalent units), will grow from 74.41million in 2005 to 130million in 2010.

To keep up with the demand, the government has streamlined its investment and construction of ports which place great emphasis on technological and mechanical innovation.

Rapid construction has resulted in a demand for highly qualified maritime engineers.

Riding the wave of this boom is the Scott Wilson Group, which employs more than 450 engineers, planners and other staff in China alone.

Scott Wilson's chief executive, China Division, Peter C.W. Chan cited strong growth patterns in port cargo handling, which had doubled every year since 2001.

"Ports are one of the mainstays of our business," he said. "We have participated in the planning, design and supervision of six out of nine container terminals in Hong Kong, and others in Macau and the mainland. The secret of our success is simply 'tender loving care'.

"We pay attention to our clients. Our staff are committed to immersion in China. It is very important to be there, live there and work there."

Many of the port projects involve joint ventures which are seen as necessary partners in the China construction boom.

"Most companies do not understand the concept of co-operation. It is not easy, nothing is easy, but local joint venture partners have a vast amount of knowledge. We are committed to our partners with patience, dedication and immersion," said Mr Chan who has lived in China for almost 10 years.

Scott Wilson has 5,800 global employees internationally with more than 800 in eight offices across China including Nanjing, Shanghai, Beijing, Tianjin, Zhengzhou, Guangzhou, Shenzhen and Hong Kong.

"We recruit employees from brand-name universities in China, Hong Kong, Australia, Britain and America. These highly trained engineers and planners serve not only in China, but also in Australia, Thailand, India and the Middle East. There is much interest in joining [the company] because of the ability to move from project to project. I joined myself because the group is highly mobile. I wanted to see the world," he said.

As a port or maritime engineer, responsibilities include port planning and cargo forecasting, design of marine structures and infrastructure including quays, jetties, breakwaters, dredging, reclamations, terminal layouts and preparation of tender documentation and construction supervision.

Paul Y. Engineering is another Hong Kong-based company that is aggressively courting the mainland market.

Project director of Yangkou Port in Jiangsu province, Ho Wing-hong said his engineers worked on total project management from design inception to progress design supervision for the 5 billion yuan infrastructure project.

"Construction in Hong Kong uses metres," said Mr Ho. "In China, they use kilometres."

The size of the port project is more than 42 sq km, equivalent to three Chek Lap Kok airports. It includes a 13km bridge into the sea which connects to a 1.4 sq km man-made island.

The project is formally included as part of China's 11th Five-Year Development Plan, and is an integral part of the Jiangsu transport development plan to establish new business. There are 150 vessels working in the sea, with 1,300 workers in marine work and another 800 on the bridge.

The project will take three to four years to complete under a 24 hours a day, seven days a week programme.

"China needs lots of ports because of the import and export demand. Logistically, they need to deliver the goods to the ultimate users. Raw materials need to be brought in for own use. Our port will be used mostly for bulk cargo, liquefied natural gas and petrochemical products."

The construction of such mammoth projects is a major concern to the local environment, but Mr Ho emphasised that the project was being handled with the least adverse impact.

"It is not what outsiders think about working in China. We have clear and stringent environmental laws. It is very important that we take natural conservation into consideration. You can see through our project outlines and designs emphasis is on the concept of environmentalism. The Chinese government is strict on the environment protection issues and safety compliance. The design and work implementation address all such aspects, and we don't want to spoil nature. As a result, the local people are happy with what we have done."

Paul Y. Engineering has been active in much of the mainland including Beijing, Shenzhen, Nantong, Guangzhou and Shanghai. There is an intrinsic understanding that China is expanding and in need of infrastructure.

"A sleeping giant for many years, the sheer size of China is large. Once momentum has been built up, it is difficult to stop. We put in the effort early and are riding the wave now."

China vies for top shipbuilding slot (http://www.ft.com/cms/s/0/ef018430-6157-11dc-bf25-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html)

By Raphael Minder in Hong Kong, Jamil Anderlini in Beijing, Song Jung-a in Seoul

Published: September 12 2007 18:55 | Last updated: September 12 2007 18:55

China has finally overtaken South Korea as the world’s biggest shipbuilder – at least by one measure.

A 165 per cent surge in first-half orders for China has led to the change at the top in terms of deadweight tonnage.

The claim by the Chinese State Oceanic Administration was endorsed by Seoul on Wednesday. The South Korean commerce ministry, using Clarkson figures, said that China’s first-half orders amounted to 49.9m against Korea’s 42.8m in terms of dwt.

South Korea has a global market share of about 40 per cent, but China’s rise has caused its shipbuilders to look over their shoulders.

However, in terms of compensated growth tonnage, which is normally used for country comparison as it includes added value, South Korea remains ahead with 15.3m tonnes of new orders, compared with China’s 13.8m.

And, in spite of China’s impressive growth, the value of its rival’s order book remains well ahead, as well as the rate of delivery by its more efficient builders.

South Korea boasts the world’s three biggest – Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering.

In the first half, South Korean shipbuilders won a record $33.2bn worth of orders, up 51.3 per cent from a year earlier, due to increasingly valuable vessels, such as a $1.8bn production ship Daewoo is building for US oil major Chevron.

Peter Bartholomew, managing director of consultancy IRC, said: “The productivity in the Korean yards is vastly ahead and China only makes up for it by cheap labour. Delivery times are also very reliable, while that is a significant problem in China.”

But Chinese yards are beginning to diversify production. This week, state-owned China State Shipbuilding Corporation delivered the first very large container ship designed and built in China, a category until now only produced in South Korea, Japan and Denmark.

Shanghai seen to be world's No. 2 container port this yr

SHANGHAI, Oct 24 (Reuters) - Shanghai is expected to overtake Hong Kong as the world's second busiest container port this year, helped by rising throughput at the multi-billion dollar Yangshan deep-water port, a senior port official said on Wednesday.

The city port's container volume is expected to top 25.5 million TEUs (twenty-foot equivalent units) this year, lagging only Singpaore, whose volume is estimated to be 27.60 million TEUs this year, Xu Peixing, the director general of Shanghai Port Administration, told Reuters on the sidelines of an industry event.

He did not give a full-year estimation for Hong Kong, which moved 17.7 million TEU of goods in the first nine months, according to statistics provided by the Hong Kong Port Development Council.

Shanghai International Port (Group) Co, China's biggest port operator, controls the city port's major assets.

"Yangshan port has played a big role in boosting Shanghai's container volume," Xu said. "Its full-year container volume is estimated at 5.8 million TEUs."

Yangshan's capacity was at 4.3 million TEUs as of the end of 2006 when the first two phases were completed.

Construction of phase III of the deep water port is going smoothly, with 4 additional berths to be in place by the end of this year and 3 more by the end of 2008, increasing its total number of berths to 16, Xu said.

He added that phase III, which would push up the port's handling capacity to 15 million TEUs by 2012, remained open to outside capital but the name list of foreign investors has yet to be finalised.

He declined to name the potential investors. But local media has named Singapore port operator PSA International and French shipping company CMA CGMere as potential candidates, along with local players China Ocean Shipping Group (COSCO) and China Shipping (Group).

Shanghai had lacked a deep-water port before Yangshan was built. The project, with five phases in total, has attracted strong interest from overseas investors.

A.P. Moeller-Maersk and Hutchison Whampoa Ltd. each hold 32 percent in Phase 2 finished in December 2006.

Shanghai International Port to raise fees next year

SHANGHAI, Oct 25 (Reuters) - Shanghai International Port (Group) Co , operator of the world's busiest port, said on Thursday it would charge higher fees for unloading containers starting next year in a move to boost revenue.

The company will start charging 566.5 yuan ($75.7) for unloading each TEU (twenty-foot equivalent unit) at its Waigaoqiao port, up 10 percent from the previous rate.

Fees at its multibillion-dollar Yangshan deep water port will be raised 21 percent to 515 yuan.

Shanghai International Port expects revenues to increase by 900 million yuan next year due to the higher fees.

A.P. Moeller-Maersk <MAERSKb.CO> and Hutchison Whampoa Ltd. each hold 32 percent in Phase 2 of the Yangshan Port, which was finished in December 2006.

Shanghai is expected to overtake Hong Kong as the world's second busiest container port this year, a senior Shanghai port official said on Wednesday.

(US$1=7.4834 Yuan)

China Merchants plans Shenzhen hub
Group to spend 3.5b yuan on five-berth multi-purpose terminal to fend off competition
29 October 2007
South China Morning Post

China Merchants Holdings International plans to invest about 3.5 billion yuan to build a five-berth multi-purpose terminal in Shenzhen by 2010.

The expansion aims to capitalise on robust cargo throughput growth in the port and fend off competition in the Pearl River Delta, the company says.

An application to build the five berths in Qianhaiwan Port - located strategically at the first exit of the new Western Corridor expressway between Shekou and Hong Kong - had been tendered to the government, said chairman Fu Yuning.

Outlining the group's ambitious expansion plan at a press conference in Shenzhen last Friday, Mr Fu said each berth would cost 700 million yuan to 900 million yuan. The multipurpose terminal, with a quay length of 2,100 metres, could handle raw materials, agricultural products or manufacturing goods, he said.

Final approvals are still pending, he said.

Construction of the first berth in Qianhaiwan will begin next year. Upon the berth's completion, China Merchants will relocate its existing bulk terminal in Jetty One, Shekou, to the new terminal. Jetty One will be redeveloped into a passenger terminal by China Merchants' parent.

Shekou's Jetty One and Jetty Two handle 35 per cent of total agricultural product throughput for Guangdong province. They also handle iron ore imports, recording 4.7 million tonnes of ore throughout last year from four million in 2005.

China Merchants, which marks its 135th year this year, faces increasing competition from other new ports in the Pearl River Delta, where up to five new container berths are due to come on stream each year until 2010 in Nansha, Dachan Bay, Yantian Port and Shekou.

Since its rival Nansha Port adopted a low-price strategy to attract domestic cargo, there had been limited room to raise tariffs in Shenzhen, Mr Fu said. In contrast, Shanghai Port has announced tariff increases of 10 per cent and 21 per cent in its two ports from January next year.

"In general, port charges in Shenzhen Port are 200 yuan per container higher than in Shanghai. So it would be pretty good to have a rate increase in Shenzhen of 6 per cent next year," Mr Fu said.

"We deserve a rate rise because of the investment we have made to optimise the logistics at the port."

Mr Fu does not expect the new container ports coming on stream in the region to outpace demand for his firm's services in the near future. "Port operators here are sensible investors," he said.

The expansion of Dachan Bay and Nansha ports is expected to add 17 core berths and a capacity of 15.5 million 20-foot containers by 2010. This will raise the number of core berths in west Shenzhen and Guangzhou to 33 compared with 15 in Yantian in eastern Shenzhen.

In the west of the delta, where China Merchants is based, competition would increase.

Economic momentum and productivity in the region would allow the port to absorb the new capacity by 2010, Citi Investment Research says in a report.

In the first nine months of the year, China Merchants' operations in Shenzhen handled 18 per cent more containers from a year earlier, while in Hong Kong, throughput at seven berths operated by its 27 per cent owned Modern Terminal rose just 4 per cent.

"In the short term, I don't think Hong Kong needs to build Container Terminal 10," Mr Fu said. "Both the government and the local operators are figuring out methods to further improve productivity of the existing berths."

He said that transshipments were on the rise in Hong Kong but this kind of cargo required less depot space than direct cargo and therefore building CT 10 was less pressing.

China Merchants was a nationwide operator with ports in Tianjin, Qingdao, Shanghai, Ningbo, Zhangzhou, Shenzhen and Hong Kong, Mr Fu said. Nine new berths held or invested in by China Merchants in Shenzhen, Ningbo, Qingdao and Shanghai will come on stream next year and a further six in 2009.

COSCO Pacific 9-month profit climbs 10.7pc
Hong Kong Standard
Tuesday, October 30, 2007

COSCO Pacific (1199), Asia's third- largest container terminal operator, said nine-month net profit increased 10.7 percent, anchored by the mainland's foreign trade.

Earnings for the nine months ended September climbed to US$242.5 million (HK$1.89 billion), or 10.83 US cents, from US$219 million, or 9.9 US cents.

Edward Wong Wing-tat, senior research analyst at Quam, said mainland imports and exports allowed the company to post "encouraging" results.

"Although the US [economy] is a concern, China can still export products to Europe and Asia," Wong said.

Excluding a one-off fair value gain on put options of US$38.2 million, profit before tax surged 17.7 percent to US$212 million. Total revenue fell 3.77 percent to US$223.3 million.

Wong said, however, that sales had been improving. "As the company sold all its old containers last year, COSCO received less income last year. Sales have been recovering in the first half and this quarter as well."

As of September 30, total container throughput amounted to 28.8 million 20-foot containers, up 20.7 percent from a year ago. Throughput at COSCO's overseas container terminals grew 39.1 percent, followed by 28.2 percent in the Bohai Rim, 20.9 percent in the Pearl River Delta facilities (including Hong Kong) and 5 percent in the Yangtze River Delta terminals.

China shipbuilders plan IPOs
1 November 2007
Financial Times

At least seven Chinese shipbuilders are planning share offerings, underlining China's efforts to build up its domestic fleet and branch out into the construction of more advanced vessels.

The largest of the anticipated initial public offerings is likely to come from state-owned China Shipbuilding Industry Corporation (CSIC), which wants to raise about Dollars 900m on the Chinese mainland A-share market, according to bankers familiar with the situation. The other major state-owned shipbuilder, China State Shipbuilding Corporation (CSSC), is considering a share sale in Hong Kong. The companies refused to comment.

Meanwhile, five privately owned shipbuilders - Jiangsu Rongsheng Heavy Industries, Sinopacific, Mingde Nantong, Yantai Raffles Shipbuilding and JES International - are also looking to sell equity in order to fund their expansion, according to people familiar with the situation. Sinopacific and Mingde confirmed they have IPO plans but refused to give details.

Chinese shipbuilders want to raise capital at a time when shipping activity is close to an all-time high. The Baltic Dry Index, a key measure of commodity shipping costs, has more than doubled in the past year. Gilbert Feng, assistant director of the Hong Kong Shipowners' Association, who visited China's two major state-owned shipbuilders, said: "New building orders are already full until 2010, so their executives certainly sound very confident."

JES will begin its roadshow next week and is set to float in Singapore as early as the end of November, trying to raise as much as Dollars 300m from a share sale managed by ABN Amro. Sinopacific is hoping to raise about Dollars 660m next year in an IPO managed by Citic. Meanwhile, Chen Qiang, president of Rongsheng, said in April his company was planning to sell as much as 25 per cent of its equity in an IPO. However, Rongsheng is now in talks with private investors about selling a stake ahead of a IPO. Finally, Mingde has selected Deutsche Bank and Morgan Stanley to manage a listing in either Singapore or Hong Kong. The banks involved in the plans would not comment.

China recently overtook Korea, the world's leading shipbuilding nation, for the first time in terms of one specific measure - first-half ship orders in terms of deadweight tonnage. CSSC's goal is to double its shipbuilding output over the five years to 2010.

Thick silt holds up south China shipping routes

BEIJING, Nov 13 (Reuters) - More than 300 cargo ships have been held up on a stretch of river in southern China because of thick silt and low water levels, Xinhua news agency reported on Tuesday, citing local navigation authorities.

The ships, carrying coal, carbon, cement and grains, have been held up since early November in the Xijiang River, a tributary of the Pearl River, en route to the southern province of Guangdong, the report said.

"Thick sediment has made the river route shallow and delayed many large ships," the report said.

Heavy industrialisation and the impact of damming has caused increased sediment in many Chinese rivers, impacting their ecosystems and shipping navigation.

The water level in the Xijiang River had dropped to 1.8 metres (5 ft 11 in) in the dry season, below the usual range of 2.2 to 2.8 metres, the report said.

Because of the low levels, only 100 to 200 ships could pass through the Chuangzhou ship lock and into Guangdong a day, compared to the usual daily capacity of 300 ships a day.

Workers were trying to dredge the channel, but the process could take as long as 10 days, the report said.

Researchers say that China's Three Gorges Dam, the world's largest hydropower project, is also retaining huge amounts of sediment, causing significant erosion in the Yangtze River and damaging the river's ecosystem.

China Shipping says 2007 earnings up over 65 pct

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSHA23644520080106

SHANGHAI, Jan 7 (Reuters) - China Shipping Development Co Ltd (600026.SS: Quote, Profile, Research) on Monday reported a 65.45 percent jump in 2007 earnings, profiting from robust global demand for coal.

The oil and coal carrier booked a 4.65 billion yuan ($639.4 million) net profit in 2007 based on Chinese accounting standards, it said in a preliminary earnings statement.

Sales rose almost 35 percent to 12.54 billion yuan.

