YANGSHAN PORT

Project Management
Sec -Z Group 1
Chiranjeeb Mohanty U113197
Rakesh A . U113163
Yatin Sawhney U113180
Soveet Gupta U113174
Ashish Roshan Jena U113192
Tanvi Randhar U113178
Agenda
Need for a new port
Project Plan
Construction
Risk Management & Mitigation
Conclusion


Introduction
Worlds busiest container port. Current capacity 33.62 million TEUS. Yangshan Port is a
deepwater port for container ships in Hangzhou Bay south of Shanghai.
Connected to the mainland via the 32.5 km (20.2 mi) Donghai Bridge, opened on 1 December
2005 as the world's longest sea bridge
In mid-2011, port officials said the port was on track to move 12.3 million TEUs during the year,
up from 10.1 million TEUs in 2010
Six Phase Project| Estimated Cost on completion 12 billion$. The fourth phase, expected to open
in 2015, will add 4 million TEUS to the port's annual capacity
It allows berths with depths of up to 15 metres (49 feet) to be built, and can handle today's
largest container ships
Interesting trivia: Shanghai Government submitted the Yangshan Deep Water Port Phase I
Project Proposal to the State Economic Planning Commission, the Shanghai government had to
use a container to store the proposal, which weighed two tons, and was shipped in a Boeing
plane.
Need for a new port
1998 Shanghai Port Authority facing challenges sufficient container handling
Extending and enlarging the terminals along the Yangtze delta was not possible due to
water depth of 7-8 m only.
Focus Shanghais government turn the port into a major Asian container hub.
Decided to
build an entirely new deep water port in the Shanghai region with commencement in 2001.
3 Constraints
Water depth at the Yangtze River estuary and Huangpu River is only 7-8 meters. Because of
this, third and fourth generation container ships can only enter and leave the port at high
tide. Fifth and sixth generation ships need 15 meters to move freely
Huangpu River is not wide enough for large ships. Container ships cannot turn freely within
the port. Large ships need to unload cargo to smaller ships prior to entering the port,
resulting in increased shipping costs.
Shanghai port lacked modern logistics to provide comprehensive services


Agenda
Need for a new Port
Project Plan
Construction
Risk Management & Mitigation



Timeline of events-Plan
Mid 90s-faced with cargo
problems, shanghai port looks
for options
Dec 2008 - Added 7 more
deep-water berths as a part of
third phase
December 2005- phase1 gets
completed and port starts
operation
Phase II construction begins
March 2002- Yangshan Project
Proposal approved by the
State Council after huge
feasibility exercises
December 2006-Phase II gets
completed and phase 3
started
June 26, 2002-phase 1
construction begins
December 2010-Phase IV
completion
Feasibility and approval
Shanghai port had no suitable place in its own
area to meet the demands of such a harbour

Massive feasibility research was conducted by
Shanghai Municipal Government since the mid
1990s

After six years of feasibility studies, the
islands of Xiao Yangshan and Da Yangshan in
the Hangzhou Bay, 27.5 kilometres from
Shanghai's southern coast, and under the
jurisdiction of the neighbouring Province
Zhejiang, was chosen as the site of the
deepwater port of Shanghai
Feasibility and approval
In August 1999, the Shanghai Government
submitted the Yangshan Deep Water Port Phase I
Project Proposal to the State Economic Planning
Commission

About 200 related institute and research center
and 6000 researchers and scientists joined
research, preparation, and design the new site

In March 2002, the Yangshan Project Proposal was
approved by the State Council and the State
Economic Planning Commission, and the project
began construction on June 26, 2002

The NPV of the phase 1 was found out to be USD
29 million with IRR of 17.7%
Project planning
Phase-I plan
In 2002, the Shanghai Government
founded Shanghai Tongsheng
Investment Group (SHTS) to take full
control of the Yangshan Port Phase I
construction.
Yangshan Deep Water Port project
was divided into four separate
components
Yangshan Deep Water Port Zone:-
Xiao yangshan and da Yanshang
Donghai Bridge:- A bridge
connecting Big Yangshan & Little
Yangshan to Luchaogang, the closest
on-shore point in Shanghai
Luchao District:- port city in
Luchaogang with a land area of 1.5
sq. km, with storage area of 720,000
sq. m. and 15 container cranes
Lu-Hu Freeway:- freeway connecting
Luchao and Shanghai, designed to be
43 kilometers in length.




