Taicang Port Set to Compete for Shipping Traffic in China

When supply chain executives active in China's Yangtze River Delta think of port options, Shanghai's Waigaoqiao and Yangshan are often among the first to come to mind. However, as manufacturing locations migrate toward lower cost centres further inland such as Suzhou, Wuxi and Changzhou decision-makers are finding another deep-water shipping available in the city of Taicang in southern Jiangsu province.

The Jiangsu port has recently expanded in order to keep up with the province's rapid economic growth, particularly in goods being exported. By shipping out of Taicang, manufacturers in nearby cities like Suzhou and Wuxi that have lead that development can save time and money over going through Shanghai.

In spite of the region's successes, however, Taicang currently lags far behind the competing ports at Waigaoqiao and Yangshan in terms of both shipping routes and volume. However, between the port's plan for further improvement and the continuing growth of manufacturing in the cities of Suzhou, Wuxi and Changzhou business increasingly interested in expanding beyond Shanghai area though, Taicang port is preparing to more convenient, lower cost alternative for companies shipping regionally, and even internationally from the Yangtze River Delta.

Manufacturing Shift Creating New Opportunities

The potential for Taicang's emergence as a major port comes as cities up the Yangtze River expand their manufacturing bases. GDP in Jiangsu province reached RMB 3.4 trillion in 2009, four times its level ten years earlier, with the southern cities of Suzhou, Wuxi, and Changzhou contributing nearly 1.6 trillion renminbi.

Of the province's output, more than 25 percent was exported, creating a sizable demand for shipping services. Goods being sent by surface freight to places like the U.S. or Europe have traditionally left the country by major coastal hubs like Shanghai, which regularly ranks within the top five international ports by container volume.

Shanghai's reputation was strengthened in 2005, when the city opened Yangshan Port on reclaimed land 30 kilometres off the city's coast. The $16 billion project, which officially opened in December 2005, increased the maximum depth more than 50 percent to 15 metres, a necessity to handle the newer ships used to transport containers internationally.

Taicang Port Takes Advantage of Its YRD Location

Further up the Yangtze River in neighboring Jiangsu province, the Taicang government has been quietly improving its own port. In operation for more than 20 years, the port recently underwent an expansion that doubled its number of container berths to 12, all with maximum depths of 12.5 metres.

Taicang has not traditionally been know for its container services, but rather as a major port for petroleum, with companies such as Exxon, BP, and Sinochem having facilities in the Taicang Port Development Zone.

Over the last decade however, Taicang has expanded its containerized freight operations, handling a volume of 1.45 million twenty-foot equivalent units (TEU – a standard measure for container sizes) in 2008.

According to Russel Beron, a consultant on the shipping industry, the port's added capacity is part of a larger plan to build the city's prominence.

“Taicang is very hungry to attract the shipping industry,” Beron said. “They expect to move 2.5 million TEU this year and to double that by the end of 2011.”

Beron also said Taicang is working to open new routes to U.S. cities like Los Angeles, increasing the options for companies in the Yangtze River Delta (YRD) looking to develop their supply chains.

Growing with Jiangsu

Taicang seems to be in a particularly good place to gain because of its position in the southern part of Jiangsu, 50 kilometres north of Shanghai, offering companies a deep water port that doesn't require navigating the first-tier city's traffic.

Indeed, Yan Lu, a representative of the Taicang Port Development Zone, attributes much of the city's success to its placement amid burgeoning neighbors.

“For us, the biggest advantage is the connection between Taicang Port and the Suzhou-Wuxi area,” Lu said. “Most of [the companies that ship out of Taicang] are based either locally or in Kunshan, Suzhou, or Wuxi.”

For companies that choose to ship out of Taicang, they will likely find that costs drop along with the time spent getting their goods to port. For a typical 40 foot (2 TEU) container shipment from Taicang to Long Beach, California, RightSite received a quote from a freight forwarder of 2,300 USD – more than four hundred dollars less than if the same shipment were leaving Yangshan.

Shanghai Still the Shipping Heavyweight

Despite Taicang's recent success, Shanghai's role as the major port in the YRD – and all of mainland China – is years away from being eclipsed. Kago Lee, Senior Project Manager with Shanghai Waigaoqiao Free Trade Zone United Development Company, noted that between Shanghai's size and quantity of existing international routes, other ports currently can't compete.

“There are lots of small ports along the Yangtze,” Lee said. “But ninety-nine percent of the time if you want to transport internationally, you'll have to consolidate the shipments at Shanghai.”

Data on each of the ports support's Lee's observation: according to CargoInChina.com, a logistics information website, 366 ships were scheduled to leave Shanghai's ports within a one-week period while only 43 were shown to be departing Taicang. That disparity is echoed in each port's container volume, with Yangshan alone handling nearly six and a half million TEU more than Taicang in 2008.

Shanghai clearly benefits from its status as the most popular port in mainland China, as most shipping companies appear reluctant to shift their traffic from Yangshan to develop new routes through Taicang. Beron also attributes the difference in transportation routes to the number of other ports in provinces neighbouring Shanghai.

“There are a lot of other options right now,” Beron said. “With ports like Ningbo, shipping from a city outside of Shanghai is very much case by case.”

Until it can attract a comparable quantity of routes to that of ports in such areas, Taicang won't be able to compete with Shanghai in the YRD.

Building for the Future

Far from being slowed by its current secondary status, Taicang is instead looking to quickly catch up to Shanghai. Lu said in the coming years the port administration plans to increase its container berths to 82, four times its current number and enough to handle 22.1 million TEU per year.

Beron says that with its current management and recent rise, there are plenty of reasons to be optimistic about the port's future.

“Taicang has been around more than 20 years, so the facilities are very sophisticated.” Beron said. “Traditionally it's been mainly focused on Asia, but now they're ready to expand internationally.”

Between the expansing facilities and a growing base of potential customers in southern Jiangsu, Taicang may soon become the next major port in China.