Fifth Symposium(Presentation of Qingdao:Qingdao Port (Group) Co.,Ltd

Construct International Shipping Center by Seizing Port Development Trend
By Chang Dechuan
Chairman & President , Qingdao Port (Group) Co.,Ltd

Ladies and Gentlemen:

On this golden October, we are greatly pleased to welcome our distinguished friends and colleagues from the INAP member ports are honored to the host of INAP 2003. We have been looking forward to this reunion for a long time. October is a harvesting season for Northern China, and we are getting in our harvest, and our friendship, which has been developed through long-time exchange and cooperation. On this pleasant occasion, I, on behalf of all the staff member of Qingdao Port , would like to extend our warmest welcome and sincerest greeting to you. Peace, Development and Win-win Policy, the theme of today’s symposium has provided us a broad field of exchange and communication. Today, I would talk about the brainchild of future development of Qingdao Port, which has been nurtured with full observation of global shipping trends.


The First part: The international port development trends
The development of world port can largely divide into three generations. For the first generation, ports had a simple function of cargo distribution and discharging and loading. For the second generation, ports incorporated value-added industrial and business activities, then port became a center of stevedoring and correlated services. Since 1980’s along with the globalization of world economy and the revolution of container transportation, some ports, which are located on international trunk lines have come to become global trade and distribution center, as well as comprehensive center. Those are ports of the third generation, which can provide value-added services of information exchange, integrated logistics and etc..

Historically, one port does not always have the same international function, and different period has different international shipping center. International shipping centers always shift and vary along with local and global economy and port functions. The earliest international shipping centers, take Port of London for example, give priority to trade of large volume and shipping services, which is characterized as trade type. This type of shipping center was gradually edged out by hinterland-oriented ports, like Port of Rotterdam and Port of New York. Those hinterland-oriented shipping center made the distribution service of hinterland cargo as its main service. In accordance with the integration of world economy and the upgrow of Asian economy, there comes the third generation of shipping center, which is highlighted by international of container, like Hong Kong and Singapore. The formation of this new generation of shipping center has brought about new changes on division of labor and layout of world business ports. New shipping centers are taking shape, and those centers are based on large container transshipment ports and supported by surrounding feeder ports.

The international shipping centers on Mainland China is under the stage of nurturing. In 2002, Port of Shanghai handled 8.61 million TEU, ranking the 4th among world container ports, Port of Shenzhen handled 7.61 million TEU, the 6th place in the world, and Port of Qingdao 3.41 million TEU, the 14th in the world. They are the shipping centers of the central China, southern China and north China respectively. Qinddao is one of the largest container hub ports in the Northeast Asian area, only second to Pusan. After entry to WTO, China gradually becomes the largest and the most potential market of the globe, as well as the largest world factory of production. Its GDP of 2002 exceeded 120 million US dollars, the sixth in the world. By the end of august, its import & export value has reached 522,272 billion US dollars, an increase of 36% . The fast developing economy of China will no doubt have great impact on the formation and development Mainland international shipping centers.

The second part; The necessary conditions of a shipping center

The global shipping trend has showed that a shipping center must possess the following six conditions:
First,excellent superstructure and infrastructure, including over 14-meter-deep berths and access channel, which can accommodate the 4th generation container vessel and upwards.
Second,strategic location. The port shall be on international trunk lines, and enjoy good distribution facility.

Third, developed hinterland, which can provide plenty of cargo flow,especially containerized cargo.
Fourth, size throughput of cargo, of which container volume should be above 5 million TEU.
Fifth, comparatively dense liner services, to a certain scale.
Sixth, sound management and service efficiency, especially fast and efficient customs service.


The third part: The advantages of Qingdao in its construction of international shipping center