The project was divided into 2
stages and 6 phases.
The initial stage of development
would be in Xiao Yangshan and the
subsequent stage on neighbouring
Da yangshan island




Project SPV
Shanghai Tongsheng Investment Group
(SHTS) owned by 3 state-owned entities:
Shanghai International Investment Group,
Shanghai Port Authority(SIPG) and Shanghai
State-owned Asset Management Company
was announced to be the entity that was in
charge of the construction and operation of
the Yangshan Phase I project.

After the completion of the Phase I Yangshan
Deep-water port, the port will be managed
and operated by the Shanghai Port Container
Co. Ltd

Project SPV
Shanghai shendong international
container co.(SHSG) took charge of the
construction and operation in phase II and
the ownership structure changed

Following was the ownership structure:-


Hutchison Whampoa 32%
AP Moller Maersk 32%
SIPG 16%
COSCO 10%
China Shipping 10%

Financing
Phase I required a investment of RMB 14.31 billion including RMB 7.2
billion for the port area(sea route and auxiliary facilities) and RMB 7.11
billion for the Donghai Bridge.
Five domestic banks, comprising China Construction Bank, State
Development Bank, Bank of China, Industrial and Commercial Bank,
Shanghai Pudong Development Bank, offered a RMB 7.5 billion loan to
SHTS
Rest of the investment came in form of equity from govt. asset supervision
and administration commission, china merchants holding group(CMG),
Shanghai State-owned Asset management company and Shanghai
Dasheng holding group.
A consortium of 10 banks including above mentioned 5 banks signed a
deal to provide a RMB 17 billion credit line for the port construction up to
the year 2020.


Financing
Phase II saw investment of USD 830 million with equity contribution from
Hutchison Whampoa, AP Moller Maersk ,Shanghai international port
group(SIPG) ,COSCO, China Shipping and debt from consortium of 5 banks.

SIPG(currently owns 16%) went public in 2006 to ensure funds for future
expansions

Phase I Phase II Phase III Phase IV Phase V Phase VI Phase VII Total
Completion Time 2005 2006 2008 2010 2020 2020
Total Investment
(billion)
1.25 0.8 11.75 12.2
Accumulated
Annual Capacity
(TEU, million)
2.2 15 20 20
Number of
Berths
5 4 4 3 14 30
Expected Financials from port operation
Number in thousand RMB
2004 A 2005 E 2006 E 2007 E
Revenue ( 000' yuan) 4,043,460 4,763,550 6,271,400 6,730,110
Less Cost of sales 1,792,960 2,301,950 3,077,610 3,489,520
Less revenue adjustment 121,440 142,910 188,140 201,900
Gross profit 2,129,060 2,318,690 3,005,650 3,038,690
Other business profit 125,570 213,870 213,870 213,870
SG&A 335,950 404,900 627,140 572,060
Other Overhead 96,200 235,160 215,280 151,020
Operating Profit 1,822,480 1,892,500 2,377,100 2,529,480
Operating margin 45.07% 39.73% 37.90% 37.58%
Other investment income 47,540 50,000 80,000 80,000
Non operating income 390 30000 50000 50000
Taxable income 1,870,410 1,972,500 2,507,100 2,659,480
Tax -281,720 -295,880 -376,070 -398,920
Minority interest -433,210 -400,000 -583,230 -557,190
Net income 1,155,480 1,276,620 1,547,800 1,703,370
Capital Ex 1,863,680 3,287,130 6,500,000 200,000
Capital Ex % of Revenue 46.09% 69.01% 103.65% 2.97%
Source: HuaTai Securities Co., LTD
Shanghai Port Container Co. Ltd. Income Statement and Projection
Agenda
Need for a new Port
Project Plan
Construction
Risk Management & Mitigation


Construction

Construction-Phase I
Total Investment: RMB 14.3 BN Four
major components:
Port Zone
Donghai Bridge
Lu-Hu Freeway
Luchaogang city
Construction began in 26
th
Jun 2002
and completed in Dec 2005
EPC Contractor China Harbour
Engineering Company Ltd.


