YANGSHAN

YANGSHAN PORT
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.

•  It allows berths with depths of up to 15 metres (49 feet) to be built, and can handle today's
largest container ships

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

• 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 Shanghai’s 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 90’s-faced with cargo December 2006-Phase II gets

June 26, 2002-phase 1 December 2010-Phase IV
problems, shanghai port looks completed and phase 3
construction begins completion
for options started

March 2002- Yangshan Project December 2005- phase1 gets

Proposal approved by the
State Council after huge
feasibility exercises
Dec 2008 - Added 7 more
completed and port starts
deep-water berths as a part of
operation
third phase
Phase II construction begins
 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
1990’s

•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
• 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
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.
 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
1.25 0.8 11.75 12.2
(billion)
Accumulated
Annual Capacity 2.2 15 20 20
(TEU, million)
Number of
5 4 4 3 14 30
Berths
 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 sa les 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 inve stment income 47,540 50,000 80,000 80,000

Non opera ting income 390 30000 50000 50000
Tax able 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

Capita l Ex 1,863,680 3,287,130 6,500,000 200,000

Capita l 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 26th 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 TEU’s a year out of the
planned capacity of 25 million TEU
• Channel depth-15.5 meters
(enough for 5th and 6th 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 2nd largest
container port in the world in terms
of capacity
 Land Reclamation
• 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
• Need: Yangshan is a tiny group of island with very little plain area near the coast
• The shorelines of the islands had to be expanded
•• To accommodate
Land the massive
relamation through port
rocks andfresh flatmud
ocean landswas
were
theneeded adjacent
only viable to the islands
solution
•• This
To could only
reclaim land be done
over through
depths land reclammation
of 15.5m required 3000 million cu.m of ocean mud for
• To reclaim
phase 1 land over depths of 15m requires 3000 million of cu.m of ocean mud for phase 1
•• For
For all
thethe phasesthey
6 phases putwill
together
pump they
13 bnwill
cu.mpump 13 bn cu.m of mud to expand the
of mud
• shores of Yangshan
This required massive dredging machines
• 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 TEU’s 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 Construction
• Second longest sea bridge in the world - 6 • 6000 foundation piles dug into
lanes wide and 32 km long 20 m of water and 40 m of mud
• Connects Luchaogang city and Yangshan to reach bed rock within 5mm
port accuracy through GPS
• Strong enough to withstand 6m waves, • The sections above foundation
typhoons every summer was pre-fabricated and
• The donghai is a combination of box girder transported through barges with
bridge made of 600 concrete spans and 2 1600 tonne lift capacity
cable –stayed suspension bridges • Constructed in 42 months
• 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
 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-
Phase II
west section of the island’s coastline
was expanded into the sea via a “sea- Phase I
fill” method, by dumping rocks and
sand into the sea
 Phase III and beyond Year Container handling volume CAGR
• In December 2008 7 more berths were 2005 2.2 million TEU
2010 5.5 million TEU 20.1% (2005 to 2010)
added to take the berth count to 16 2020 13.4 million TEU 9.3% (2010 to 2020)
• 2600 quay length added and annual
operation capacity increased to 5.5 million Time & Cost Overrun
TEUs
Schedule Actual
• The west Yangshan port area will have 10
to 12 berths of from 50,000 to 100,000 Phase-3 2008 2010
tonnes with a quay length of over four Phase-4 2010 2015
kilometres.
• The project is expected to be completed Delay because of slowdown in container
by 2020 with 30 berths with capacity of shipments during recession and
70,000 to 100,000 tonnes and the overcapacity of chinese ports
handling capacity to reach 20 million TEU.
• Only documented cost overrun was in
MM TEU
2004 A 2005 E 2006 E 2007 E
Donghai Bridge
Huangpu River Port
Waigaoqiao Port
3.83
4.31
3.75
5.17
3.3
5.44
3
5.71
• On completion of the project, it was
Yangshan Deep-water Port Phase I
Yangshan Deep-water Port Phase II
2.7 3.24
2
reported that the cost shot up by
Shanghai Ports Total 8.14 8.92 11.44 13.95 $350million on account of design
Source: HuaTai Securities Co., LTD changes
 Agenda

 Need for a new Port

 Project Plan
 Construction
 Risk Management & Mitigation
 Challenges
Risks Mitigation

•Sea mud was used to build the port

•Land reclamation problem and
from scratch
engineering challenges to build the
•They limited the land reclamation to
port in deep water
as minimal as possible and used sea
•Environmental concerns regarding the
mud instead of land fill from
flora and fauna of the 2 islands
reclamation
•Communication facility to the
•Donghai bridge was built to take care
shanghai port as it is about 27.5
of communications
kilometres from the coast
•Luchagoang city, the nearest shore
•Sufficient storage facility was not
point was developed to take care of
there
storage
•support facilities, power plant, water
•Land area was grown to have the
plant, and living area was a concern
facilities on site
•Shipping line could have been blocked
•Navigation hole were made to allow
by Donghai bridge
ships to pass smoothly
 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.
• Shanghai’s 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