Shares in China Shipping more than tripled in 2007, compared to a 97 percent rise in the benchmark Shanghai Composite Index .SSEC. ($1=7.272 Yuan) (Reporting by Sophie Taylor; Editing by Tomasz Janowski)

High Growth Forecasted for the China Shipbuilding & Repairing Industry Report, 2007-2008

http://www.reuters.com/article/pressRelease/idUS200917+07-Jan-2008+BW20080107

China's shipbuilding industry kept a fast growth in the first
three quarters of 2007, and a variety of indicators refreshed the
record. The accomplished output of shipbuilding industry amounted to
12.03 million DWT, a rise of 44 percent over the same period last
year. Of all, the exported shipping hit 9.77 million DWT, taking 81
percent of accomplished shipbuilding output. In addition, new
shipbuilding orders reached 64.34 million DWT, up 120 percent from a
year earlier. Of all, the exported shipping arrived at 57.22 DWT, a
share of 89 percent in the new shipbuilding orders. The handheld
shipbuilding orders were up to 129.35 million DWT, up by 111 percent
year-on-year. Of all, the exported shipping got to 113.07 million DWT,
accounting for 87 percent of handheld shipbuilding orders.

The accomplished shipbuilding output, new shipbuilding orders and
handheld shipbuilding orders of China takes a global market share of
20.1 percent, 38.7 percent and 29.5 percent respectively. Since the
cost-efficient labor force in China's shipbuilding industry and a 17
percent of tax rebates on exports, the shipbuilding in China is quite
competitive in the international market. In recent years, China-made
shipping has a price cut of five percent to eight percent compared to
the shipping built in South Korea. According to the forecast, the
shipbuilding accomplished in China in the year of 2007 will be above
16 million DWT.

The exported value of China-made shipping reached USD 8.76 billion
in the first three quarters of 2007, up 61.9 percent from a year
earlier and exceeding the total exported value in 2006. The shipping
products have been exported to 142 countries and regions, particularly
to Singapore, Germany and Hong Kong (China). The shipping import
reaches RMB 940 million, up 125.8 year-on-year, 63.9 percentage points
higher than the shipping export.

The marine market becomes increasingly prosperous. To modify the
ships is the fastest way for marine transport companies to expand the
carrying capacity. Since 2007, the ship repairing enterprises
continued to receive orders of ships modification business. The
repairing work of ocean lines expands rapidly and the efficient of
backbone enterprises to repair ships is significantly improved, which
conduces to the dramatically growing production capacity of the
shipping repairing industry. In Jan.-Aug. 2007, the output value of
ship repairing reached RMB 30.3 billion, up 62 percent year-on-year.
Moreover, the industrial added value was up to RMB 10 billion, up by
71 percent from a year earlier. The profit of the ship repairing
industry hit RMB 3.9 billion, with a rise of 81 percent and a
contribution ratio of 35.4 percent to total profits of the whole
industry.

As is shown from the current market situation of global
shipbuilding industry, the shipbuilding market will be more prosperous
since the global economic trade keeps a rapid growth and the marine
transport market grows fast. Driven by the strong demand of iron ore
and coal, the global bulk cargo marine transport market advances
triumphantly and the Baltic Dry Index (BDI) continuously refreshes the
record. As the oil tanker market declines, the bulk cargo carrier
market is greatly incentive to the further prosperity of the world's
shipbuilding market. In addition, there is a rising prosper in the
market of container transportation, the cargo volume in each marine
line remains stable, and the period leasing level keeps rising
steadily. The rising trend of market demand will greatly promote the
steady growth of China's shipbuilding and repairing industry in the
future.

Free trade harbor to lift Tianjin as shipping center

http://www.chinadaily.com.cn/bizchina/2008-01/07/content_6375662.htm


By Ding Qingfen (China Daily)
Updated: 2008-01-07 15:05

http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20080107/001320d123b908ebe1be1c.jpg　

The recent operational kick-off of the Tianjin Dongjiang Bonded Harbor Area, China's largest free trade harbor, has boosted the city's drive to become North China's shipping center.

On December 11, the first phase of the bonded harbor area, which covers an area of 4 sq km, came into commercial operation. It includes warehouses, container terminals and processing and logistics zones, and involves an investment of 6.6 billion yuan ($906.59 million).

The rest of the 6-sq-km area is under development and is due to be operational by 2010.

"The harbor area is sort of an engine that could drive up the regional economy and business in Tianjin, especially the Tianjin Binhai New Area," says Xu Fu, a professor at the Tianjin-based Nankai University.

In 1994, the Tianjin government proposed the idea of the Tianjin Binhai New Area, and the central government eventually approved it as the nation's third regional economy facilitator, after the Shenzhen Special Economic Zone and Pudong New District in Shanghai.

China has pinned high hopes on the Binhai new area, expecting it to help Tianjin grow into an economic powerhouse as well as North China's shipping hub.

"This cannot be realized without free commodity exchange. Dongjiang harbor area provides easier access," says Yu Rumin, chairman of Tianjin Port (Group) Co Ltd, who is also in charge of the construction of Tianjin harbor area.

The Tianjin Port is also aiming high. It is now China's fourth-largest and the sixth-largest worldwide. In 2006, it handled 258 million tons in cargo. It plans to increase its cargo and container handling capacity up to 400 million tons and 12 million standard containers by 2010.

Tianjin Dongjiang Bonded Harbor Area enjoys preferential treatment for taxes, land, foreign exchange and financing, and provides convenient Customs clearance, compared with the other three harbor areas around China - including Shanghai-based Yangshan Bonded Harbor Area, Dayaowan Bonded Harbor Area in Dalian and Yangpu Bonded Harbor Area in Hainan.

The Tianjin harbor area is involved in five major businesses: international transfer, distribution, purchase, transit trade and export processing.

On the horizon

Dongjiang Bonded Harbor Area is located in Dongjiang harbor of Tianjin Port, which includes another three harbors: Beijiang, Nanjiang and Haihe.

In December 2005, the Tianjin municipal government submitted the harbor area's proposal to the State Council and received approval in August 2006.

Tianjin harbor area is China's third approved area, after Yangshan and Dayaowan, and to be followed by Yangpu. The four areas are located in China's north, east, northeast and south.

"In China, the idea of bonded harbor areas comes at an opportune time," Xu says.

The idea of bonded harbor areas is still new in China. It did not come into the spotlight until June 2005, when the Chinese government gave a nod to Yangshan bonded harbor area, the first of its kind in China, covering 8.14 sq kms.

The bonded harbor area plan comes at a time when the tariff-free zones, which China introduced in 1990 to stimulate exports and imports by lowering tariffs and improving efficiencies in distribution, storage and processing, are losing their advantages as a result of accelerated globalization and China's entry into the WTO.

Experts believe that compared to tariff-free zones, bonded harbor areas provide higher quality and more cost-effective services to exporters and importers because harbor areas, as their name suggests, are built much closer to ports. They are also equipped with tariff-free logistics parks, export processing bases and commodity showrooms.

"We are following the practices of internationally well-known ports such as Germany's Port Hamburg and Port Rotterdam in the Netherlands," Yu says.

The government has other ambitions for the bonded harbor areas - improving economic performance in the respective regions.

The Yangshan harbor area aims to help Shanghai grow into an international shipping hub and give a boost to businesses in Yangtze River Delta; the Dayaowan harbor area shoulders the responsibility of bolstering the economy of Northeast China; and the Yangpu harbor area is positioned as the most dynamic shipping hub around Beibu Gulf.

So is the Tianjian harbor area. "The Tianjin Dongjiang Bonded Harbor Area should act as a growth facilitator in the Bohai Rim Economic Region," says Yu.

Shanghai port second in TEU throughput in 2007, surpasses HK

http://news.xinhuanet.com/english/2008-01/18/content_7449424.htm

www.chinaview.cn 2008-01-18 23:03:19

SHANGHAI, Jan. 18 (Xinhua) -- The twenty-foot container equivalent units (TEU) throughput of Shanghai port exceeded 26 million in 2007, surpassing Hong Kong to rank second globally, Shanghai Port and Shipping Bureau official said Friday.

The TEU throughput grew by more than 20 percent from 2006.

Local officials attributed the throughput growth to the port's expansion in recent years and the prosperous export-oriented business in the Yangtze River Delta, a major powerhouse of the country's economy.

The Shanghai port currently has 42 TEU piers with routes to more than 300 ports worldwide.

The cargo throughput of Shanghai port reached 560 million tons in 2007, ranking first globally for the third straight year.

The Port of Singapore is currently the world's largest in TEU throughput. It handled more than 28 million TEUs last year.

The municipal government authorities have been striving to build the Shanghai port into an international shipping center.

Italian major places $180m order for ships

By Ma Zhenhuan (China Daily)
Updated: 2008-02-01 09:44


Italian shipping company Rizzo-Bottiglieri-De Carlini Armatori SpA offered a $180 million contract on Wednesday to Shanghai Waigaoqiao Shipyard for two 177,000-dwt ships.

"These will be the largest ships in our fleet. With them, we will develop a deep and stable commercial relationship with China, especially with its major steelmakers," said Giuseppe Mauro Rizzo, managing director of RBD Armatori, adding that China's shipping community is very valuable for them.

In the past two years, RBD Armatori has ordered four 110,000-ton Aframax tankers and four 87,500-ton Post Panamax bulk carriers from Shanghai Hudong Zhonghua Shipyard, worth a total of $450 million. All the ships will be delivered between 2009 and 2011.

With the latest contract, the Italian shipping major has ordered 10 vessels from Chinese shipbuilders worth about $650 million. All orders went to shipyards under the State-owned CSSC group.

RBD Armatori also ordered two 108,000-ton Aframax tankers and four 83,000-ton Kamsarmax bulk carriers, valued at $350 million, from Tsuneishi Shipbuilding Company of Japan for delivery in 2011.

"The quality of these ships is very competitive and we believe the Shanghai Waigaoqiao Shipyard is one of the top shipbuilders in the world for making very large ships," said Rizzo.

"I am proud to be the first Italian ship owner to have ordered Capesize bulk carriers from China and also to have our ships built at the highly advanced facility of Shanghai Waigaoqiao Shipyard on Changxing Island, which will soon represent the most advanced shipbuilding plant in the world.

"We intend to continue with our new building program in China and for this reason we are strengthening our relationship with reputable shipyards such as SWS and Hudong."

RBD Armatori is fully owned by the Rizzo, Bottiglieri and De Carlini families and has been in the shipping business since 1850. Today the company operates a fleet of about 50 ships, transporting about 30 million tons per year, enjoying an annual turnover of about 600 million euros.

The group also owns hotels and mineral water brands in Italy.

http://www.chinadaily.com.cn/bizchina/2008-02/01/content_6436138.htm

China sees fast growth in marine shipping business


www.chinaview.cn 2008-02-26 11:01:58 Print

CHANGSHA, Feb. 26 (Xinhua) -- China's marine shipping business continued to grow rapidly and notched up 341.4 billion yuan (about 46.77 billion U.S. dollars) in value added last year.

The figure poses a year-on-year rise of 21.1 percent, according to a statistical bulletin released at an ongoing annual conference of the State Oceanic administration (SOA) held in Changsha, capital of central China's Hunan Province.

The number of coastal ports with handling capacity exceeding 100 million dead weight tonnage (DWT) each has totaled 14 in the country.

The country ranked the first globally in terms of both freight and container handling volumes for the fifth straight year.

Shanghai Port, for instance, handled 26.15 million in 20-foot container equivalent units (TEU) throughput in 2007, surpassing Hong Kong to rank second globally. And the TEU throughput grew by more than 20 percent from 2006.

The Port of Singapore is currently the world's largest in TEU throughput. It handled more than 28 million TEUs last year.

In tandem with the fast growth in marine shipping business, China also saw expansion in the shipbuilding industry. The sector scored 44.8 billion yuan (about 6.14 billion dollars) in value added last year, a rise of 17.6 percent from the year 2006.

China's shipbuilding sector completed ships equivalent to 18 million deadweight tonnage (DWT) and received orders for ships totaling 70 million DWT in the same year.

Coastal tourism and related consumption demands continued to grow fast too in 2007. Coastal tourism created 32.43 million yuan in value added last year, a year-on-year rise of 19.9 percent.

http://news.xinhuanet.com/english/20...nt_7671819.htm

China's shipbuilding tonnage up 30% in 2007


BEIJING, March 1 (Xinhua) -- China's shipbuilding tonnage jumped 30 percent to 18.93 million tons last year, the country's top economic planning agency said Saturday.

China, the world's third-largest shipbuilder after the Republic of Korea and Japan, grabbed 23 percent of the world's market share, four percentage points higher than in 2006.

Among the total, 14.9 million tons of ships in tonnage were exported to 151 countries and regions, according to the National Development and Reform Commission (NDRC).

The number of exported tonnage rose 25.6 percent and the export value rose 51.1 percent to 12.24 billion U.S. dollars.

The country's new shipbuilding orders in tonnage soared 132 percent to 98.45 million tons last year. The figure accounted for 42 percent of the world's total, up 12 percentage points from a year earlier.

The new amount raised the total orders in tonnage the country held to 158.89 million tons, 33 percent of the world's figure. The market share was nine percentage points higher than in 2006.

During the year, China State Shipbuilding Corp. (CSSC) and China Shipbuilding Industry Corp. (CSIC) built 6.55 million tons and 4.24 million tons of ships in tonnage, respectively.

The CSSC and CSIC received 23.52 million tons and 16.16 million tons of new shipbuilding orders in tonnage, respectively, last year. The two state-owned shipbuilding giants each had at hands 50million and 26 millions of total orders in tonnage.


http://news.xinhuanet.com/english/20...nt_7697971.htm

China fast becoming the world's shipyard

http://afp.google.com/article/ALeqM5ibqrvhIkvHb_Mvv-pWnIq3B7EJBA

DALIAN, China (AFP) — In a drydock at a shipyard in northeast China's Dalian city, a 300,000-tonne oil tanker is ready for delivery to Maersk, its hull painted in the Danish shipping company's trademark blue.

Nearby, an offshore drilling platform has been constructed according to precise specifications from US company Noble.

Both are examples of China's growing success as a shipbuilding nation and its progress towards the goal of becoming number one in the industry by 2015.

"Last year, the order books at Chinese shipyards surpassed those of Japan, to be second only to South Korea," said Li Cheng, assistant general manager of Dalian Shipbuilding Industry Co.

The company runs the eighth largest shipyard in the world, and last year delivered 32 vessels totalling three million deadweight tonnes.

In terms of new orders, China was actually number one last year, totalling 98.5 million deadweight tonnes, or 42 percent of the global total, according to the Beijing government.

"Chinese shipyards have had their business boosted by the very fast growth of the local economy, which has fuelled demand for container ships and other vessels," said Li. "If it continues like this, we'll overtake South Korea."

Chances are it will indeed continue like this. Dalian shipyard, located in the Gulf of Bohai, has its order books filled right until 2011.

The expansion of the Chinese economy -- leading to strong growth in both exports and imports -- is not the only factor behind this success.

Equally important is the global boom in shipping. Eighty percent of the output of China's shipyards is exported.

The result is that China's share of the global market has expanded from 18 percent in 2006 to 23 percent last year, while South Korea and Japan account for roughly 35 percent each, according to research institute Clarkson.

"It's not impossible that it will eventually take up the leadership position (ahead of South Korea)," said Caroline Huot, general manager of Total Lubmarine for the Asia Pacific.

"It's got the will, no doubt. There's a real can-do attitude in China."

She added the government offers strong support for the shipbuilding industry, investing large amounts of money in new shipyards.

The industry is dominated by two huge state-owned enterprises: China State Shipbuilding Corporation and China Shipbuilding Industry Corporation, the parent of the Dalian company.

But in recent years, it has also seen a large number of new entrants, in the form of smaller shipyards run by local governments or private groups, or set up as joint ventures.

There are now 3,000 of these smaller shipyards, up from just 350 a decade ago.

At the same time, Chinese shipyards have succeeded in building up a good reputation.

"The Chinese companies are very concerned about safety and the environment. They are large and extremely professional enterprises, and they're just as good as their counterparts in the United States or Norway," said Huot.

The Dalian shipyard has clients across the globe, from Gear Bulk, 60 percent Norwegian-owned, to Sweden's Stena AB and customers in Greece and Iran.

To keep up its competitive advantage, the Dalian shipyard now spends heavily on research and development and the continued improvement of the infrastructure.

"We're still cheap compared with South Korea and Japan, but we have to think about the future and take steps to improve our competitiveness," said Li.

Shanghai on course to become No 1 container port

http://www.thehindubusinessline.com/2008/03/31/stories/2008033150310600.htm

Given its current growth trend, Shanghai is expected to top the box traffic league in 2008, with total of 31 million TEUs.


--------------------------------------------------------------------------------



Jose Paul


Global growth in container port throughput (measured in TEUs – twenty-foot equivalent units) increased by 8.7 per cent in 2005. Preliminary figures for 2006 indicate an increase of 13.5 per cent over 2005. In 2005, the container throughput growth rate for developing countries was 10.03 per cent, with 241 million TEUs.