Construction-Phase I
The Phase I of port zone
construction includes 5/30 port
berths planned
Total handling capacity of 2-2.5
million TEUs a year out of the
planned capacity of 25 million TEU
Channel depth-15.5 meters
(enough for 5
th
and 6
th
generation
container ships with 8000 TEU
capacity)
It covers an area of 1.44 sq.km with
1600 m quay waterfront
Upon completion of phase-I,
Yangshan wasthe 2
nd
largest
container port in the world in terms
of capacity
Land Reclamation
Need: Yangshan is a tiny group of island with very little plain area near the coast
To accommodate the massive port fresh flat lands were needed adjacent to the islands
This could only be done through land reclammation
To reclaim land over depths of 15m requires 3000 million of cu.m of ocean mud for phase 1
For the 6 phases they will pump 13 bn cu.m of mud
This required massive dredging machines
Yangshan is a tiny group of island with very little plain area near the coast
To accommodate the massive port fresh flat lands were needed
The shorelines of the islands had to be expanded
Land relamation through rocks and ocean mud was the only viable solution
To reclaim land over depths of 15.5m required 3000 million cu.m of ocean mud for
phase 1
For all the phases put together they will pump 13 bn cu.m of mud to expand the
shores of Yangshan
Massive sea dredging machines were employed round the year for this purpose
Cranes
Phase-I uses 13 in nos. (Ship to
shore) STS-40 cranes
These cranes for Yangshan
needed to be 50m high
They had to lift 4 TEUs at one
go
These cranes should
dock/undock at a rate of 50
containers an hour
No such crane existed in the
world at that time.
The cranes were custom
designed and made by zhenhua
heavy industries. The biggest
crane factory in the world
Control room
The port control room acts as a nerve
centre
Control system was developed by the Port
of Shanghai Ltd.
Advanced CCTV systems, communication
systems, wireless network systems which
connects STS-40 cranes, gantry cranes,
trucks with information from the ship and
shipping companies.
This creates a seamless information flow
between port staff on what to move,
when to move and where to move
The control room also monitors logistics
park in Luchaogang city, Donghai bridge
Donghai bridge
Design
Second longest sea bridge in the world - 6
lanes wide and 32 km long
Connects Luchaogang city and Yangshan
port
Strong enough to withstand 6m waves,
typhoons every summer
The donghai is a combination of box girder
bridge made of 600 concrete spans and 2
cable stayed suspension bridges
The suspension bridges had to be high
enough to accommodate the worlds
biggest ships underneath them
The overall bridge design should cater to
the needs of ships travelling with the sea
current
Design of the bridge to these requirements
took 2 years to complete
Construction
6000 foundation piles dug into
20 m of water and 40 m of mud
to reach bed rock within 5mm
accuracy through GPS
The sections above foundation
was pre-fabricated and
transported through barges with
1600 tonne lift capacity
Constructed in 42 months
Luchaogang city
Planned suburb of 311.6
sq.km
Logistics park having a
storage area of 720,000 sq.m
for supporting the port
The suburb also houses
several industries which are
dependent on the port
Lu-Hu Freeway 43 km long
was built to connect
Luchaogang with Shanghai
industrial district
Construction-Phase II
Phase II added another 4 berth on the
north-west side of the island next to
the 5 constructed during phase I
Added 1,400 meters to the length of
the quay and increase annual operation
capacity by 2.1 million TEU
With average waterway depth of 15m,
it enabled the port to accommodate up
to 8,000 TEU container ships
To make accommodations, the north-
west section of the islands coastline
was expanded into the sea via a sea-
fill method, by dumping rocks and
sand into the sea
Phase II
Phase I
Phase III and beyond

In December 2008 7 more berths were
added to take the berth count to 16
2600 quay length added and annual
operation capacity increased to 5.5 million
TEUs
The west Yangshan port area will have 10
to 12 berths of from 50,000 to 100,000
tonnes with a quay length of over four
kilometres.
The project is expected to be completed
by 2020 with 30 berths with capacity of
70,000 to 100,000 tonnes and the
handling capacity to reach 20 million TEU.


Year Container handling volume CAGR
2005 2.2 million TEU
2010 5.5 million TEU 20.1% (2005 to 2010)
2020 13.4 million TEU 9.3% (2010 to 2020)
MM TEU
2004 A 2005 E 2006 E 2007 E
Huangpu River Port 3.83 3.75 3.3 3
Waigaoqiao Port 4.31 5.17 5.44 5.71
Yangshan Deep-water Port Phase I 2.7 3.24
Yangshan Deep-water Port Phase II 2
Shanghai Ports Total 8.14 8.92 11.44 13.95
Source: HuaTai Securities Co., LTD
Schedule Actual
Phase-3 2008 2010
Phase-4 2010 2015
Delay because of slowdown in container
shipments during recession and
overcapacity of chinese ports
Time & Cost Overrun
Only documented cost overrun was in
Donghai Bridge
On completion of the project, it was
reported that the cost shot up by
$350million on account of design
changes
Agenda
Need for a new Port
Project Plan
Construction
Risk Management & Mitigation