Container throughput is a general used standard to see if a port is an international shipping center. In the past dozen years, we have speeded up our construction of international shipping center and developed eight advantages in conformity with the world shipping trend.
Strategic location. Port of Qingdao is situated on the Bohai economic belt, one of the three big Mainland economic belts, and its hinterland is highly developed. The port enjoys convenient sea transportation since it is on the Asia-Europe, Asia-America, and Asia-Australia trunk lines. It is the largest gateway of Yellow River basin, and one of most important hub port of the west Pacific Rim.
First –class port facility. Qingdao is a rare natural port in the world. By applying advanced shipping technology, we have nurtured five core cargo types, that is container, coal, crude oil, ore, and grain. Sophisticated superstructure and infrastructure has made Qingwan Port Area one of the most advanced container terminal in the world. Eight deeowater berths has been set up, and the alongside water depth ranges from 14.5 m to 17.5m. Those berths are facilitated with a CY of 2.25 million square meters and 24 ship-to-shore cranes. Three of those cranes are the largest of its type in the world, with a lifting capacity of 70 tons and an outreach of 70 meters, which can accommodated SX vessels of 10,000 TEU. Phase III of Qianwan Project has the longest alongside quay length (2,400 meters), the deepest berth (17.5 meters), the most advanced ship-to shore cranes(70 tons / 70 meters), and the largest backup area(1500 meter wide).
Dense liner services. The ‘ Westward migration ‘ implemented in 2002 has gained understanding and support from shippers, ship owners and shipping operaters. Within 231 days and in four phases, we have transferred all the shipping network from the old port area to the new port area, including more than 50 international main lines, over 40 shipping operators, a dozen container depots, and numerous shippers and forwarders. During the migration, no shipping company leave the port, and no service is cancelled. On the contrary, another 30 new service has been launched and now all the top 20 ocean carriers have services in Qinwan new port. This is the most successful transfer between old port and new port in the shipping community. Up to now, the port has 80 international container services, and more than 350 calls per month. Famous shipping companies, like ZIM, COSCO,APL, etc., make Qingdao as their international transshipment base. Up to now, we have handled more than 200,000 TEU international transshipment boxes. The daily throughput of the new port is well above 10,000 TEU, and last month, there are four days with a daily throughout above 15,000 TEU. September 30 th witnessed a record daily throughput of 16,630 TEU.
World-class handling service. The international practice allows a 4000 TEU vessel to be finished within 24-36 hours after berthing. This year we have put forward a brand service, ‘ 10-hour-catchment service’, that is , all the container vessels, no matter how many boxes should be handled, will be finished within 10 hours after berthing. April 27,2003 saw a record handling of container service. The record is 339boxes per vessel/hour, 70.3 boxes per crane/hour, and 2117 boxes handled on one single vessel. On September 30th , in the operation of MSC Alessia, a 6,750 TEU container vessel, 2733 boxes was handled within 7 hour and 10 minutes, 381 boxes per vessel/hour. Another breakthrough of world record.
Scale advantage for developing international shipping center. The total throughput of Qingdao is increasing at a rate of around 15% , and in the past two years it increased by two million tons consecutively, and reached 122 million tons last year. Container increased 30% year on year, and reached 3.41 million TEU. The foreign trade volume of the port ranks the second Mainland China, and it is the largest important port for iron ore and crude oil. By September 20th this year, the port has handled 100 million tons of cargo, and 3 million TEU of container, an increase of 14% and 26% respectively. We expect a total throughput of 140 million tons, and 4.2 million TEU this year.
Convenient transportation network. The port of Qingdao is gifted with transportaiton
Modes of railway, expressway, water and pipe. It has trade connection with over 450 ports in 130 countries. Intermodal transportation service through railway has been developed between Qingdao and a dozen of key inland cities, and inland customs clearance is realized. Every month there are 68 Intermodal railway services. And three expressways connect our terminal with the northern China highway network.
Advanced IT facility. Modern information network is a key support of international shipping center. The Qingdao port information center is the largest and most advanced among Mainland ports. The port EDI center has connected with all the major shipping companies, domestic and international ports, customs, forwarders, shippers, and thousands of electronic messages and data are exchanged automatically between them every day. The container operation management system and video supervision system can provide supervision of the whole process from entry, stacking stowage, and loading. And real-time information of cargo is reachable. The IT network has laid solid foundation for the construction of international shipping center.
Powerful cooperator. The Port of Qingdao has established cooperation relationship with more than 20 famous shipping operators and shippers. On July 21st , we signed the joint venture contract for the operation of Qianwan container terminal with Mearsk, the largest ocean carrier, P&O, the second ocean carrier and COSCO, the seventh carrier in the world and the largest in China. The signature took place in the Great Hall of People in Beijing, with the observation of Chinese Premier Wen Jianbao, and British Premier Tony Blair. These cooperation has not only provided financial, technical and management support for the port, but contributed to the construction of international shipping center.


The fourth part: Ideas for future development

From now on, we will develop ‘ three centers ‘ , star up ‘ eight projects’ , set up the free trade port, and construct the international shipping center.

First is to realize a fundamental change of port service function by developing ‘ three centres’ Advanced information network, developed logistics system and influx of international capital are important features of international shipping centers. Port of Qingdao will make full use of its existing advantages, and develop first-class IT center, logistics center and finance center, which are indispensable to ports of the third generation.
Construct a world-class IT center with the aim of building a digital port. All international shipping centers are equipped with advanced information technology. In the future development, the port will speed up its construction of network and database, set up a world-class information exchange platform , and connect more shippers, forwards, shipping operators and world ports. Drive the port development with information technology, and build up the digital port.
Construct a world-class logistic center by taking hold of the developing trend of modern logistics. Port of Qingdao has been appointed as a key contact enterprise of modern logistics development by the state. We will give full play to the unique location, core competitiveness and transportation network, provide more convenient and developed distribution service, information service, customs service and comprehensive service, and construct the most efficient logistic center of Northeast Asia.
Develop a world-class finance center and construct a port of nations. Along with China’s entry to WTO, port has become a hot spot of international investment. We will continue to expand the opening-up, and build up the port of nations by entering cooperation with all major ocean carriers and shippers.
Second is to uplift the competitiveness by constructing ‘’ eight projects’’ and developing ten port –related industries.
Facing up to the future, we will further enforce the five key cargo types by starting eight new projects, like the extension of the container terminal for 10,000 TEU vessels, a 300,000-ton crude oil facilitiy, and so on. These eight projects will add another 100 million capacity to the existing 100 million. At the same time, we will put forward ten port-related industries, such as port machinery manufacture, international tourism, and cargo forwarder, shipping agency, etc., in order to realize the leap-forward development of the port.
Third is to set up a free trade port, and enhance the situation for constructing international shippong center.
The development history of international port has showed that the formation of an international shipping center needs supporting conditions like preferential policies and legal conditions, as well as facilities like good access channels and water depth. Among there supporting conditions, free trade policy is commonly adopted by international shipping centers. Now, China is already a member country of WTO, and the China-ASEAB free trade zone is under construction. Qingdao Bonded Area, the only bonded area of the Yellow River Basin, is a special trade zone set up in accordance with international free trade zone. Taking advantage of this bonded area, we will push on the change to free trade port, expand international transshipment, and speed up the construction of international shipping center. We expect a throughput of 150 million tons and 5 million TEU for next year, 160 million tons and 7 million TEU for the year 2005. By 2010, the total throughput will exceed 200 million, and container will exceed 10 million.

Ladies and gentleman, Peace, Development and Win-win Policy is the theme of this symposium.Port of Qingdao will further enhance cooperation with all the INAP members and gain the win-win development.

I wish a great success for INAP, and I wish every INAP representatives a pleasant stay here in Qingdao.

Thank you for your attention!