This corresponds to 62 per cent of the total world throughput. The figures for developing countries reveal that their share of world container moves grew by approximately a third more than that of developed countries for the period from 2004 to 2005. (UNCTAD – Review of Maritime Transport - 2007)

Containerization International, a reputed journal on container shipping published in London, carried an assessment of the performance of top 30 container ports in its issue dated March 1, 2008. According to its analysis, Singapore retained its number one position by handling 27.9 million TEUs, registering 12.50 per cent increase on the volume of 2006.

Shanghai upstaged Hong Kong by handling 26.15 million TEUs — 20.5 per cent over the throughput in 2006. Hong Kong thus ended up in the third place by handling 23.88 million TEUs in 2007.

The Chinese port of Shenzhen, South Korean port of Busan and the Duch port of Rotterdam are seen to have been placed in fourth, fifth, and sixth positions by handling 21.1, 13.27 and 10.79 million TEUs, respectively. The UAE port of Dubai made an impressive gain by handling 10.65 million TEUs, and got itself placed in the seventh place.

The Taiwanese port of Kaohsiung and the German port of Hamburg handled 10.26 and 9.9 million TEUs and got themselves placed in the 8th and 9th places, respectively. A deeper analysis will show that just five years ago, Shanghai’s total throughput was a mere 8.6 million TEUs compared to Hong Kong’s vastly superior 18.6 million TEUs. In 2007, not only did Shanghai overtake Hong Kong to capture the number two position but also put Singapore on notice.

If the same trend of growth in container traffic continues in 2008, Shanghai is expected to top the box port traffic league with a total traffic of about 31 million TEUs. Shanghai’s developmental plan is now focused on having sufficient capacity in place to handle 35 million TEUs by 2010.

Another significant factor that emerges from closer examination of the league of top 30 world container ports is that China accounts for nine out of 30 top container ports and they account for about one-third of the total throughput handled by the top 30 ports.

The China factor


Latest estimates suggest that China’s ports have handled collectively more than 110 million TEUs in 2007 — the first country in the world to do so. The throughput of Chinese ports in 2007 represents an increase of 21.7 per cent over that in 2006. In comparison, Indian ports seem to have handled about 7 million TEUs in 2007 — an increase of about 15 per cent over 2006. If the argument is that China is a bigger country with 18,000 km of coast line as against that of India’s 7,500 km, even on a proportionate basis India does not have that many container ports of the size and commercial significance that China has.

Roping in private sector


Most ports in South and South-East Asian countries seem to have developed their port infrastructure through private investments. The public-private partnership (PPP) model has revolutionised the port infrastructure scene and helped modernise container terminals and also create new terminal infrastructure at a faster pace.

The standardised concession agreements for BOT projects ranging from 20 to 50 years and the emergence of highly specialised agencies as global terminal operators have brought in a new initiative and vibrant dynamism on a global scale to invest, own, operate and transfer container terminals worldwide. Hutchison Port holdings, PSA International, APM Terminals, DP World, Cosco Pacific, Eurogate and SSA Marine, etc, are well established Container Terminal operators with a global reach and multi national character who are operating container terminals in over 40 countries in the world.

An UNCTAD Transport Newsletter suggests that the world container throughput that passed through state owned terminals was down to 19 per cent whereas it was 42 per cent in 1993. It is indeed heartening to learn that the Central and maritime state governments in India have realised the huge potential to create port infrastructure by tapping the private sector’s resources through the PPP route.

About 70 per cent of India’s container traffic of about 7 million TEUs is seen to have passed through privately managed container terminals and this figure is most likely to increase significantly when container port development in India’s major and non-major ports gains faster momentum in the next five years.

(The author is a former Acting Chairman, JN Port, Mumbai, Former Chairman, Mormugao Port Trust, Goa, and Visiting Professor, Manipal University)

LNG tanker hailed as a milestone for China

2008-4-4


CHINA'S first self-built liquefied natural gas carrier was delivered to its owner in Shanghai yesterday and will soon sail on the Australia-Guangdong route to load the clean fuel to China's south.

"It's a major milestone in China's shipbuilding industry. Now we are able to produce LNG tankers on a large scale," said Xiao Hongxing, chief engineer of Hudong-Zhonghua Shipbuilding (Group) Co, the LNG carrier's builder.

Building an LNG vessel requires the highest level of shipbuilding technology since the ships must be equipped with tanks that can withstand extremely low temperatures. Until now, only a few shipyards in Japan, the Republic of Korea and some European nations have been capable of building the special-purpose tankers.

The vessel, which cost US$160 million to build, has a capacity of 147,000 cubic meters, or about 70,000 tons, of LNG - equivalent to one-month use for Shanghai residents. Construction of the first LNG carrier started late in 2004.

Named Dapeng Sun, it will carry LNG from Australia to Guangdong Province's Dapeng, China's first LNG receiving terminal, partly replacing the service now offered by foreign-flagged vessels.

Xiao said there was some delay in delivery after builders found problems in pipe parts supplied by one domestic company. He also said construction costs had risen a lot over the past few years.

The Shanghai-based Hudong-Zhonghua is building another four LNG vessels with the same capacity. Two will be delivered for the Dapeng project this year and next year. The other two are being made for the LNG terminal in Fujian Province.

For sea transportation, natural gas is super-chilled to a liquid state at minus 163 degrees Celsius, giving it only one-six-hundredth of its original volume.

The Dapeng Sun can complete a return trip between Australia and Guangdong twice a month and will carry more than 1.4 million tons of LNG annually, according to its owners - a consortium of investors including China Ocean Shipping (Group) Co and BHP Billiton Petroleum (North West Shelf) Pty Ltd.

The Dapeng terminal, which started to receive LNG from Australia in June 2006 under a long-term contract, had imported four million tons by the end of 2007. It imported three million tons in 2007, equivalent to a third of the nationwide natural gas consumption.

China's LNG imports are expected to reach 19 million tons in 2010. The government has approved several LNG terminals in Guangdong, Fujian, Shanghai and Zhejiang and is planning others. Upon arrival, the LNG is converted back to gas to supply households, power stations and factories.


http://www.shanghaidaily.com/sp/article/2008/200804/20080404/article_354708.htm

Profit seen to rise


2008-4-15


GUANGZHOU Shipyard International Co, the only Hong Kong-listed shipbuilder, said first-quarter profit probably gained more than 50 percent from a year earlier because of higher efficiency and the appreciation of the Chinese currency.

The profit estimate for the three months ended March 31 was based on preliminary calculations, the Guangzhou-based company said in a statement to the Hong Kong stock exchange yesterday. The company said it achieved a first-quarter profit in 2007 of 153.7 million yuan (US$22 million).

http://www.shanghaidaily.com/sp/article/2008/200804/20080415/article_355927.htm

Shipbuilders grab more global market

2008-04-28


http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20080428/0013729e4358097f6d5e05.jpg


In a Shanghai shipyard, a gigantic 8,530 TEU container ship is ready for its maiden voyage. At the same time, in a drydock in northeast Dalian, a 300,000-ton oil tanker is ready for delivery.


Such high value and sophisticated vessels, which were the domain of South Korean and Japanese shipbuilding industries before, are now good examples of China's drive to surpass its neighbors in the global shipbuilding market.


As the race between the countries intensifies, China, the world's third largest shipbuilder (behind No 2 Japan and No 1 Korea), has upgraded its ships from conventional crude oil tankers and bulk carriers into high value-added vessels, such as high-speed containerships, liquefied natural gas carriers and very large crude oil carriers.


And in terms of shipbuilding orders, Chinese companies have already exceeded South Korea and Japan.


According to a British report, China shipbuilders had orders for 14 million CGT Compensated Gross Tons (CGT -ship's capacity measure) in January 2008, accounting for 50 percent of the world's total. South Korea had orders of 600,000 CGT and Japan had 300,000 CGT.


In terms of new orders, China was actually No 1 last year, totaling 98.5 million deadweight tons and taking a global share of 42 percent, up 12 percentage points from a year earlier and exceeding South Korea.


The growth of the Chinese shipbuilding industry was relatively rapid, though for more than ten years, the country has been playing catch-up with Japan and South Korea.


China has been the world's third largest shipbuilder for 12 years. By 1995, Chinese shipbuilders replaced Germany in the third spot with a 5 percent market share in the world.


By 2006 the country's global market share increased to 18 percent in 2006 when South Korea had 35 percent, followed by Japan with 25 percent in 2006.


In 2007, the country lifted its market share to 25 percent, according to a report from Morgan Stanly.


The strong growth has made many observers bullish on China's shipbuilding future and they expect it to surpass South Korea to become the global leader.


"Although some have a different prospective about the country's shipbuilding sector, we are positive about its growth in the long run," Hu Song, a researcher with Bank of China International Securities says.


Researchers at Morgan Stanly believe the global shipbuilding industry is relocating from Japan and South Korea to China, and expect the country to surpass Korea and top the global market by 2015.

Success factors


Researchers studying the Japanese and the South Korean shipbuilding industries suggest there are several factors that a growing market leader must have.


The role of the government is very important with subsidies and general support and China's shipbuilding sector has enjoyed strong government support.


In 2006, the State Council approved the long-term blueprint for the industry which set a target for the industry to comprise at least 25 percent of the world's total output by 2010 and 35 percent in 2015. But the development is better-than-expected.


To power the goal, the Chinese government has already implemented several favorable policies to boost the sector's growth, including giving financial support by awarding special loans to shipbuilders and giving them preferential interest rates.


In terms of technology, Chinese shipbuilders are also catching up with the South Korea and Japan.


In 2005, the Hudong Zhonghua shipyard built the first LNG carrier in China. In 2007, China State Shipbuilding Corp delivered the first 8,530 TEU container ship, while Waigaoqiao shipyard delivered a 300,000 deadweight tonnage oil tanker.


Industry observers expect a continuous upgrade of product mix with more high-end vessels being built.


"We believe Chinese shipbuilders will become more competitive," says Hu. China will fully catch up in technology in a few years, he adds.


China's shipbuilders also enjoy cheap labor costs, of course. The cost of shipbuilding in Japan and South Korea is 30-40 per cent higher than that of China, which makes China more competitive in the market.


Challenges


The key is to improve the industry's efficiency and productivity, say analysts. The efficiency of the country is about half of that of Japan and South Korea.


Among the problems still plaguing the industry are:


The ship design and supply chain are major bottlenecks and there is less cooperation among the country's shipbuilders which leads a slow diffusion of the technologies within the industry;


Many older shipyards are not designed to follow the most-rational manufacturing process.


The industry is slow to adapt new eco-friendly methods as manufacturers fear cost will rise. And the appreciation of the yuan is a potential threat due to weaker the industry's weaker earning capabilities.


The situation also points to the industry's vulnerability to market and raw supply fluctuations.


"The biggest challenge is how Chinese shipyards can improve their competitiveness," Hu says.

http://www.chinadaily.com.cn/bizchina/images/attachement/jpg/site1/20080428/0013729e4358097f6d9406.jpg

http://www.chinadaily.com.cn/bizchina/2008-04/28/content_6648167_2.htm

Just want to share Hanjin's First Subic Bay Shipyard product.

http://i307.photobucket.com/albums/nn320/ferrarilover08/Subic-HanjinShipyard_Argolikos.jpg

Just want to share Hanjin's First Subic Bay Shipyard product.

http://i307.photobucket.com/albums/nn320/ferrarilover08/Subic-HanjinShipyard_Argolikos.jpg

hey sorry but Hanjin is Korean. so this pic does not belong here

http://www.answers.com/Hanjin?cat=biz-fin

Export boost keeps things shipshape

2008-4-28


CHINA State Shipbuilding Co, the publicly-traded unit of the country's biggest ship builder, said first-quarter profit more than doubled after rising demand led to higher prices for vessels.

Net income climbed to 984 million yuan (US$140 million) from 417 million yuan a year earlier, the Shanghai-based company said. Sales gained 16 percent to 3.98 billion yuan.

Record imports of raw materials to China and exports of consumer goods are spurring vessel orders for the nation's ship builders as they expand to surpass South Korea as the world's biggest manufacturer of ships. Sales in 2008 may rise to 24.4 billion yuan from last year's 17.9 billion yuan, the company said on March 18.

China State Shipbuilding and its domestic competitors booked orders at record prices last year while order backlogs more than tripled, Bloomberg News said.

Its parent, China State Shipbuilding Corp aims to become the world's biggest ship builder by 2015, Director Xu Miao said on April 23. The parent holds contracts for 50 million deadweight tons of ships, or 10 percent of the global total.


http://www.shanghaidaily.com/sp/article/2008/200804/20080428/article_357445.htm

China's First Locally Built LNG Tanker Completes Maiden Voyage

Updated: 2008-05-05 Source:Bloomberg




China's first locally built liquefied natural gas tanker has completed its maiden voyage transporting the fuel from Australia to southern China's Guangdong province.

Guangdong Dapeng LNG Co., the nation's only LNG importer, received its first cargo from the Dapeng Sun on May 2, the Shenzhen-based company said in an e-mailed statement yesterday.

The tanker is one of five Chinese shipyards are building to serve LNG receiving terminals planned for the world's fastest- growing major economy. Demand for LNG is rising as China promotes gas as a cleaner-burning alternative to coal and oil.

"With this vessel, the company furthers its position as a pioneer in the LNG industry in China,"Thomas King, Guangdong Dapeng LNG president, said in the statement.

The Dapeng Sun is operated by China LNG Ship Management Company, a joint venture between China LNG Shipping Holding Ltd. and BP Shipping Ltd.

Guangdong Dapeng LNG, which started operating in May 2006, is a venture between China National Offshore Oil Corp. and BP Plc. China National is the nation's largest offshore oilfield developer.

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume, for transportation by ship to destinations not connected by pipeline. It's turned back into gas for distribution to power plants and other buyers.


http://www.marketavenue.cn/upload/NEWS_36822.htm

Qindao port throughput up 15% in first 4 months
By Tu Lei (chinadaily.com.cn)
Updated: 2008-05-07 16:43



Qingdao port, the second largest trading port in China, witnessed a throughput of 100 million tons as of the end of April, up 15 percent year on year, while comprehensive energy consumption per unit was down 4 percent year on year, according to today’s Xinhua News Agency.
Chang Dechuan, president of Qingdao Port, said the port is striving for its target of 300 million tons in 2008.

According to the 11th Five-Year Program (2006-10) for Qingdao port, it will further develop at Jiaozhou Bay, Qianwan Port, Aoshan Bay and Dongjiakou.

It is striving to become a state-of-the-art, global port by 2010, when throughput is projected to hit 320 million tons, including 12 million twenty-foot equivalent units of cargo.

Qingdao Port plans to become the shipping hub of northeast Asia as it transforms itself into a hi-tech, third-generation facility.

http://chinadaily.com.cn/bizchina/2008-05/07/content_6668362.htm

"Record imports of raw materials to China and exports of consumer goods are spurring vessel orders for the nation's ship builders as they expand to surpass South Korea as the world's biggest manufacturer of ships. Sales in 2008 may rise to 24.4 billion yuan from last year's 17.9 billion yuan, the company said on March 18."

Is this correct?

It's full steam ahead for city shipping
By Fu Chenghao 2008-6-4

IN 2007, China overtook Japan as the world's second-biggest shipbuilder. The next target is to eclipse South Korea and be No. 1.

This lofty but highly achievable aim was boosted yesterday as Shanghai's Jiangnan Shipyard, fittingly celebrating its 143rd anniversary as the country oldest shipbuilder, completed its relocation to make way for World Expo 2010.

The first phase of building at the new yard on Changxing Island at the mouth of the Yangtze River has been finished. It is China's largest and most advanced shipyard and set to become the world's most productive single facility.

The first-phase project, which cost about 16 billion yuan (US$2.31 billion) and stretches 3.8 kilometers along the coastline, is composed of seven large cranes, three ship-building lines and four docks with annual ship-building capacity of 4.5 million deadweight tons.

Completion of phase one was six months ahead of schedule.

Chen Xiaojin, president of China State Shipbuilding Corp, said the second phase is expected to start next year and output should begin in 2012. Jiangnan Shipyard is a subsidiary of CSSC.

"No matter what the capital expenditure, equipment or technological know-how, phase two will be even better than phase one," Chen said.

The construction of phase two will create ship-building capacity for another 3.5 million DWT, bringing the total to 8 million DWT.

The Changxing base is expected to have an annual capacity of 12 million DWT by 2015 and become the world's biggest.

To date, the Changxing base has won orders to build more than 100 ships with combined capacity of more than 14 million DWT, to be delivered by 2011.