Challenges
Land reclamation problem and
engineering challenges to build the
port in deep water
Environmental concerns regarding the
flora and fauna of the 2 islands
Communication facility to the
shanghai port as it is about 27.5
kilometres from the coast
Sufficient storage facility was not
there
support facilities, power plant, water
plant, and living area was a concern
Shipping line could have been blocked
by Donghai bridge
Sea mud was used to build the port
from scratch
They limited the land reclamation to
as minimal as possible and used sea
mud instead of land fill from
reclamation
Donghai bridge was built to take care
of communications
Luchagoang city, the nearest shore
point was developed to take care of
storage
Land area was grown to have the
facilities on site
Navigation hole were made to allow
ships to pass smoothly
Risks Mitigation
Risk Management
Shanghai will establish a comprehensive appraisal system to track,
supervise and collect industrial information in the Free Trade Zone.
Pilot RMB capital account convertibility.
The Customs administration process will be optimized while the
administration of "frontier" (i.e. goods flow between overseas and
the zone) and "second-tier" (i.e. goods flow between the zone and
other domestic areas) will be coordinated by improvement on e-
information network, entry and exit record lists cross check,
accounting books management, physical verification, and risk
analysis. An inspection and quarantine model of "easily import and
export, with strict quality and safety risk control" will be promoted.
The China (Shanghai) Pilot Free Trade Zone will set up a port
supervision institution with integrated functions, and explore the
feasibility of applying an electronic monitoring system and setting
up of effective risk management system.
Risk Management and Mitigation
A three-level port contingency reaction system has been established.
Port safety and security management system improved by coordination
and collaboration with municipal comprehensive safety surveillance
department, waterway traffic safety authority, port-related entities and
public security organs.
Administration enhancement of port handling of dangerous goods and
shipment of dangerous goods on inland waterways, port facility security,
traffic conditions harnessing, passenger transport management and
monitoring of danger in water engineering projects all put a curb on
occurrence of accidents ensuring safety and minimizing risks.
Shanghai Municipal Port administration Bureau regularly conducts
security training, annual audit, entrusted assessment, expert review
and drilling exercise
Risk Management and Mitigation
Since December 2003: 498 persons from the relevant authorities and
foreign-related port enterprises attended the ministerial training of port
facility security and accordingly obtained qualification certificates.
Since January 2004: Qualified security entity conducted assessment of 76
foreign-related terminal enterprises and 85 port facilities as well as
security risk evaluation of the Donghai Grand Bridge located in Yangshan
Port District.
Totally 23 expert meetings were organized to invite more than 350
person/time scholars and experts to check 170 assessment reports of
plans of port facility security.
All foreign-related port facilities underwent annual audit since June 2005
and 64 port facilities got valid certification in 2007.
June 2004:, SMPAB successfully performed the first land/sea/air combined
port facility security drill in China at Shanghai Pudong International
Container Terminal Co., Ltd. (the first-phase project).
Risk Management and Mitigation
November 2005: SMPAB conducted the first ship/port/bridge
security interplay drilling at Shanghai Shengdong International
Container Terminal Co., Ltd. (the first-phase project in Yangshan) .
Furthermore, the Implementing Procedures of Shanghai Port
Facility Security Plan were formulated by taking reference of
advanced security experience both at home and abroad to establish
the regional contingency reaction procedures according to different
security levels and events.
The port administration also initiated the bulletin system for port
facility security and security guards.
October 2007: Ministry of Communications and Shanghai
Municipal Government jointly held the Port Facility Security Drill
Showing Chinese Government Performance of SOLAS Convention
2007 and achieved great success.

Conclusion
Yangshan Port handles staggering 32million containers
a year carrying 736 million tonnes of goods to far-flung
places around the globe.
In the last eight years alone, capacity at the Port of
Shanghai has ballooned from 14million TEUs (a unit
which is roughly the volume of a 20ft-long container) in
2004 to more than 32million last year owing to the
construction of the Yangshan Deepwater Port.
Opening of Yangshan has helped China sustain high
growth rates over the past decade
Shanghai has become the important trade center along
with Hong Kong and Singapore in the region
References
Megastructures Yangshan port by NGC
Case document on Hutchison Whampoa Limited and the
Phase II Shanghai Deep-water Port Project
Yangshan Port revenues Hu-Tai Securities Ltd.
Shanghais Yangshan Deep Water Port: An International
Mega Port in the Making, report by Yang Mu and Lionel Ho
Shanghai Flash Issue No.3 June 2003
Yangshan Island Deep Water Port Project, Shanghai,
China, Jing Xu, Journal of Undergraduate Engineering
Research and Scholarship
Grand power logistics Development Ltd. Information
memorandum