Having a terminal along the world's busiest coast, which handles more than 4 billion tons of throughput a year, is great, isn't it?

That means you have tapped a big, steady, and long-term profit engine in China's blistering economic growth and foreign trade, which are expected to maintain their rapid growth for at least 10 years.

This is particularly true for terminals operated by multinational firms, which have found their businesses in other parts of the world have reached the saturation point and no longer have room to grow.

In fact, the world's leading terminal and port giants are showing their brawn as they wrestle for a foothold along China's 18,000-kilometre coast.

They are trying to grab more terminals, or, at least, more berths.

None want to be left behind as China enters its latest wave of construction, which is sweeping the nation's major ports. Its all part of the country's unprecedented, and searing, trade boom.

Port construction

The world's seventh-largest economy, and third-largest trading power, has experienced a strain in shipping since 2001. That has been due mainly to the exceptionally high increase in both imports and exports, which have witnessed 30-per-cent-plus growth annually.

China's imports and exports last year were worth US$1.15 trillion.

"Most of the current port facilities were built in the 1990s," said Zhang Ji, a professor at Yangzhou University in East China's Jiangsu Province.

"They are fairly old, and apparently cannot sustain the current delivery demands."

Take East China's Xiamen port for instance. About 75 per cent of the shipments must pass through the Dongdu terminal, which was built more than 10 years ago, said Wang Yongjun, director of the Xiamen Port Administration.

"The terminal is just overloaded," he said.

The Xiamen port is the Chinese mainland's seventh-largest port.

To ease the bottleneck, which is denting China's economy, the nation has launched a campaign aimed at expanding port capacity by building new terminals and updating old ones in its three major economic engines the Pearl River Delta, which encompasses Guangzhou and Shenzhen; the Yangtze River Delta, which includes Shanghai and Ningbo; and the Bohai Rim Area, which includes Qingdao, Dalian and Tianjin.

Plans, released by the Ministry of Communications late last year, call for China to double handling capacity at the ports in the three regions to 3.5 billion tons by 2010.

Various cities have expressed their desire to expand capacity at their ports.

Shanghai appears to be leading the way. China's largest port, which handled 380 million tons last year, is pushing for its US$12-billion Yangshan port project. The 20-year project calls for the construction of 33 deep-water berths on Yangshan Island, which sits 27.5 kilometres from the city's southern coast.

The first phase, in which five berths will be constructed this year, will cost 14.31 billion yuan (US$1.75 billion). The berths will be put into use this year or early next. Four more berths will be operational in early 2007.

"The construction (of new terminals in China) is vibrant," Richard Nicholson vice-president of A.P. Moller-Maersk Group's terminal business in China, told China Business Weekly earlier this year.

Maersk is the world's third-largest terminal operator. It has investments in five terminals in the Chinese mainland.

Investment boom

For overseas giants, the marketplace estimated to handle 33 per cent of the total throughput of the world's container terminals by 2008 is considerable.

And the lucrative, stable profit rate of this business that stands at, as Nicholson says, "no less than double-digit," is extraordinarily attractive.

Moreover, local ports' courting foreign investors is motivating the overseas players.

"We welcome foreign investors," said Xiamen's Wang Yongjun. He revealed between 10-14 billion yuan (US$1.3-1.7 billion) will be needed for the city's terminal-construction projects over the next six years.

"To lure more foreign funds, I believe, we should allow them to take majority shares or to set up wholly owned companies," he added.

Actually, these international behemoths embarked on a spending spree, worth billions of US dollars, last year.

Last September, Maersk entered into a 50-50 joint venture with Xiamen Port Co to invest a combined 3 billion yuan (US$363 million) to construct three berths in Xiamen's Songyu District.

The project is to be completed in the fourth quarter of next year.

The company currently operates five terminals in Shenzhen, Dalian, Shanghai, Qingdao and Xiamen on the Chinese mainland.

"We will continue to expand to enter some additional locations," said Nicholson.

He did not identify in which ports Maersk will invest.

There are a few ports in which the company has not established its terminal business, such as North China's Tianjin and East China's Ningbo.

The world's largest terminal giant, Hutchison Whampoa Terminal, also does not want to miss the business opportunities on the Chinese mainland.

The firm signed a contract worth US$150 million with Ningbo Port Group in January to jointly develop a new terminal in the city. Hutchison Whampoa Terminal has 11 terminals in China.

Another Hong Kong company, Orient Overseas (International), launched its foray into the mainland in January, after it agreed to invest US$130 million in Ningbo, the mainland's second-busiest port.

Singapore-based PSA, Hong Kong-based Orient Overseas (International) and British company P&O Nedlloyd, along with Tianjin Port Group, reportedly will invest US$200 million to build, manage and operate a new terminal complex in Tianjin, the mainland's fourth-largest port.

"Overseas players' spending sprees show no signs of abating in the coming years," said Zhang Ji, who has observed the market for years.

"Considering China's trade growth, it is just beginning."

(China Daily 03/21/2005 page8)