The Shanghai government aims to boost the city's development in shipbuilding and other related sectors.


http://www.shanghaidaily.com/sp/article/2008/200806/20080604/article_361923.htm

Model, Changxing Shipbuilding Base Phase 1
http://www.shipol.com.cn/xw/tpxw/W020060922500305932823.jpg

Phase 1, Jiangnan Changxing Shipbuilding Base
http://www.calf.cn/attachments/day_080604/20080604_4977ef0a820588a89650scJx08tiac5I.jpg

The three shipbuilding bases of CSSC located at the mouth of the Yangtze River (Changxing is the red rectangle to the right)
http://www.cjk3d.net/old/projects/changxing/image/guihuatu_1.jpg

JES wins $247.5 mln shipbuilding deals

Mon Jun 23, 2008

Singapore-listed JES International (JSIH.SI: Quote, Profile, Research), a Chinese shipbuilding firm, said on Monday it has won $247.5 million worth of shipbuilding contracts.

JES said it will build four bulk carriers worth $180 million for Croatia's Atlantska Plovidba ATPL.ZA, and a oil tanker worth $67.5 million for Indonesian state oil firm Pertamina.

It is not clear if the contracts will impact JES's earnings in the 2008 financial year. JES said it has an order book of $1.13 billion as of March

http://uk.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUKSIN295220080623

Ship builder plans rights issue to purchase yard

2008-7-2

GUANGZHOU Shipyard International Co said it plans a rights issue of up to 3.1 billion yuan (US$452 million) to find the purchase of an affiliate shipyard from its parent as it bids to widen its product offering as part of a reorganization.

The purchase of Guangzhou Wenchong Shipbuilding Ltd, based in the same city in Guangdong Province, would help Guangzhou Shipyard expand into building smaller vessels.

Guangzhou Shipyard said yesterday that it will offer owners of its Shanghai-traded A shares and Hong Kong-listed H shares the rights to buy three shares for every 10 held. It did not give a price but said there will be a discount to the 20-day average share price before the announcement. Holders of A and H shares will be subject to the same subscription price, which should be not less than 4.96 yuan per share, it said.

The Wenchong yard was put up for sale on the Beijing Equity Exchange for 3.04 billion yuan by China State Shipbuilding Corp, the parent and China's largest ship builder.

Guangzhou Shipyard will allot as many as 101 million A shares and 47.2 million H shares in the proposed rights offer, and will sign a deal with CSSC around August 5 if there are no other contenders.

Wenchong made a net profit of 626 million yuan on sales of 3.19 billion yuan in 2007, compared to Guangzhou's earnings of 939 million yuan and sales of 5.9 billion yuan. Wenchong builds small and medium vessels including cargo ships, dredging vessels, oil tankers and multipurpose vessels.

"Wenchong has better profitability than Guangzhou," Ye Zhigang, a Haitong Securities analyst, said. "The deal would give Guangzhou a wider product offering as their businesses don't overlap."

Guangzhou Shipyard fell 6.81 percent to 23.54 yuan yesterday in Shanghai on concern that profit would be diluted on a per-share basis after the stock issue.

http://www.shanghaidaily.com/sp/article/2008/200807/20080702/article_365273.htm

China State Shipbuilding plans to raise $1 bln

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSHA8775220080709

SHANGHAI, July 9 (Reuters) - China State Shipbuilding Co Ltd (600150.SS: Quote, Profile, Research, Stock Buzz) said on Wednesday it plans to raise up to 7.4 billion yuan ($1.08 billion) by issuing convertible bonds and warrants. The firm aims to issue no more than 3.7 billion yuan in convertible bonds and 3.7 billion yuan in warrants, to raise funds for eight major shipbuilding projects, it said in a statement sent to the Shanghai Stock Exchange.

The statement did not give further details or timeframe. ($1=6.857 Yuan) (Reporting by Sophie Taylor; Editing by Keiron Henderson)

Tianjin Harbor impresses journalists

http://en.beijing2008.cn/bocog/bocognews/headlines/n214423578.shtml

(BEIJING, June 26) -- More than 40 Beijing-based journalists, including those working with the AP and French TV channel TF1 were brought to Tianjin Harbor to get a first-hand look at how the harbor will serve the Beijing Olympic Games with efficient operations.

On the agenda of the visit was a tour of the Tianjin International Trade and Shipping Service Center. Inaugurated in 2005, the center combines comprehensive functions such as government services, international trade, market operations, information diffusion, public supervision and human resource exchange. The building contains offices of the customs house, inspection and quarantine, maritime service and frontier checkout, as well as trading, shipping, logistics and broker agencies, with an aim to provide feasible and convenient passage of cargos, boats and personnel.

http://images.beijing2008.cn/20080627/Img214423587.jpg
Loading operations attract journalists.

Photographers shoot footage of boat movements.
Highly efficient services from staff members of close to 400 service areas ensured rapid handling of import and export goods to meet the demands of customers.

Tianjin, the closest sea port in China to the Olympic host city of Beijing, has set a special mechanism to handle customs procedures for Olympic goods through "one-stop service." The harbor gives priority to loading, berthing and quarantine services and provides a "green passage" for Olympic goods. So far procedures of customs, storage and transportation for some 400 containers of Olympic goods, including sports and broadcasting equipment, have been handled.


An official of the Tianjin International Trade and Shipping Service Center answers a question from the press.
The journalists also visited the Tianjin container terminal, ranking sixth in the world in terms of freight handling capacity.

Organized by the Beijing Olympic Media Center, the trip left reporters with a deep impression of the harbor's modern technologies and managing levels.

http://images.beijing2008.cn/20080627/Img214423590.jpg
Journalists visit the Tianjin International Trade and Shipping Service Center.

Port of Tianjin pitctures taken on July 6th (bohaibbs.org)

http://bbs.home.news.cn/upfiles/035D886A.002C

http://bbs.home.news.cn/upfiles/035D8871.002C

http://bbs.home.news.cn/upfiles/035D8883.002C

http://bbs.home.news.cn/upfiles/035D8922.002C

http://bbs.home.news.cn/upfiles/035D8974.002C

http://bbs.home.news.cn/upfiles/035D8859.002C

http://bbs.home.news.cn/upfiles/035D8C40.002C

COSCO Shipping reports 140% growth in H1

2008-07-09

Shanghai-listed COSCO Shipping Co Ltd announced on Wednesday that business revenue in the first half was up 41 percent over the same 2007 period to 3.46 billion yuan ($505.1 million), with net profits at 853.05 million yuan.

The listed arm of China's major ocean shipping group COSCO, the company realized 1.3 yuan in earnings per share for the six months, a growth of 140 percent on the same period of last year.

Its net assets per share averaged 6.06 yuan, up 49.96 percent, and the net assets per share ratio was up 8.09 percentage points to 21.48 percent.

Owning and operating 90 ships, COSCO Shipping offers liner services to Southeast Asia, Bangladesh, Burma, the Persian Gulf, the Red Sea, Africa, Europe and America. It specializes in the transport of oversized and super-heavy cargoes, non-container cargoes, and cargoes with special loading and discharging requirements.

http://www.chinadaily.com.cn/bizchina/2008-07/09/content_6831521.htm

For Tianjin port, does colors of the cranes mean anything? There was green, blue, and red ones.

Shanghai leads with cargo science

2008-7-11

SHANGHAI has made a major breakthrough in advanced logistics systems handling bulk cargo. The breakthrough will make city ports the most advanced in the country, the Shanghai Science and Technology Commission announced yesterday.

Developed by the Shanghai International Port (Group) Co Ltd, the technology will see the complete automation of bulk cargo loading and unloading at Shanghai ports with the most advanced equipment in the world, the commission said.

Of the cargo currently handled by local ports, 30 percent is bulk cargo such as iron ore and other mining or construction materials, while the rest is containers and liquids.

The technology will improve the security, quality and efficiency of the port when handling bulk cargo, commission officials said.

The company has spent three years researching bulk cargo equipment technology and has 38 patents on the new equipment. It created the first automatic ship loading machine, which uses an automatic detection technique so that it can load without manpower.

Because the World Expo is to be held in Shanghai in 2010, 65 small bulk cargo docks along the Huangpu River have been moved to Baoshan District.

In 2007, the handling capacity of bulk freight at Shanghai ports reached 3.565 billion tons.

http://www.shanghaidaily.com/sp/article/2008/200807/20080711/article_366349.htm

Yantian container traffic drops amid US downturn
Shenzhen port hurt by weaker economy and policy changes
South China Morning Post
July 5, 2008 Saturday

For the first time in its history, container volume at Shenzhen's huge Yantian port has fallen, a sign that a slowing United States economy and mainland policy changes are cutting into exports.

Yantian is expected to report for the first half a drop in throughput, which has declined for five consecutive months by 6 per cent to 3.5 million 20-foot equivalent units. The exact figure for last month is not available.

And the slowdown is not limited to Shenzhen. Shanghai, the mainland's largest port, also saw growth cut to a single digit in May, when it posted an 8 per cent increase in throughput.

Analysts say a complex set of factors are to blame: the economic slowdown in the US, a cut in the across-the-board export tax rebate, yuan appreciation and changing labour laws. All have left the export and import-oriented terminals fighting a hard battle to maintain growth.

Analysts said Yantian port, controlled by Hutchison Whampoa, was being especially hurt by a weakening US economy, since about 70 per cent of its shipping line customers served the transpacific trade.

The slump at Yantian has proved a drag on the entire Shenzhen port system, which consists of Yantian in the east and Shekou and Chiwan ports in the west. Together, they serve as the gateway for merchandise from the Pearl River Delta to the world.

Shenzhen, the second-busiest port on the mainland, saw growth halved to 7 per cent in the first half, down from 14 per cent on average last year, Ma Yongzhi, a vice-director general of the Bureau of Communications of Shenzhen said yesterday in Changsha, Hunan.

The slowing trend is likely to continue.

"The risk is building for next year when manufacturers negotiate new contracts with importers from the west," said Geoffrey Cheng, a transport analyst for Daiwa Institute of Research.

"Owing to rising costs and an appreciating yuan, some factories may trim their exporting contract volume, which will lead to further declines in throughput growth next year."

However, ports in Shenzhen west still maintained strong growth in the first six months with a 20 per cent increase in container throughput, said a manager from China Merchants International, which operates the ports in the west.

The ports' even distribution of routes - calling on European, US and Asian destinations - has helped the firm defy weakening US demand. Shekou handled 34 per cent more containers in the first five months.

"We are looking at attracting more domestic shipments to Shenzhen to reduce the impact from the export slowdown," Mr Ma said.

In the past, Shenzhen has been too occupied with international direct cargo, allowing much of the domestic cargo to go to neighbouring ports such as Nanshan.

Mr Ma said the port had decided to adjust its strategy to increase the proportion of domestic cargo.

A proposal is being examined by the Shenzhen municipal government to change the proposed Da Chan Bay Terminal phase three into a feeder port for domestic shipments rather than a bulk port as suggested in a previous study.

The new phase would help the first two phases in Da Chan Bay, which have just come on stream this year, to cater to more domestic shipments.

However, from a port operator's point of view, domestic shipments are less attractive because rates are less than half those levied on international shipments, according to industry sources.

Cooool！
Go China！

Brazil's Vale spends US$1.6 billion for ore ships
http://ap.google.com/article/ALeqM5hYcER-e...-bz11wD92B4HKO0 (http://ap.google.com/article/ALeqM5hYcER-ecZhONwqbbNjpLuz-bz11wD92B4HKO0)
By ALAN CLENDENNING
8/3/2008

SAO PAULO, Brazil (AP) — Brazilian mining company Vale has placed a US$1.6 billion order for 12 huge iron ore carriers from China's Rongsheng shipbuilder, and the vessels will be the biggest of their kind in the world, Vale said Sunday.

Companhia Vale do Rio Doce SA said in a statement that the ships will be used to create a "dedicated route" to ship the company's iron ore from Brazil to Asia, a key market where iron ore is used as the main raw ingredient for steel production.

The ships, which Rongsheng Shipbuilding and Heavy Industries will build for Vale — the world's largest iron ore producer — will have a capacity of 400,000 deadweight tons each. The ship deal comes on top of a US$59 billion investment program through 2013 already promised by Vale.

The first of the ships will be delivered in 2011, and the order should be completed by 2012, allowing Vale "to reduce the cost of long-haul maritime transportation of iron ore to steel makers," Vale said in its statement.

When combined with other ships already used by Vale and additional ships on order, Vale's fleet will have the capacity of carrying 30.2 million metric tons of iron ore per year from Brazil to Asia. Most of Vale's Asian exports go to China.

Vale last month raised US$11.5 billion to fund operations and possible expansion by selling new stock in New York, Paris and Sao Paulo.

The company said at the time that the money could be used to finance it's US$59 billion investment plan, and would be dedicated to "general corporate purposes" — which could include "strategic acquisitions and increased financial flexibility."

Vale is the second-largest mining company after Anglo-Australian BHP Billiton Ltd. The company's American depository shares closed down 5.8 percent Friday in New York, or US$1.75, to US$28.28.

interesting.....

Shipbuilder Cosco's Q2 jumps 60 pct, outlook stable

Mon Aug 4, 2008

SINGAPORE, Aug 4 (Reuters) - Shipbuilding and repair firm Cosco Corp (Singapore) (COSC.SI: Quote, Profile, Research), 53-percent owned by China's government, posted a 60 percent rise in quarterly profit on Monday, boosted by a booming ship repair and building business.

Cosco, controlled by the mainland's biggest shipping firm China Ocean Shipping (Group) Co, said it remained confident of its prospects for the full year.

The company said it has not been hit by any order cancellations for its new ships, after stocks of Singapore-listed shipbuilders including Cosco fell on Monday on news of order cancellations from Korean shipbuilders.

"People are concerned about what is happening in Korean shipyards. I'm glad to tell you we did not receive cancellations of newbuildings at present," Cosco President Ji Hai Sheng told a media briefing.

"In future, the situation could change but (parent) COSCO Group is doing quite well," he said, adding that the firm would not accept orders from smaller and financially weaker companies.

Despite the slowing global economy, Ji said Cosco would not slow down the expansion of its facilities, which would boost capacity 88 percent by early 2010, on a bright outlook for rigbuilding.

The Singapore-listed firm earned S$128.7 million ($94 million) in the April-June quarter, compared with S$80.4 million in the year-ago period.

Analysts are worried that shipbuilders such as Cosco will be hit by higher steel costs, which will have an impact on operating margins for the full-year.

The firm's sales of scrap materials during the period more than doubled to S$38.4 million from S$17 million a year ago, thanks to the soaring steel prices and as the firm takes on more ship conversion contracts.

Cosco is expected to post full-year mean net profit of S$479.8 million, up 43 percent for a year ago, according to 12 analysts polled by Reuters Estimates before Monday's results.

Second-quarter revenues doubled to S$1.05 billion from S$512.3 million a year ago.

Cosco said its order book stood at $7.4 billion in the second quarter, reflecting slower growth from the previous quarter as it has tightened its rules on the recognition of new orders. It now books an order only after it receives the downpayment

http://uk.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUKSIN2356120080804?pageNumber=1&virtualBrandChannel=0

Shipyard H1 profits advance 15% on demand

2008-8-23

GUANGZHOU Shipyard International Co, a unit of China's biggest shipbuilder, said first-half net income increased 15 percent as rising demand for vessels allowed it to increase contract prices.

Net income climbed to 533.1 million yuan (US$78 million), or 1.08 yuan a share, from 465.2 million yuan, or 0.94 yuan, a year earlier, the company said in a statement to the Hong Kong stock exchange yesterday. Sales rose to 3.08 billion yuan from 2.33 billion yuan. The numbers were prepared in accordance with Hong Kong accounting standards.

Record raw material imports are spurring vessel orders at Chinese shipyards, pushing the nation toward overtaking South Korea as the world's biggest ship maker, Bloomberg News said. The company's full-year profit will get an additional boost from doubled production capacity after it completes the acquisition of Guangzhou Wenchong Shipbuilding Ltd from its parent, it said this month.

http://www.shanghaidaily.com/article/?id=371193&type=Business

Shipyard to boost capacity

2008-09-18


Dalian Shipbuilding Industry Co Ltd (DSIC), one of the nation's biggest shipyards, plans to boost production from this year's 3 million dwt to 10 million dwt by 2020.

DSIC expects sales of 17 billion yuan this year from its ships - including tankers, chemical and product carriers, containerships, LPG and LNG - and engineering and offshore platforms.

"We are now in the best period for the shipyard in terms of its development and economic efficiency," Sun Bo, general manager of DSIC, said.

DSIC was China's first shipyard to build a 300,000-dwt very large crude oil carrier (VLCC). Twenty-four months in the making, its first VLCC was delivered to the National Iranian Tank Co in August 2002.

"The first VLCC realized the dream of generations of Chinese shipbuilders to break the monopoly on these very large vessels," Sun said.

The shipbuilder has since received orders for more than 35 VLCCs for clients.

http://www.chinadaily.com.cn/bizchina/2008-09/18/content_7038381.htm

Looks like the recent downturn in the global economy hasn't been felt yet in the shipping sector.

China's shipbuilding orders account for forty percent of global total


September 25, 2008


China's shipbuilding industry received 98.45 million deadweight tons (DWTs) in new orders, accounting for 42 percent of the global total, said Zhang Guangqin, chairman of the China Association of the National Shipbuilding Industry (CANSI) on the Nantong Shipbuilding Industry Development Forum.

