¡¡¡¡Background Material

¡¡¡¡Chen Xuyuan, President of Shanghai International Port Group Co. Ltd., recently announced an adjusted performance forecast for Shanghai Port in 2008, raising cargo throughput by 1.3% and container throughput by 15.38%. The ratio of container transit has been raised from 34% to 37%, with international transit up to 6% from 5.8%. Of all the changes, Shanghai Port has placed a higher requirement on the volume of container transit, particularly international transit.

¡¡¡¡Generally speaking, a port's international transit refers to the quantity of cargo transferred for trade between two other countries or areas. It is a crucial measure to mark a port's status in international shipping, and also one of the main indicators to decide whether a port can really become a central base or hub in the international shipping market.
¡¡¡¡To become an international shipping centre, Shanghai Port has already worked hard to raise its international container transit ratio to 6%. Finding ways to level up this indicator has been a problem vexing Shanghai Port for years.
¡¡¡¡At this moment, Shanghai Port's low transit volume is attributed to two factors: objectively, Shanghai Port is neither located in nor close to the world's three major trunk routes, which has made it much less necessary, indeed feasible, for neighbouring countries and regions to have their foreign trade goods transferred here; subjectively, the existing policy environment in Shanghai falls far short of those in Hong Kong or Singapore, and the logistics, customs clearance as well as integrated services are still not appealing enough to for international transit goods.

¡¡¡¡With the reasons clarified, the right solutions are now just around the corner.

¡¡¡¡Since the geographical location of Shanghai Port cannot be changed, within the port itself we are seeking improvements in hardware facilities and our working environment, as well as pursuing collection and distribution possibilities. For instance, to further build the port to be larger, more specialised and have greater water depths, increase the number of trunk routes and liner density, and develop supporting transit services mainly for the westbound routes covering the European Mediterranean, the eastern United States, the Middle East, the Australia and New Zealand, Southeast Asia. The port is also seeking to reduce charge rates as much as possible, in order to establish a perceived competitive advantage compared with foreign ports.
¡¡¡¡There is also an urgent and pressing need for a new kind of policy and regulation strateg towards Shanghai Port, in particular for Yangshan Port or portside new city, so as to upgrade the soft power based on integrated services. For now, a move worth considering is to upgrade relevant policies on Yangshan Bonded Port.
¡¡¡¡From the Game theory, the strategic readjustment of Shanghai Port may pose some challenges to the neighbouring ports, meaning ports in East China will face new competition in international transit. However, those medium and small-sized feeder ports serving Shanghai Port will be rewarded with good opportunities, because more transit containers will be collected by them on the way heading for Shanghai Port, automatically increasing their container handling capacity.