He said China completed its 18.93 million DWTs in 2007, accounting for 23 percent of the global total.

Experts estimate that China's total shipbuilding output will reach 24 million tons by 2015, or 35 percent of the global total, making China the No.1 shipbuilding country in the world.


http://english.people.com.cn/90001/90776/6506308.html

A city record - very big and very advanced

2008-10-28


http://www.shanghaidaily.com/NewsImage/2008/2008-10/2008-10-28/20081028_378476_01.jpg

THE world's biggest crude oil tanker, made in Shanghai, is expected to be delivered this week, five months ahead of the original schedule, the Shanghai Waigaoqiao Shipbuilding Co said yesterday.

The 318,000 dead-weight-ton tanker, Hua San, represents the largest Very Large Crude Carrier (VLCC) under the structural rules formulated by the International Association of Classification Societies Ltd.

The carrier will be delivered to its owner, a Singaporean shipping line, on Thursday or Friday, He Baoxing, a Shanghai Waigaoqiao press official told Shanghai Daily yesterday.

This marks another key milestone for the local shipbuilding industry in Shanghai, whose Changxing Island is on course to become the world's leading builder.

Just two weeks ago, a 297,000-DWT vessel, the Yangtze Pearl, which was the largest VLCC built in Shanghai up to that time, began its maiden voyage. The Yangtze Pearl was built by the Shanghai Jiangnan-Changxing Shipbuilding Co, a subsidiary of Shanghai Waigaoqiao.

The Hua San, is 333 meters long, has a beam of 60 meters and features advanced technology using thickened materials in crucial parts of the tanker.

http://www.shanghaidaily.com/article/?id=378476&type=Business

China more than doubles ship exports in 1st 7 months

2008-10-28


BEIJING, Oct. 28 (Xinhua) -- China sold abroad 1.4 million vessels in the first seven months of this year, a growth of 170 percent on the same period of last year, customs sources said on Tuesday.

The exports were valued at 10.58 billion U.S. dollars, up 61.6 percent, according to the General Administration of Customs.

The administration attributed the growth to the nation's comparative advantages in labor cost, ship building technology and infrastructure for the business.

The total export value included 3.49 billion U.S. dollars for container vessels, up 81.7 percent, 2.84 billion dollars for liquid cargo ships, up 53.3 percent, and 2.04 billion dollars for bulk cargo ships, up 54.6 percent. The three categories combined to account for 79.2 percent of the total ship export value.

Nearly 90 percent of the exports were achieved through processing trade.

Of the total export value, 63.4 percent, or 6.71 billion U.S. dollars was earned by state-owned enterprises, up 35.9 percent. Foreign-funded and private businesses recorded export value of 2.28 billion dollars and 1.24 billion dollars, respectively, up 150 percent and 170 percent.

The European Union, ASEAN members and Hong Kong were the major target markets of the ship exports by the Chinese mainland.

http://news.xinhuanet.com/english/2008-10/28/content_10265257.htm

China State Shipbuilding net profit up 48.64% in Q3

30 Oct 2008

China State Shipbuilding Co Ltd the Shanghai-listed unit of the country's biggest shipbuilder China State Shipbuilding Corp, announced on Tuesday that its net profit for the third quarter of this year surged 48.64% year-on-year to hit RMB 1.24 billion, fuelled by investment gain.

In the Jul. to Sep. period, the company's revenue surged 45% year-on-year from RMB 5.26 billion to RMB 7.64 billion. Earnings per share stood at RMB 1.818. Investment gain soared to RMB 54 million, compared with RMB 10.6 million in the same period last year, according to its financial report filed with the Shanghai Stock Exchange.

For the first nine months this year, CSCS posted net profit of RMB 3.153 billion. Earnings per share were RMB 4.759, up 8.3% from a year earlier. Revenue soared 41.89% to 18.39 billion from the corresponding period last year.

Shares of CSCS went up 4.52% to RMB 34.25 at 2:45 pm on Wednesday.


http://news.alibaba.com/article/detail/china/100017549-1-china-state-shipbuilding-net-profit.html

Shanghai port activity runs deep

2008-10-29


THE Yangshan Deep Water Port is full steam ahead and on track for Shanghai's goal of making the city an international shipping hub.

The project's developer plans more auxiliary facilities and value-added businesses.

Phase III-B, the final phase of the project's main northern development, is due to be operational this December, bringing the port's annual designed handling capacity to 9.3 million 20-foot-equivalent units (TEUs) with 16 berths.

Construction on the project's new western section would start next year and the section would be gradually put into use from 2010 through 2013, said Liu Zuoliang, chairman of the Shanghai Tongsheng Investment Group, which started to develop the deep water port in 2002.

The western development will include 10 to 12 berths in relatively shallower water, with designed annual capacity of 7 million TEUs.

"We don't want to start them too hastily, as current capacity expansion can meet demand growth, which has shown signs of easing," Liu told reporters yesterday.

He said that while the northern section's design capacity was 9.3 million TEUs, this could be expanded to between 12 million and 15 million TEUs.

The port handled 6.09 million TEUs in the first nine months, and is expected to handle 8.5 million TEUs for the whole year. This compares to the full-year government forecast of 28.5 million TEUs for the whole of Shanghai.

Liu said his company would open a ferry center in the western extension, and further develop logistics, processing, tourism and other infrastructure in the northern area.

The port, connected to Shanghai by the Donghai Bridge, also plays a key role to ensure the city's energy supplies. An area has been developed that serves as an energy port, housing liquefied natural gas receiving facilities and refined oil storage tanks.

The LNG facilities are expected to receive the first cargo of clean fuel from Malaysia early next year.

http://www.shanghaidaily.com/article/?id=378663&type=Business

Ships To Be Fitted With Solar Power


2008-10-30

CHINA COSCO Holdings Co, the world's biggest operator of dry-bulk ships, signed an initial accord with Solar Sailor Holdings Ltd yesterday for the Australian company to develop renewable power systems for tankers.

Solar Sailor will design and engineer wind and solar power units for a COSCO tanker and bulk carrier, said Ian Macdonald, minister for state development in Australia's New South Wales. Solar Sailor fits wing-shaped solar panels to vessels to generate solar power as well as capture energy from the wind.

http://www.shanghaidaily.com/sp/article/2008/200810/20081030/article_378751.htm

Container throughput may shrink next year, Citi says
Slowdown could hit mainland ports run by HK-listed firms
25 November 2008
South China Morning Post

The growth in container shipments through the mainland's major foreign trading ports had slowed rapidly and could turn negative next year, affecting several Hong Kong-listed port operators, industry experts said.

"With the financial tsunami sweeping the world, growth at China's foreign trade container ports cooled to 10 per cent in the first 10 months of this year, compared with more than 20 per cent per annum in the past five years," said a recent Citi report by Ally Ma and Brian Lam.

"Growth in September and October slowed sharply to 5 per cent, with ports servicing light manufacturing bases getting hit the hardest."

The report said the downturn might continue to worsen in the fourth quarter.

It said container throughput at the major foreign trading ports might decrease in the first half of next year and only recover mildly in the second half, at the earliest.

The Citi report defined the major foreign trading ports, beginning with the largest, as Shanghai, Shenzhen, Qingdao, Tianjin, Ningbo, Xiamen and Dalian.

The trade slowdown would hurt several Hong Kong-listed mainland port operators, including Cosco Pacific, China Merchants International (Holdings), Tianjin Port Development and Dalian Port, the Citi report said.

It gave Cosco Pacific a "sell" rating, saying it was the most vulnerable of the ports to the trade slowdown, with most of its earnings coming from container leasing and manufacturing.

Citi cut its 2009-2010 earnings forecasts by 14 per cent for Dalian Port and 24 per cent for China Merchants and Tianjin Port.

The Pearl River Delta, a major light manufacturing base that exports extensively to the United States and Europe, was among the hardest hit, according to the report. Shenzhen port recorded a 2.3 per cent decline in shipments in September and an 8.3 per cent decline last month.

"[Based on] analysis of leading indicators including the Canton Trade Fair, the fourth quarter and first half of 2009 could be extremely difficult," the report said. "The Canton Trade Fair from October 15 to November 6 in Guangzhou was the most dismal in its history. Value of contracts signed at the event declined by 17 per cent."

Growth in throughput at Hong Kong's container port slowed from 7.3 per cent in August to 1.2 per cent in September and minus 2.9 per cent last month, the Hong Kong Port Development Council said.

"In the coming six months for Hong Kong and Shenzhen, the trend will be worse," said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council. "The negative growth will be bigger."

Shenzhen's ports might possibly experience a decline in container throughput next year, he predicted.

"For 2009, we believe Hong Kong and China's international trade with the US and Europe will drop."

China's domestic trade and intra-Asian trade could partly offset the decline in international trade for Hong Kong and mainland ports, he said.

However, since the terminal handling rates for the domestic and intra-Asian trade are much lower than for international trade, the decline in foreign trade would cause the revenue of terminal operators to drop substantially, Mr Ho said.

Shipbuilding industry to see blue in three years

2008-11-28


After two or three years' blowout, the Chinese shipbuilding industry will face a real test in 2011-2012, and the situation will be worse during the financial crisis, said a report from today's Shanghai Securities News.

Shipbuilders in China are still busy because most orders are due to finish by 2011. Are they heading for a problem?
Figures from China Association of the National Shipbuilding Industry show in the past three quarters of this year shipbuilders finished 16.82 million deadweight tonnages (DWT), up 40 percent year on year, with new orders of 57.17 million DWT, down 11 percent year on year, and the ongoing orders of 210.84 million DWT, up 63 percent year on year, accounting for 25.6 percent, 38.8 percent and 35.4 percent of global market respectively, said Clarkson, the world's leading integrated shipping services group.

But ship builders still can not sleep well despite these orders. Experts familiar with the matter said gloomy demand, cancellation of orders, and difficulty in raising funds are the potential problems for the industry.

The Baltic Dry Index on November 25 dropped to 824 points, down by 92.6 percent compared with a former record of 11,067 points in May of this year. Recent figures show there are 180 capesize ships casting anchors due to no transportation deals, and the rent was reduced to $5,000 per day from $180,000.

The negative impact has already emerged in the second-hand ship market. "The quoted price has dropped by 50 percent in three weeks," said a senior ship broker to the Shanghai Securities News. A ship's dealt price was $28 million, far lower than the quoted $60 million.

Brokers said biggest problem for ship owners is having no goods to transport. And the order cancellations will be worse if second-hand ship prices keep dropping.

In fact, global market has seen cancellations already. The listed New York Shipping & Trading Ltd declared recently it cancelled six new cargo ships orders worth $530 million. And London's Hellenic Carriers Ltd dismissed a bulk carrier order worthy $69.7 million. Clarkson's figures show 94 ship orders were cancelled in the first eight months of this year, accounting for 1.2 percent of orders.

In addition, the banks are crunching loans, and taking a cautionary attitude towards the shipbuilding industry, which means some builders have difficulty raising funds.

Officials from the Exit & Export-Import Bank of China said shipbuilders and shipping firms are transferring from sellers' market to buyers, which makes the banks reevaluate the credits.

Survivor will be the King

Except for the above mentioned problems, more risks will be seen in three or four years, and those survivors will be the leaders.

According to a report from China International Capital Corporation Ltd, global orders totaled 2.48 million DWT in the first ten months of this year, the lowest since 2006, and orders dropped by 88.2 percent year on year, or by 65.1 percent month-on-month, dropping the fastest since the start of this year. New orders between January to October in 2008 totaled 144.65 million DWT, down 33.8 percent year on year.

The China Association of the National Shipbuilding Industry said most ship builders said it has grown difficult to get more orders since August.

Zhu Nujing, consultant from the association, predicted global ships need 60-70 million DWT by 2010, and the building ability will be 200 million tons. China itself has 60-70 million DWT building ability. "The competition will be fierce," said He.

Among the competition, small and medium ship builders will be the victims, and those new small and medium non-stated builders, who depend on bank loans for infrastructure constructions, will see a crisis on loans return as well.

Zhu added some new ship builders are conducting technology renovation, or finish renovations by 2009 or 2010, and those firms will be in difficulty if the market keeps falling.

However, the large ship builders are still optimistic towards the future. Tan Zuojun, general manager from China State Shipbuilding Corporation, is still confident of surviving the winter.

"The cold winter will make the resource closer for large builders," said Hong Liang, vice-president from Jiangsu Rongsheng Heavy Industries Group Co Ltd, adding the wash out of bulk and container markets will put the market in strong need.

Policies needed

Facing potential difficulties, parties have noticed the risks, and governments are conducting research on ship builders.

On November 15, Premier Wen Jiabao visited CSSC Guangzhou Longxue Shipbuilding Co Ltd, and one week later visited Shanghai Waigaoqiao Shipbuilding Co Ltd. And officials from East China's Jiangsu Province were also doing research at Jiangsu Rongsheng Heavy Industries Group Co Ltd.

The association's Zhu Nujing said in recent years, some provinces are still building more factories. "The result will be hard to imagine," said Zhu. He called on local governments to adjust investments according to market environments.

And the association also suggests the government should improve enterprises' operation environment, take care of chain industries development trends, support good performers on policies, and encourage advanced technologies, mergers and acquisitions.

Besides self-improvement, shipbuilders are also searching for government policy support. Hong Liang expects the government may allow ship mortgage businesses, increase tariff rebates and release forward settlement and sale of foreign exchange businesses to avoid the yuan appreciation risk.

http://www.chinadaily.com.cn/bizchina/2008-11/28/content_7252193.htm

Port firm to develop facilities in Shenzhen

2008-12-5


HUTCHISON Port Holdings Ltd, the world's largest container-terminal operator, plans to help develop new port facilities in Shenzhen, south China, because of the country's rising exports.

Shenzhen Yantian Port Group and Hutchison Port have agreed to develop a terminal as part of the Shenzhen Yantian East Port Phase I, Hutchison Whampoa Ltd's terminal unit said in an e-mailed statement yesterday. The new facility will have four berths, Hutchison Port said, without providing a time frame for the plan.

Hutchison has expanded in China's mainland as the country's rising exports of toys, furniture and other goods fuel sea cargo. Still, traffic has slowed this year in Shenzhen, near Hong Kong, because of the global recession, crimping margins for port operators in the city, according to Bloomberg News.

The new terminal will have two berths for ships able to carry up to 6,600 containers and two more for 9,500-box ships. Hutchison's venture with Shenzhen Yantian Port operates 14 berths in the port. Worldwide, Hong Kong-based Hutchison has stakes in 292 berths spread across 47 ports, according to its Website.

The global recession is damping the growth of China's sea-cargo, particularly in the Pearl River Delta. Shenzhen's container traffic fell in September and October, Citigroup Inc has said.

http://www.shanghaidaily.com/article/?id=383295&type=Business

China Merchants sees slowing growth, expansion

HONG KONG, Dec 9 (Reuters) - China Merchants Holdings , the country largest operator of ports, plans to curtail its pace of expansion because of expectations that sputtering global shipping will retard the pace of growth in its key southern Chinese market in 2009.

Analysts expect shares in Chinese port operators such as COSCO Pacific to come under pressure in coming months after a sharp deceleration in the country's exports underscored the potential for once-stellar growth to tank, though many remained bullish on the sector's longer-term potential.

Port operators focused on southern China, where trade growth has slowed more sharply because of the prevalence of lower value-added goods manufacturing in the region, are likely to be harder hit.

Chairman Fu Yuning told reporters on Tuesday his firm, which derives 70 percent of its revenue from ports in the country's south, planned to curb expansion plans amid expectations of slowing throughput growth at key terminals in Hong Kong and Shenzhen.

But Fu would not identify areas in which to trim expansion.

Shares in China Merchants, riding a general upswell in shipping stocks after a global benchmark shipping rates index gained for the first time in weeks on Monday, ended the day up more than 5 percent.

Taiwan, China to launch direct shipping links
13 December 2008

TAIPEI, Taiwan (AP) - China and Taiwan will start a new era of direct air and shipping services Monday when planes and ships travel directly across the Taiwan Strait, formally ending a nearly six-decade ban on regular links.

Relations have improved between the once-bitter rivals since Taiwanese President Ma Ying-jeou took office in May and moved to reverse the pro-independence policy of his predecessor, Chen Shui-bian.

China has reacted warmly and although the mainland still claims sovereignty over the self-governed island, both have agreed to set aside thorny political disputes to focus on trade and economics.

The two sides split amid civil war in 1949.

Prominent politicians will attend inauguration ceremonies held in Taiwan and China on Monday for a move widely expected to boost trade and economic integration of the two longtime rivals.

The first Taiwanese ships, from Evergreen and Yang Ming Marine, are scheduled to leave from the island's Kaohsiung and Keelung harbors for Chinese ports about noon Monday. Ships with mainland companies, China Shipping and China Ocean Shipping, are to sail vessels to Taiwan from Shanghai and Tianjin, respectively.

Also Monday up to 60 cargo flights per month will start to fly between Taiwan and the mainland, according to agreements signed on Nov. 4.

Daily passenger flights will also start, with 16 scheduled Monday, in an expansion of weekend charter services inaugurated in July.

The direct services will result in cost savings and generate new businesses as both Taiwan and China feel the pinch of the global economic slowdown, said Chiang Pin-kung, head of Taiwan's semiofficial Straits Exchange Foundation.

"This will contribute greatly to our economic development," said Chiang, who signed the air and shipping pacts with his Chinese counterpart, Chen Yunlin.

With annual bilateral trade built up to about US$100 billion, Taiwanese businesses have pushed for years to end the ban on direct links across the 100-mile (160-kilometer) wide Taiwan Strait.

In the past, planes had to fly into Hong Kong airspace while traveling between the two sides. Cargo ships had to stop at the Japanese island of Okinawa northeast of Taiwan.

In Beijing, Xu Lirong, executive vice president of the China Ocean Shipping Group Company, said the direct shipping links will cut the cost of the company's related freight business by 30 percent.

"Direct shipping will undoubtedly bring new vigor to economic and trade ties between the mainland and Taiwan," China's official Xinhua News Agency quoted Xu as saying.

Under the pact signed last month, the mainland will open 48 sea ports and Taiwan will open 11 harbors for direct shipping.

Taiwan imposed the ban on regular links six decades ago. When former President Chen attempted to end it, China refused because of its deep distrust of him.

Shipbuilding stimulus plan under discussion

2008-12-29

A stimulus program to revive China's shipbuilding industry is currently under discussion and will be submitted to the State Council, China's Cabinet, for approval at the beginning of 2009, a senior industry official said.

The program - drafted mainly by the country's top economic planning body, the National Development and Reform Commission (NDRC) - will cover a raft of supportive policies to boost the shipbuilding sector such as fiscal policy, tax reform and research and development assistance, China Business News reported, citing Zhang Guangqin, chairman of China Association of the National Shipbuilding Industry.

"The program provides detailed instructions to Chinese shipbuilders that will help them cope with the financial crisis in the next 2 to 3 years," Zhang said.

The stimulus package will emphasize shipping of energy resources and strategic materials such as crude oil by State-owned fleets.

"For example, many goods in China are now transported by foreign ships and thus Chinese shipping enterprises have great potential to explore domestic demand," Zhang said.

The Baltic Dry Index (BDI), which measures the demand for shipping capacity against the supply of dry-bulk carriers, dropped by 93.7 percent from a peak of 11,793 on May 20 to 744 on Dec 24. Moreover, Chinese shipbuilders reported a 44-percent drop in new orders during the first 11 months of 2008.

http://www.chinadaily.com.cn/bizchina/2008-12/29/content_7350818.htm

China's Tianjin Port container throughput up almost 20% in 2008

2008-12-31

TIANJIN, Dec. 30 (Xinhua) -- Tianjin Port, the largest in north China, handled 354 million tons of cargo by Tuesday evening, said an official of Tianjin Port Group.

The port handled 8.5 million twenty-foot equivalent (TEU) units of containers in the past year, up 19.7 percent year-on-year.

When Tianjin Port opened in 1952, it was a small, shallow-water harbor capable of handling less than 700,000 tons of cargo a year. It has since become a deep-water port with many specialized berths.

In 2007, it handled 300 million tons of cargo and 7.1 million TEUs of container cargo, which put it in the sixth and 20th places in the world, respectively.

There are more than 400 ship movements at the port each month to all points of the globe.

http://news.xinhuanet.com/english/2008-12/31/content_10583340.htm

Major shipping, aviation funds to boost reforms

2009-01-12

Tianjin will strengthen financial reform and innovation this year and launch two major development funds for the shipping and aviation sectors, in line with it being one of the test beds for national reform, the municipality's mayor said Sunday.

"We will deepen our comprehensive reform in an all-around manner, facilitating reform and innovation within the financial sector. We plan to set up shipping and aviation funds," Mayor Huang Xingguo said in his address to the second session of the 15th municipal people's congress.

To that effect, the National Development and Reform Commission (NDRC), the country's top economic planner, has approved Tianjin's application to raise a 20-billion-yuan ($2.93 billion) shipping industrial fund.

The fund is now being prepared for launch, Li Weibin, head of the China Development Bank's Tianjin branch, told China Daily.

The planned aviation fund is still waiting for approval from the NDRC, Li said.

But the aviation fund might not be approved by the NDRC by this year, given the current economic challenges, a Tianjin government official told China Daily on condition of anonymity.

"There are also difficulties facing the shipping fund because of the current sluggish demand in shipping. But it can start low for example, at 2 billion yuan," the official said.

The shipping fund is expected to fuel financing for the country's shipbuilding industry and facilitate the formation of international shipping and logistic centers such as Tianjin, analysts have said.

Financial innovation holds the key to fueling the development of major projects of Tianjin, China Development Bank's Li said.

In developed countries, due to the relatively mature fund and capital markets, the proportion of direct financing is said to be able to reach 50 percent or even higher. But the figure is only 10 percent in China, analysts said.

Many consider the problems arising from the lack of direct financing to affect the healthy development of the economy, when businesses having financial difficulties cannot obtain capital effectively.

"We will spare no effort to increase the ratio of direct financing, develop private equity funds and introduce all categories of financial institutions," Huang said.

http://www.chinadaily.com.cn/bizchina/2009-01/12/content_7386416.htm

China Shipping Container Lines: 2008 Net Profit Dn Over 50%
21 January 2009

SHANGHAI (Dow Jones)--China Shipping Container Lines Co. (2866.HK), the country's largest container shipper by capacity, estimates a drop of more than 50% in net profit in 2008, as exports from China fell amid the global financial crisis.

The company reported net profit of CNY3.32 billion ($485 million) in 2007, it said in a statement late Wednesday.

It didn't specify its 2008 earnings results, which will be released March 26.

"In 2008, the volume of container-loaded cargoes exported from China decreased significantly, and the traditional peak season for cargo volume didn't appear," CSCL said.

In addition, crude oil prices kept soaring in the first half of last year, resulting in a sharp increase in the company's operation costs, it added.

China's shipbuilders see profits up 50 percent in 2008

2009-02-02

BEIJING, Feb. 2 (Xinhua) -- Profits of China's shipbuilders rose 50 percent in 2008 from the same period a year ago, despite rising material costs and the appreciation of Renminbi, according to data released Monday by the Ministry of Industry and Information Technology (MIIT).

Profits jumped 50.5 percent to 28.34 billion yuan (4.05 billion U.S. dollars). The industry value totaled 118.3 billion yuan, up 61.2 percent year on year.

The nation's shipbuilders completed a production capacity of 28.81 million deadweight tons (DWT), or 29.5 percent of the world's total, up from 22.9 percent in 2007, according to MIIT figures.

New orders comprised 37.7 percent of the world's total, with a production capacity of 58.18 DWT. Current orders accounted for 35.5 percent of the total, with a capacity of 204.6 million DWT.

An official with the MIIT said China's shipbuilders had remarkably strengthened their capabilities in innovation and had improved their techniques notably in making bulk cargo ship, oil carrier and container ships.

They also had the world's leading techniques in making ships that could meet the standards of the international classification society, according to the MIIT official.

He warned, however, that as the global financial crisis begins to take a toll on the shipbuilding sector, the industry could face severe challenges in the coming two-to-three years.

He said it has become more difficult for shipbuilders to raise fund as there has been a sharp decrease in new orders and defaults on new orders are on the rise.

http://news.xinhuanet.com/english/2009-02/02/content_10752955.htm

Beijing to unveil revitalization plan for shipbuilding sector soon

Monday, Feb 02, 2009

It is reported that China's shipbuilding industry's revitalization plan has been drafted following the release of support plan for auto industry and is to submit to the State Council for approval.

One principal in Zhejiang Development and Reform Commission said that it will strictly control the approval of new ship units and expanding projects in light of the current market downturn.

Mr Zhang Guangqin chairman of China Shipbuilding Association said that the revitalization plan for the sector covers a series of policies arranging from interior demand expanding, finance, tax and scientific research and mapped out a detailed development trend for China's ship industry in the coming 3 years.

China will establish development fund and financing & chartering company for the sector to ensure key shipbuilders orders completion and delivery. More Science and technology investments would be earmarked to help key enterprises' industrial upgrading and encourage mergers & acquisitions.

As the third largest shipbuilding country in the world, China is suffering the huge orders losses, leaving the ship producers into the hardest time in the history. Shipyards in Zhoushan, renowned as the City of Shipbuilding in China, are quiet with many ships unfinished at the moment, the traditional hot time for the sector.

An official said that domestic shipbuilding mills can hardly secure new orders after 2011 due to the contract suspension of European shipping industry impacted by the world financial crisis. So far, most Chinese shipbuilders have seen their delivery time extending to 2010. That means the international competition will be fiercer in days to come and the strong one will survive from the competition, while those inefficient ship-makers are set to be washed out.

According to the statistics from Singapore Pacific Basin Shipping Limited in early 2009, there are 382 new ship orders have been cancelled worldwide and China takes up half of the contract default, or 20 million DWT. Zhoushan COSCO, the subsidiary of Singapore COSCO Corporation has received cancellation for four ships and delaying requests for delivery for 12 vessels within one month.

A senior insider said that China's shipbuilding industry has expanded blindly before 2008 and the market downturn has helped squeezing out the bubbles in the sector. Only in Zhejiang province, there are nearly 2,000 private shipbuilding mills and the repeated construction can be seen everywhere with shrinking profits.

Compared with Japan and Korea, China owns cheap but high quality labors and rich land resources. Besides, the industry also enjoys the 17% export tax rebates, which help ensure the profit margin in the sector. As per the relevant surveyed statistics, the market shares of Chinese ship completion, new contracting tonnage and new building order books account for 19%, 42% and 28% of the world's total volume respectively in the first half of 2008, ranking the second all over the world.

http://www.yourshipbuildingnews.com/beijing+to+unveil+revitalization+plan+for+shipbuilding+sector+soon_22740.html

Chinese shipyards see sharp drop in orders in 09-paper

SHANGHAI, Feb 9 (Reuters) - China State Shipbuilding Co and other Chinese shipyards are expected to see a significant drop in new ship orders in 2009 for the second straight year as the global financial crisis takes a toll on the once booming sector, the Shanghai Securities News said on Monday.

The downturn will likely spur the government to introduce measures to help shipyards counter the impact of slackening demand amid slowing economic growth, analysts say. The newspaper did not say when stimulus steps may be introduced.

China has implemented wide ranging tax cuts and subsidies so far to help its auto, steel and petrochemical industries.

Ship orders this year are estimated at between 20 million to 30 million deadweight tonnes (DWT), against 58.18 million DWT in 2008, when orders slumped 40.9 percent from a year earlier, the newspaper said, citing official industry data.

China's shipping industry, which is gradually taking market share from its Asian neighbours, is facing a difficult time this year as shrinking orders exacebate overcapacity problems, the newspaper said.

Chinese yards hold 37.7 percent of the world's total new orders, with a production capacity of 58.18 DWT, the official Xinhua news agency said last week, citing data provided by the Ministry of Industry and Information Technology.

It has also become more difficult for shipbuilders to raise funds due to a sharp decrease in new orders, as well as rising numbers of defaults on previous orders, Xinhua said, citing an unnamed government official.

China says to help shipbuilding industry

BEIJING, Feb 11 (Reuters) - China's cabinet on Wednesday approved a plan for supporting the domestic shipbuilding industry, telling banks to step up trade finance for exports of ships, state media said.

China's shipping industry, which is gradually taking market share from its Asian neighbours, is facing a difficult time this year as shrinking orders exacerbate overcapacity problems, state media have said.

The State Council will encourage financial institutions to expand their credit for purchasers of exported ships, and will extend fiscal and financial support for domestic buyers of long-range ships until 2012, the Xinhua news agency said.

"We need to take active measures to keep shipbuilders' order books steady, guard against operational risks and maintain stability in the industry," state television cited the cabinet as saying.

It will also limit construction of new capacity in the industry, force outdated ships to be replaced, encourage production of more advanced ships and promote mergers and acquisitions in the industry, the broadcaster said.

It did not provide further details on the moves.

China has implemented wide-ranging tax cuts and subsidies to help its auto, steel and textile industries since the beginning of this year, hurt by a slowing economy and fallout from the global financial crisis.

Domestic media reported on Wednesday that light industry would soon receive support, including tax cuts. The high-tech and petrochemical sectors are among those that are also expected to receive more government help.

New ship orders will drop to between 20 million deadweight tonnes (DWT) to 30 million DWT in 2009, compared with 58.18 million DWT in 2008, Xinhua said earlier this week, citing the China Association of National Shipbuilding Industry.

As the world's third-largest ship building country, China built 28.81 million DWT of ships in 2008, according to the association.

China State Shipbuilding Co and other Chinese shipyards are expected to see a significant drop in new ship orders in 2009 for the second straight year, the Shanghai Securities News reported on Monday.

Tianjin Port dives on capex concern after merger news

HONG KONG, March 17 (Reuters) - Tianjin Port Development Holdings Ltd's shares plunged 13 percent on Tuesday on concerns its $1.4 billion merger deal with Tianjin Port Co Ltd would require significant capital expenditure.

Analysts said the merger was a significant and positive move that could see earnings being enhanced for the two firms, both major operators in China's third-largest port of Tianjin.

But the stock, which surged 38 percent in two weeks until last Friday, is pricey with valuation at 24 times 2008 earnings against around 11 times that of its bigger domestic rivals, such as COSCO Pacific and China Merchants Holdings , said Jim Wong, an analyst at Nomura.

Tianjin Port, a unit of Tianjin Development Holdings Ltd , said late on Monday it would pay a total of HK$10.96 billion ($1.41 billion) to Tianjin Port (Group) for 56.81 percent of the Shanghai-listed port operator.

It would issue new shares to the seller and possibly to other investors to finance the deal. [ID:nHKG255513]

Tianjin Port (Group), which will become the parent of Tianjin Port Development after the merger, said earlier this month it would invest 12.8 billion yuan ($1.9 billion) this year to build new berths and upgrade facilities in the northern port of China.

The group also intended to inject its 300,000 tonne crude oil terminal into Tianjin Port Co but there was no timetable yet.

"With substantial capex in the wings, we would not advise short-term investors to chase the stock," Wong said.

Shares in Hong Kong-listed Tianjin Port Development hit a low of HK$1.95, down 13.3 percent in late morning trade, and its Hong Kong-listed parent fell 4.9 percent. Both stock underperformed a 0.7 percent fall in the blue chip Hang Seng Index <.HSI>.

Shanghai-listed Tianjin Port Co also eased 1.3 percent to 11.8 yuan.

But Credit Suisse upgraded Tianjin Port Development to neutral from underperform on the company's improved growth outlook from the acquisition.

The consolidation should also help the company gain exposure to China's energy and resource-related terminal business, such as coal, iron ore and oil products, for which demand is driven mainly by China's domestic economic growth, it said in a research note on Tuesday.

China Shipping's profits up 16.9% in 2008

2009-03-18

China Shipping Development Co (CSDC), the nation's largest oil carrier, said its 2008 profit rose 16.9 percent, boosted by strong demand for energy-related bulk shipping services.

Net income climbed to 5.37 billion yuan ($839 million), on sales of 17.5 billion yuan, 38 percent more than a year earlier, the Shanghai-based company said in its 2008 earnings report.

The Baltic Dry Index (BDI), a measure of rates for carrying coal, iron ore and other commodities, fell 93 percent by the end of the year as transportation demand dropped drastically in the second half of 2008.

The China Coastal Bulk Freight Index (CCBFI), a barometer of the shipping market, fell 55 percent by the end of the last year due to weak demand from power plants and steel mills in the second half of the year.

The Baltic Dirty Tanker Index, a measure of chartering rates, rose 34.4 percent in 2008, helped by rising demand for gasoline and other fuels in China, the world's second- largest energy user.

The combined transportation turnover of CSDC in 2008 reached 229.34 billion ton nautical miles, up 6 percent year-on-year, and its core business revenue climbed 38.4 percent to 17.5 billion yuan.

The company plans to expand by 19 ships with total loads of 2.72 million tons, including 14 oil tankers of 2.26 million tons and five bulk ships of 460,000 tons.

CSDC, a unit of State-owned China Shipping (Group) Co, operates a fleet of oil tankers and dry-bulk vessels mainly for carrying coal. The company has boosted cooperation with its largest customers, such as Baosteel Group Corp and PetroChina Co, through ventures and long-term contracts.

http://www.chinadaily.com.cn/bizchina/2009-03/18/content_7592488.htm

China container cargo down 13.4 pct in April: state media
6 May 2009
Agence France Presse

Cargo container volume at Chinese ports was down 13.4 percent in April from a year ago, state media said Wednesday, as the financial crisis continues to hit the export-dependent economy.

The main ports in the world's third-largest economy processed an estimated 9.2 million containers in April, the official Xinhua news agency said, citing transportation ministry figures.

Overall cargo traffic last month was down 1.9 percent from a year earlier to 500 million tonnes, Xinhua said.

China's exports fell 17.1 percent in March, their fifth straight monthly decline, according to the latest government figures.

However, recent data indicates that manufacturing activity expanded in April after months of contraction.

China's economy grew 6.1 percent in the first quarter, the lowest level in at least a decade.

Lower port throughput dampens hopes
9 May 2009
South China Morning Post

Dashing hopes of an early recovery in exports, key mainland ports in Shanghai, Shenzhen and Zhejiang reported worsening throughput performances last month.

Shenzhen's container throughput fell 25.1 per cent year on year to 1.3 million 20-foot equivalent units (teu) last month, according to official figures.

This was worse than the 21.6 per cent year-on-year drop in March. Last month's throughput was 3 per cent lower than March.

The container throughput of ports in Zhejiang, including China's fourth-largest port Ningbo, fell 15 per cent year on year to 782,000 teu last month, according to the container port portal www.portcontainer.cn. By comparison, Ningbo's throughput fell 3.7 per cent year on year to 836,000 teu in March.

Throughput at Shanghai, the world's second-busiest port, fell 20 per cent year on year to 2 million teu, Citi analyst Ally Ma estimated.

This was more than double Shanghai's 9 per cent year-on-year drop in container throughput in March. Shanghai's throughput last month was 8.3 per cent lower than March.

"April numbers show the recovery is still fragile," Ms Ma said.

Sunny Ho Lap-kee, the executive director of the Hong Kong Shippers' Council, said Shenzhen's performance last month was below expectations.

"I was surprised to see Shenzhen's laden container throughput drop in April from March. I expected an increase," Mr Ho said.

Shenzhen handled 930,000 laden containers last month, less than the 960,000 moved in March.

Normally, there is an increase in shipments just before the May 1 holiday from Shenzhen, but this did not happen this year, Mr Ho said.

"This can only be explained by very weak demand. The Hong Kong Shippers' Council has not seen any improvement in orders by overseas buyers. Manufacturers [in Hong Kong and Guangdong province] have not seen improvement in April in orders. Europe also has horrible demand," he said.

In the first four months of this year, orders from Europe to Hong Kong and Guangdong manufacturers have dropped by 40 per cent, said Mr Ho.

United States rail cargo traffic, an indicator of US demand, has seen no improvement in recent weeks.

For the week ended May 2, total rail volume in the US was 27 billion tonne-miles, less than the total volume of 27.7 billion tonne-miles the previous week.

One other reason for last month's poor performance was a rush of shipments in March to avoid freight rate increases in April, Ms Ma said.

Shipping lines including OOCL and China Shipping Container Lines raised freight rates last month in a bid to stem losses and avoid bankruptcy.

Modern Terminals and Hutchison Port Holdings are the main port operators of Shenzhen and Hong Kong ports.

Modern Terminals has not cut staff or salaries in Hong Kong and Shenzhen in recent months, said a Modern Terminals spokesman.

HPH did not comment on whether it has cut staff, but a spokesman said it expected this year to be a challenging one.

Shanghai unveils shipping hub master plan today
11 May 2009
South China Morning Post

Shanghai plans to announce details today of policy measures in a bid to develop the city into a larger regional shipping hub, sources said.

The measures include tax incentives, an infrastructure upgrade and inauguration of the country's first arbitration court to decide international disputes. The measures will be in line with the Shanghai government's stated ambition to attract more shipping agencies from around the world to use the city's suburban Yangshan port as a transshipment site for Asia-wide trade.

The tax adjustments could help attract more shipping firms and other companies that move cargo by land transport to use Shanghai's ports, while the arbitration court would be a required feature for a shipping hub, analysts said. But the city's attempt to become an international shipping centre could put its ambitions of becoming an international financial hub on a policy backburner, some observers said.

"At this stage we will devote most of our efforts to seeking breakthroughs in the shipping sector while remaining cautious about rolling out major financial market innovations," said a government official with direct knowledge of the policy blueprint. "A lot of sensitive issues need to be settled at the central government level before any meaningful progress can be made on the financial front."

In March, the central government endorsed Shanghai's ambition to transform itself into an international hub for both the financial and shipping sectors by 2020 by promising to authorise groundbreaking policy initiatives in the city's jurisdiction.

"Obviously, shipping, at least for now, takes the front seat from the more-hyped financial liberalisation in Shanghai's drive to enhance its global economic status," said an executive at a state-owned bank in the city who has seen the first batch of policy initiatives on the shipping front, expected to be released today.

The People's Daily reported in March that Shanghai cargo throughput rose 3.6 per cent last year to 582 million tonnes, making it the world's busiest port for the fourth consecutive year. It ranks second for container throughput to Singapore.

The removal of sales tax on shipping agencies registered in Shanghai is on the cards along with faster delivery of export tax rebates for all domestic shipments using Shanghai's Yangshan port as a transit site.

A range of enticements and infrastructure-building plans are also expected to lure Yangtze Delta cargo owners - currently contributing the majority of tonnage to the Yangshan port's turnover - to use more waterways instead of expensive, congestion-causing road transportation.

"To move domestic shipments to the Yangshan port before transferring them onto international liners, cargo owners have to pay a lot of extra bucks in loading and unloading costs incurred on trucks and barges required," Liu Wei, a professor at Shanghai Maritime University, said. "The new measures would help reduce these fees by providing more convenient and cheaper inner waterway thoroughfares to Yangshan."

ANALYSIS-Dry bulk shippers hope China will lead revival

CHICAGO, May 22 (Reuters) - WOW, what a ride!

Just a year ago, on May 20, 2008, the Baltic Exchange's dry sea freight index <.BADI> -- which tracks prices to ship commodities such as iron ore, coal, grains and cement -- hit an all-time high of 11,793 points, driven by a seemingly insatiable hunger for raw materials among developing nations, especially China.

Halcyon days for the dry bulk companies that haul these raw materials by ship.

But by Dec. 5, that same index had fallen 94 percent to 663 points, with much of that decline coming after the Lehman Brothers Holdings Inc collapse. In the credit vacuum that ensued, trade finance froze up, leaving goods unable to move.

The dry freight index has rebounded quite some way, quadrupling to 2,707 points driven -- once again -- by strong demand from China and a loosening of the credit market.

"It has been quite a roller coaster ride," said John Wobensmith. Chief Financial Officer of dry bulk shipper Genco Shipping & Trading Ltd .

But the resurgence of the Baltic index raises a number of questions for dry bulk shippers: Have we hit the bottom? Is China's renewed appetite for raw materials -- primarily coal and iron ore -- sustainable or is it a flash in the pan? And what about all the ships that were ordered amid the euphoria of the boom before the bust came?

Dry bulk industry executives say there are signs the pace of the decline has slowed and the worst may be over, both for bulk shippers and the global economy.

"Overall, when it comes to demand we're bumping along the bottom," said Seanergy Maritime Holdings Corp Chief Executive Dale Ploughman. "The underlying fundamentals in developing countries haven't changed much and we're starting to see a little normality coming back thanks in part to government stimulus packages.

"A lot of Western countries have used up their inventories and are tentatively replacing them. We should see factories start to come slowly, slowly back online."

CHINA THE DRIVER

Ploughman and other dry bulk executives point to China as a key factor in the stabilization of the market. Thanks to the Chinese government's infrastructure-heavy $586 billion stimulus package, China has regained an appetite for raw materials after a brief hiatus at the end of the fourth quarter.

"China had a bit if a hiccup there," Genco's Wobensmith said. "But it's coming back and leading the world right now."

Iron ore imports -- needed to produce steel roads, railways, bridges and buildings -- have hit record levels for the past three consecutive months and coal imports hit a record in April. Industry executives say the full effect of Chinese government spending has yet to be felt.

"I think there's somewhat of a time lag when it comes to the stimulus package," Wobensmith said. "I think we'll see more of an impact from the stimulus in the third and fourth quarter."

Joseph Royce, CEO of bulk shipper TBS International Ltd , agreed: "The Chinese recovery is here to stay."

But analysts are more divided.

In a note for clients, Credit Suisse analyst H Bin Toh wrote: "Our chief economist has warned that China's economic recovery appears to have slowed ... With China iron ore inventory increasing, any steel demand weakening could mean less imports ahead," which would hit the Baltic index.

Chinese iron ore inventories stand at 70 million tonnes.

But Omar Nokta, an analyst at Dahlman Rose, did not think Chinese iron ore inventory levels were too high.

"We are growing more positive on the outlook for the dry bulk shipping market," Nokta wrote in a recent note.

In the same note, he upgraded a number of dry bulk shippers to "buy," including Genco, DryShips Inc , Paragon Shipping Inc and Safe Bulkers Inc .

ARMADA OF NEW SHIPS

The other issue is what impact a impending glut of new ships will have. If that glut ever materializes, that is.

At the heady top of the boom, daily charter rates for Capesize vessels -- the largest dry bulk ships -- reached $230,000. All of a sudden, everyone wanted a piece of the action and lined up to order new ships. That pushed the price tag for a new Capesize to $150 million and shipyard order books had a three-year backlog.

In the crash that ensued, Capesize prices plunged to $50 million and the daily charter rate dropped to a measly $3,000. Charter rates have since recovered to around $35,000.

Some 300 or more ship orders have been canceled -- hard numbers are difficult to come because many deals were agreed between privately-held companies -- but many ships are still officially due for delivery over the next two years, leaving some shippers worried about a glut.

"We don't know how many ships are going to hit the water," Seanergy's Ploughman said. "But I am concerned about the impact this is going to have on the supply side."

But Felipe Menendez, CEO of shipper Ultrapetrol Bahamas Ltd welcomes the possibility of a surfeit of ships.

"We expect that dry bulk ships will be substantially underpriced in the next couple of years," he said. "The opportunities for us from this are going to be tremendous."

But TBS' CEO Royce believes a lot of shippers have arranged to delay delivery of new ships, meaning that, if global demand really does comes make a comeback next year, a lack of available ships would push charter rates up.

"That could play in our favor in 2010," he added.

China says to encourage shipbuilders to list shares

SHANGHAI, June 5 (Reuters) - China will support plans by qualified shipbuilders to list their shares and issue bonds, as part of an aid plan for the shipbuilding industry, the China Association of National Shipbuilding Industry said on its website (www.cansi.org.cn).

Earlier this year, China's cabinet encouraged banks to step up trade finance for exports of ships. Beijing also encouraged domestic shippers to purchase vessels ordered by overseas buyers who later cancelled their orders, the association cited the Ministry of Industry and Information Technology as saying.

China's shipbuilding industry has taken a heavy blow from the global economic downturn due to shrinking orders.

In the first four months of the year, key shipbuilders were forced to cancel orders of 28 vessels with 1.15 million dead weight tonnes, up 12 vessels and 250,000 dead weight tonnes in the first three months, the association said.

China plans to expand its share in the global shipbuilding industry to at least 35 percent in 2011, and to occupy a 10 percent share in the marine equipment market, it also said.

China's largest shipbuilders include Guangzhou Shipyard and China State Shipbuilding Co .

China shipyards' Jan-May new orders fall sharply

SHANGHAI, June 23 (Reuters) - New orders received by China's shipyards in the first five months of the year fell 96 percent from a year earlier to 1.18 million dead weight tonnes (DWT), the Ministry of Industry and Information Technology on Tuesday.

New orders in May stood at 190,000 DWT, bringing the total orders held at shipyards as of end-May to 192.28 million DWT, down 6 percent this year, the paper said.

But the shipyards' output in the first five months of the year rose 61 percent from the year-ago period to 12.16 million DWT.

Beijing has announced plans to encourage qualified shipbuilders to list their shares and issue bonds, and has asked banks to step up trade finance for exports of ships, to aid the industry, which has taken a heavy blow from the global economic downturn.

China's largest shipbuilders include Guangzhou Shipyard and China State Shipbuilding Co .

China's ships idled but Shanghai port charges ahead
27 June 2009
Agence France Presse

The scene where Shanghai's river meets the sea is a snapshot of China's battle against the financial crisis -- as well as the site of the port the country hopes can set the stage for the next boom.

Empty container ships -- victims of China's export collapse -- line the river banks in Shanghai's port.

Meanwhile, bulk carriers laden with raw materials -- a bet on demand rebounding -- wait at sea because ports cannot unload them fast enough.

"Just look at the Huangpu River," a shipping company dispatcher said, referring to the waterway that cuts through Shanghai. "There used to be a few ships anchored on the river but now you can see anchored ships everywhere."

"Charter rates are so low now we would rather anchor the ships and save the cost of crew and fuel," the dispatcher for state-run Shanghai Puhai Shipping Co. said on condition of anonymity because he was not allowed to speak to reporters.

World shipping prices in the past week were down about 68 percent from a historic peak in May last year, according to the Baltic Exchange Dry Index, which gauges international dry bulk good shipping prices.

Low shipping rates combined with weak commodity prices sparked a Chinese buying spree of iron ore and other commodities that has led to jams of bulk carrier traffic at Chinese ports.

But that has not offset volume lost due to seven straight months of plummeting exports, which were down 26.4 percent year-on-year in May.

The volume handled at Shanghai's port was down 15 percent in the first five months of 2009 after nearly a decade of 20 percent annual growth, Shanghai International Port Group Vice President Huang Xin said this past week.

"This is the first time Shanghai's shipping container business declined since it went into full-scale operation (20 years ago), it shows how deeply the financial crisis has affected the real economy," Huang told a maritime conference in Shanghai.

Chinese shipbuilders fared even worse, with orders plunging 96 percent to 1.18 million deadweight tons in the first five months of the year compared to the same period last year, according to government figures.

"This will be the worst year ever for the container port industry in terms of volume decline," Truong Bui, a consultant at Drewery Maritime Services said. "China's container traffic will not recover until 2011."

Despite the plunge in shipping demand, Shanghai -- already the world's busiest port by total cargo volume -- is charging ahead with plans initiated during boom times to more than double its capacity.

China's cabinet set ambitions for Shanghai even higher in April, declaring it would move up the value chain and become a full-service world-class shipping centre by 2020.

But building the infrastructure will be easier than developing the service side of that equation, Xu Jianqun, Shanghai's Construction and Transport Commission Secretary General, warned.

"We lack the related 'software' in terms of ship financing, reinsurance for ships and arbitration," Xu told the same conference. "This leaves Shanghai lagging behind other developed port cities in the world."

The centrepiece of its expansion will be the Yangshan Deepwater Port, which connects to the mainland via a 32.5-kilometre (20-mile) bridge.

Shanghai also plans to build the world's biggest shipbuilding yard on its northern Changxing island and put in place rail lines to better link the port to industrial powerhouse regions, Xu said.

On the services side, the Bank of Communications, part-owned by HSBC and China's fifth-largest bank, announced last month plans to create a ship financing division.

Some argue the need for the extra capacity is debatable but Torben Skaanild, chief executive of the Baltic and International Maritime Council, said Shanghai's moves come as the shipping industry faces a historic shift.

"The timing is probably absolutely perfect. There has been a shift in ship-owning towards the East and Asia," Skaanild said. "But there will be stiff competition because Hong Kong, Singapore, Japan and Korea are not going to let Shanghai stand alone."

Shipbuilder Rongsheng says '09 profit to double

SHANGHAI, July 10 (Reuters) - Jiangsu Rongsheng Heavy Industries Co, China's biggest privately-owned shipbuilder, expects revenue and profit to double this year from last year, its president Chen Qiang said on Friday.

Chen did not provide sales and profit figures for last year and would not comment on the progress of the shipbuilder's listing plans.

Rongsheng, backed by foreign funds including Goldman Sachs and U.S. fund D.E. Shaw, is seeking to tap capital markets via an initial public offering of up to $2 billion to fund growth and compete with bigger state-owned rivals including Guangzhou Shipyard International Co .

But investors have turned cautious about the sector as the global shipbuilding industry has been dealt a heavy blow by the economic downturn, whith orders shrinking.

China's new shipbuilding orders shrank 96 percent in the first five months this year to 1.18 million deadweight tonnes (dwt) from the same period last year, statistics from the Ministry of Industries and Information Technology showed.

Chen said he expected demand for new oil tankers to pick up.

"The oil tanker sector is likely to be the first to recover because crude prices have risen and that should boost demand for tankers," Chen told Reuters in an interview after the company signed a $484 million contract to build four ships for Oman Shipping Co.

But it could take another two years for the market for container ships to see any improvement, he said.

Rival Guangzhou Shipyard posted a near 50 percent drop in first-quarter net profit this year and called off a proposed $445 million acquisition of a shipyard from its state-owned parent in March as its share price had slumped.

Beijing has announced plans to encourage qualified shipbuilders to list shares and issue bonds and has asked banks to step up trade financing for exports of ships to bolster the industry.

First direct Zhejiang-Taiwan sea route opens
Xinhua News Agency
10 July 2009

YUHUAN, ZHEJIANG -- The Taiwanese "Ocean LaLa" passenger liner left Damaiyu Port in east China's Zhejiang province July 7 morning- bound for Taiwan. With 318 passengers onboard, the voyage signaled the opening of a direct passenger sea route between Zhejiang and Taiwan.

Jin Qifa, a citizen of Taizhou, says he took the trip because he is planning to meet his uncle's family in Taipei.

"They(his uncle's family in Taiwan) used to fly from Hong Kong to Shanghai or Wenzhou, and we had to go to Shanghai to pick them up sometimes, which was very inconvenient. But now, with the opening of the direct sea service across the Taiwan Straits, it's much more convenient."

Taizhou boasts unique geographic advantages as it is close to the Yangtze River Delta and the Straits Economic Circle. It also has a well-developed light industry that could complement Taiwan's economy.

Damaiyu is the province's closest deep-water port to Taiwan, only 163 miles from Keelung Port and Su-ao Port in south of the island. Cargo service between the two sides launched June 16.

As for the tourists... they are scheduled to return to the mainland next Tuesday.

Shanghai unveils hub ambitions
1 July 2009
Lloyd's List

SHANGHAI authorities are working on a slew of measures to promote the city as maritime hub, including tax concessions for shipping and logistics operators.

Xu Jian Qun, secretary-general of the Shanghai municipal government development and communications commission, said a special committee had been established to speed up the development of the city as a shipping hub.

A consultation project is under way for 59 proposed expansion measures for the Shanghai shipping hub project.

“Management of many large logistics and shipping companies have joined the committee,” he said.

The timeline for implementation remains unclear as consultation of the measures was still ongoing. A spokeswoman of Shanghai government’s transportation division told Lloyd’s List that preparatory tasks of all the measures would be started this year, with tax concessions taking a priority.

In March, the state council granted approval for Shanghai to develop as an international shipping hub by 2020. To complement the long-term blueprint, the Shanghai transportation bureau has laid down 59 relevant measures for the plan.

Industry sources noted Shanghai is keen to try and replicate Singapore’s success in promoting itself as a maritime hub. Singapore has built its maritime centre ambitions on a package of tax and other incentives to attract companies to set up regional headquarters in the city state.

One of the main focuses of the measures is to develop the port of Yangshan as an international transhipment hub. The bureau is working on the details of offering tax exemption for logistic operators and international liners at the port. “The measures cover seven areas and include a port tax refund, income tax exemptions for shipping insurance companies and share floating of shipping companies,” said China Maritime Shanghai director Wu Minghua.

Mr Wu said details of the measures would not be released soon. “Since the measures involve many departments, it takes time for the bureau to co-ordinate.”

The 13 measures related to shipping financing have been placed under the international financial centre project for Shanghai.

China ports offer free storage amid crisis: report
17 June 2009
Agence France Presse

Shanghai International Port Co., China's largest port operator by volume, has been shoring up its crisis-hit business by offering carriers virtually free container storage, a report said Wednesday.

The state-controlled firm began the offer in November to its larger clients, who must pay only a deeply discounted handling fee, an official at the port operator told Dow Jones Newswires on condition of anonymity.

The programme enables shipping companies to safely store their containers, which have been idled as the global economic downturn has battered demand for exports.

It also allows the Shanghai-listed company to inflate its throughput volume -- which measures container volume handled not cargo loaded and unloaded -- and build goodwill with ailing clients, the report said.

The programme comes as China is pushing a plan for Shanghai to overtake Singapore as the world's busiest port, the report said.

China's severe drop in exports led to an 11 percent year on year fall in overall container throughput in the first four months of this year, the report said, citing Credit Suisse.

China to boost ship production to 50 mln T in 2011

SHANGHAI, June 10 (Reuters) - China, the world's top ship builder, aims to boost production to 50 million tonnes in 2011, according to a detailed plan aimed at supporting the domestic ship building industry.

The country also plans to expand its share in the global shipbuilding industry to more than 35 percent in 2011, said the plan issued late Tuesday on the government's main website, www.gov.cn.

China's shipping industry, which is gradually taking market share from its Asian neighbours, is facing a difficult time this year as shrinking orders exacerbate overcapacity problems, state media have said.

The country's State Council, or cabinet, has said it encourages financial institutions to expand their credit for purchasers of exported ships, and will extend fiscal and financial support for domestic buyers of long-range ships until 2012.

It said China would also limit construction of new capacity in the industry, force outdated ships to be replaced, encourage production of more advanced ships and promote mergers.

Early this month, China said it would support plans by qualified ship builders to list their shares and issue bonds, as part of an assistance plan.

China's largest shipbuilders include Guangzhou Shipyard and China State Shipbuilding Co.

Shipbuilding industry may see pick-up in orders
23 June 2009
South China Morning Post

The mainland shipbuilding industry, hit by the global financial downturn, may be about to show some tentative signs of recovery.

Some analysts are guardedly optimistic there will be a rebound at shipyards before the end of the year, despite an order book that has remained skimpy over the past five months.

The industry, the world's second-biggest after South Korea's, is likely to receive a boost from a stimulus package announced by Beijing and the improvements seen in some parts of the global economy.

New orders for Chinese shipbuilders fell 96 per cent to 1.18 million deadweight tonnes in the first five months of the year, according to the website of the Ministry of Industry and Information Technology.

Shipbuilders had 192.28 million dwt of orders on hand at the end of last month, 6 per cent less than at the beginning of the year.

"New orders were scanty," said the ministry. New orders fell 95 per cent to 990,000 dwt in the first four months of the year and dropped 94 per cent to 790,000 dwt in the first quarter, it said. Mainland shipyards completed 2.62 million dwt of new ships last month, 17.6 per cent less than in April.

Despite the gloomy figures, some industry experts expected an improvement in the order books.

"We may see some orders for large ships for Chinese shipyards before the end of the year," said Russell Barling, Asia corporate communications manager at Lloyd's Register, the world's No2 ship classification society by order book.

Stimulus measures for the industry announced by Beijing in the past few months and optimism that the global recession might be bottoming out were key reasons for the more optimistic outlook, Mr Barling said.

"There are now inquiries going to Chinese shipyards for larger ships. There haven't been many inquiries for larger ships for a long time, but now we're seeing them within the past month," he added.

The measures include facilitating bank credit for shipbuilding.

Charles de Trenck, an analyst with consultancy Transport Trackers, said the mainland might see a recovery in shipbuilding orders later this year if oil-producing such as Iran placed orders for tankers. But he said there also were risks of a further correction in the industry.

For example, if the Baltic Dry Index, a broad indicator of freight rates, dropped further, there would be few new shipbuilding orders.

Although the market for second-hand ships had rebounded 20 to 30 per cent in the past two months after falling 70 per cent from the peak last year, it had not recovered enough to justify shipowners ordering new ships instead of buying second-hand ones, Mr de Trenck added.

Because ship values had fallen substantially as a result of the global economic crisis, finance providers might ask owners for more security or claim shipowners were in technical default and seize their ships.

Record China soy arrivals cause port congestion

BEIJING/SINGAPORE, July 15 (Reuters) - Record soybean import volumes have caused congestion in some northern Chinese ports with unloading delayed by up to a week, but the situation should ease from August as imports slow down, traders and port officials said on Wednesday.

Shandong province on the east coast saw the worst backlog after a large number of ships arrived at the same time, port officials said.

"Many ships arrived at the same time, and only one cargo can berth while the other three or four ships have to queue at anchor," said a trading executive in Shandong.

He said the problems had arisen at the ports of Qingdao and Rizhao, both in Shandong. "It rarely happens that so many ships all arrive at the same time."

In the near term, unloading times are expected to shorten after an improvement in weather in Shandong.

China, the world's largest soybean importer, imported a record 4.71 million tonnes in June, and July imports are likely to be the second-highest ever, with as many as 80 panamax ships due to be unloaded this month.

"There is congestion at the ports, for soybeans there is a delay of five to seven days to unload ships," said one trading manager with an international trading house in Singapore which supplies soy to China.

"Normally, it takes just one to two days."

There have also been unloading delays of at least one day at Dalian port in northeast China, a local crusher said, but crushers in the southern province of Guangdong said there was no congestion.

The problems in Qingdao and Rizhao have been compounded by the fact that these ports are the biggest for the nation's iron ore shipments, which reached 55.29 million tonnes in June, the second highest ever.

He Zhaoqing, vice general manager with Rizhao Port (Group) Co. Ltd., told Reuters that a slowdown in iron ore cargoes had already led to an improvement in soybean unloading times.

"There was very serious congestion some days ago, but the situation has eased now. We do not have as many iron ore cargoes as in the previous period," said He.

The large number of soy cargo arrivals, coupled with slow sales of finished soymeal and soyoil products, have swelled the inventories of some crushers, prompting buyers to try and delay shipments.

"The situation is quite bad, people are running short of space to store beans, oil and meal," said the Singapore trader.

"Most buyers want to delay shipments but sellers are not willing as they say it causes logistic problems, so the situation in the destination market will worsen."

The Shandong trader said storage space at Shandong ports was also getting tight following sluggish soybean sales to trading companies.

Soybean stocks at Chinese ports were estimated at about 4.1 million tonnes, close to their peak at the end of 2008, according to figures from Shanghai JC Intelligence Co. Ltd, a private consulting firm.

More crushers have scaled down production this month to try to sell their large stockpiles of soymeal and soyoil.

"The bookings for August is much lower at around 2.0 to 2.5 million tonnes because the margins are so bad that no one wants to crush," said another trader with a global trading company in Singapore.

Traders expected soy arrivals in July at 4.4-4.8 million tonnes. (Editing by Ben Tan)

Shanghai International Port Exec:Co Mulls JV With Ningbo Port
16 July 2009

SHANGHAI (Dow Jones)--Shanghai International Port (Group) Co. (600018.SH), mainland China's largest port operator by volume, is considering forming a joint-venture port company with Ningbo Port Co., a senior official at Shanghai International Port told Dow Jones Newswires on Friday.

"The details, including the JV's registered capital, are still being worked out. Under the current framework, each party will hold a 50% stake in the JV," said the official, who declined to be named.

Officials at Ningbo Port weren't immediately available to comment.

As of the end of 2008, Shanghai International Port was the world's second-largest port by container throughput after Singapore, while Ningbo port ranked eighth in terms of container throughput volume.

COSCO unit cancels orders for eight vessels
17 July 2009
Shanghai Daily

A unit of China COSCO Holdings Co has canceled a US$299 million order for eight vessels as the global recession cut the shipping company's profit.

COSCO (Zhoushan) Shipyard Co has canceled the orders for two vessels for Qingdao Ocean Shipping Co and six vessels for COSCO (Hong Kong) Shipping Co Ltd.

Construction of the eight vessels, each 57,000 deadweight tons, has not started.

In addition, the ship maker has delayed the delivery of three vessels to Qingdao Ocean Shipping Co and COSCO (Hong Kong) Shipping Co Ltd. The three vessels, each also 57,000 DWT, were to have been delivered between June and December last year but will now arrive between August and October.

China COSCO Chairman Wei Jiafu said in April the company might delay or cancel new vessels because of the country's slowing demand for iron ore.

"The cancellation and the rescheduling of the orders are inconsistent with the company and shareholder's interests," the company said.

New ship orders in the first five months amounted to 1.18 million DWT, 96 percent less than the same period last year, the Ministry of Industry and Information Technology said.

China COSCO shares shed 1 percent to 15.92 yuan on the Shanghai market yesterday.

OECD working group looks into aid
17 July 2009
Tradewinds

China and South Korea will reveal the full extent of state financing for newbuilding contracts to the OECD's shipbuilding working group (WP6) as it renews its efforts to tackle subsidies and contain building capacity.

In one of the clearest statements since 2005 on tackling state aid, the Paris-based organisation said it would draw up an inventory of government supports in shipbuilding including non-OECD countries.

Chairman Harald Neple told governments to "avoid actions that increase protectionism or distort the shipbuilding market".

In a statement following last week's meeting, the OECD does not identify any country or scheme but an official confirmed that non-direct financial supports through third-party financial institutions or financial guarantees would be included in the study.

Neple adds that there have been few direct subsidies in the recession but most current support measures are intended to "improve liquidity through loans and providing guarantees in order to assist buyers to finance orders".

He said: "Their aim is minimise bankruptcies among enterprises unable to deal with the combined effects of tightening capital and liquidity and a collapsing orderbook." It is understood that OECD members Europe and Japan have been keen to take a closer look at support offered by non-member China. The main concern has been over a liquidity injection to Chinese banks aimed at financing domestic and international shipbuilding contracts.

However, OECD insiders tell TradeWinds that China has been a willing participant in shipbuilding talks and supportive of the organisation's moves and has agreed with the OECD members to offer full transparency of its support measures.

In a similar scheme, South Korea has been approving state-sponsored funding for around 70 ships at its yards, although it is understood that the finance is in line with the understanding on export credit for ships.

The organisations' concerns over subsidies are also linked to a parallel move to prevent over capacity in the industry. The concern among OECD members is that unfair supports could be keeping yards alive, which in a normal market would have gone to the wall.

Neple said: "While some government support was understandable in the circumstances, participants nonetheless recognised that government interventions can have undesirable consequences on markets and measures for assisting industries must be transparent, temporary and WTO consistent to minimise distortion on trade and investment." Neple wants to see members take "concerted action" to avoid overcapacity. However, the OECD spokesperson said that this would fall short of the type of internationally co-ordinated capacity cutbacks that took place in the late 1980s following the last comparable recession.

The organisation is also promising to renew its efforts to come to an international shipbuilding anti-subsidy and pricing agreement. But efforts to reach an agreement have already spanned two decades and agreement is unlikely to be achieved soon.

Ningbo Port to Go Public in Mainland, HK

NINGBO, July 17, SinoCast -- The Ningbo port has applied to the China Securities Regulatory Commission for its listing, firstly in Mainland China and then in Hong Kong, disclosed Li Linghong, president of the port operator Ningbo Port Group.

The listing time depends on the permission, and the port is predicted to go public at the end of 2009 or in the first half of next year, added the president. For the listing, the port operator has set up Ningbo Port Co., Ltd., with China Merchants Holdings International Company Limited (CMHI and SEHK: 0144) as the strategic investor.

Among more than 300 productive berths at the port, one fifth are above-10,000-ton deepwater berths, and mainly engaged in the transportation of such cargos as iron ore, crude oil, and coal. The port also has a large amount of joint-venture assets.

It handled 360 million tons of cargos in 2008, only after the Shanghai port. Notably, it is in talks with the latter about the establishment of a dock joint venture.

Tianjin Port Development Minority Shareholders Approve Buy
16 July 2009

HONG KONG (Dow Jones)--Chinese port operator Tianjin Port Development Holdings Ltd. (3382.HK) said independent shareholders have approved its proposed acquisition of Shanghai-listed Tianjin Port Holdings Co. Ltd. (600717.SH), for HK$10.96 billion.

At an extraordinary general meeting of its minority shareholders Wednesday, six proposals were passed, including the approval of the stake purchase. The acquisition will bring Tianjin Port Development's stake in Tianjin Port Group to 56.8%.

The seventh resolution, a finance services agreement unrelated to the deal, was rejected by independent shareholders.

Cargo Throughput Inches Up in Major Chinese Ports

BEIJING, July 16, SinoCast -- The cargo throughput amounted to 2.64 billion tons in major Chinese ports in the first half of 2009, inching up 0.5 percent year on year, according to the Water Transport Bureau of the Ministry of Transport.

The cargo throughput for foreign trade, however, stepped down 1.3 percent to 950 million tons. In particular, the container handling stood at 52.42 million TEUs, falling 10.9 percent.

The ports dealt with 310 million tons of imported iron ore, rising 21.7 percent from a year earlier, 256 tons of coal, on par with a year earlier, and 84.35 million tons of crude oil, slipping 2.5 percent year on year.

In April alone, large Chinese ports were estimated to reach a cargo throughput of 500 million tons with a drop of 1.9 percent year on year. These ports were predicted to have a container throughput of 9.20 million TEUs, slipping 13.4 percent year on year but remaining the same as that in March.

They were forecast to handle 53.50 million tons of imported iron ore, rising 24.2 percent year on year. Their iron ore storage was predicted to stand around 62 million tons; coal transport throughput at 40 million tons, slipping 7.7 percent from a year earlier; imported crude oil handling at 15.30 million tons, with a rise of 9 percent.

The global financial crisis has pulled down the transportation demand both at home and abroad, and posed huge stress on domestic ports. Rizhao Port Co., Ltd. (SHSE: 600017), based in the eastern Chinese province of Shandong, posted a net profit of CNY 54.7141 million for the first quarter of 2009 in its quarterly financial report, stepping down 4.28 percent from a year earlier.

Operating revenue inched up 0.29 percent year on year to CNY 399.7169 million. Earnings per share (EPS) stood at CNY 0.04. By the end of the quarter, net assets per share had reached CNY 2.18 and return on equity had hi