Longkou Port in East China's Shandong Province is expected to invest 8 billion yuan ($1.05 billion) during the 11th Five-Year Plan (2006-2010), to build itself into a large harbor in the Bohai Bay area.

By 2010, the annual throughput of the port is expected to increase from the present 20 million tons to 50 million tons. And the port's handling capacity is projected to reach 100 million tons in 2020.

Longkou Port is fast becoming an important international hub in the Bohai Bay area by focusing on the development of modern sea transportation, port-based economy and port construction.

The total throughput of the port reached 20.53 million tons last year, meeting the set goal of doubling in two years.

During the first six months of this year, the port's throughput reached 12.55 million tons, increasing 29.6 percent year-on-year. This year, the port's throughput is expected to meet the target of 25 million tons.

Meng Xianggang, president of the Longkou Port Group Ltd said: "The port has already entered a stage of rapid growth. We will continue to strengthen its competitiveness to make it one of China's famous ports in 10 to 15 years."

According to the plan, 12 new berths will be built - including four above-100,000-ton berths for coal, one 50,000-ton berth for liquid chemical products, one 200,000-ton berth for crude oil, two 20,000-ton general berths, two 50,000-ton general berths, and two 35,000-ton multifunctional berths. With these new berths, the designed capacity of the port will increase by 70 million tons. Longkou Port aims to handle 50 million tons per year by 2010, and double that capacity by 2020.

The port is located in the north of the Shandong Peninsula and south of the Bohai Bay-rim economic zone, which is one of China's fastest growing regions. The Shandong Peninsula is rich in natural resources, and fast developing its export-oriented economy and manufacturing industry.

As an important transportation hub in the Bohai Bay region, the port is connected to many expressways, including the Weihai-Urumqi and Tongjiang-Sanya lines. A railway linking Dezhou, Longkou and Yantai is to be completed soon.

The provincial ports development scheme aims to make Longkou a major port in Shandong. It has listed bulk cargo, petrochemicals and comprehensive logistics as its core business. It will also enhance the business of container and roll-in-and-roll-out passenger shipping service. In the next five years, the port will be built into an important national distributing base for coal, a provincial key storage and transportation base for petrochemicals, and an important transferring base for grain, ore and non-ore south of the Bohai Bay.

Thus, it will certainly play a more vital role in the economic development of the Bohai Bay region and in the implementation of Shandong's strategy of becoming an international shipping center for Northeast Asia.

Competitive advantages

Meng said the key to Longkou Port's sustained pace of rapid development in the face of severe competition in the national port industry is its persistence in creating competitive advantages.

In 2004, the handling capacity of the port exceeded 10 million tons for the first time. However, the authorities were under huge competitive pressure. There are seven ports of different scales in the Shandong Peninsula alone. As a middle-scale port, how could Longkou maintain its supremacy amid such severe competition? It chose to win by underlining its individuality and creating a definite edge by making best use of its own special advantages.

The port proposed a management idea of "differentiated strategy and tailored service" to meet the various requirements of different customers.

First, it adjusted its development focus in accordance with the market. Based on detailed market survey, it decided to focus on transporting goods like coal, liquid chemicals, ore, cement and grain.

Second, it established an organized service system by promoting tailored service, extending service scope, improving its quality, and implementing "a coordinated process of service."

Third, it carried out standardized on-site management.

In recent years, the port has laid great emphasis on transporting large amounts of bulk cargo like coal, fuel, iron ore, cement and clinker, and aluminous soil.

In 2006, the throughput of coal surpassed 5 million tons, and that of petrochemicals was nearly 4 million tons, while throughput of minerals, cement and clinker reached 2 million tons each for the first time. A large storage and transportation base on the south of the Bohai Bay for crude oil, refined oil and chemicals has also taken shape.

Attracting investment

Meng said the port is accelerating investment utilization to explore new ways for development.

Since 2003, the port has attracted a large volume of investment from both home and abroad. It has cooperated with many large companies like the Transportation Company of SDIC (State Development and Investment Corp), the Nanshan Group in Longkou, and the Sinopec Binzhou Company.

With the help of diversified financing, Longkou Port established eight joint ventures, mainly dealing with loading, unloading, storage and transportation of petrochemicals, ore, coal and aluminum oxide, waterway dredging, railway project and management, and shipbuilding.

The Bingang Fuel Dock, jointly invested by the Sinopec Binzhou Company and the Guangzhou Huataixing Group, worked a miracle in Longkou Port's history when it created 100 hectares of land by hydraulic mud fill in less than two years and established a 50,000-ton berth for liquid chemicals in less than one year.

In 2006, a 100,000-ton ore berth of the Hongguang Dock Company was built and put into use. The first 100,000-ton general berth of Jimu Island deepwater dock is under construction and expected to be completed by the end of this year.

By actively seeking to attract investments, Longkou Port has solved the problems of cargo sources, funding and mechanism that it was once plagued by, thus creating conditions conducive to fast growth.

At the same time, it has speeded up the pace of developing a port-based economy. A logistics park covering 35.84 hectares has begun to take shape. Another bonded logistics center, which is applying for government approval, will be built soon.

Innovative management

"The port cannot do well without innovation and reform on management," said Meng.

In recent years, it actively advanced the mechanism of innovation and management reform, thus stimulating staff enthusiasm and bringing vigor to Longkou Port.

The port is moving forward along a road of healthy and scientific development as it promotes new techniques and modern management, drafts medium and long-term development strategies, and avoids random management and blind investment.

It has created a staff evaluation and promotion mechanism based on responsibilities and contributions. All these measures encourage port personnel to strengthen their sense of responsibility and mission, thus gradually fostering a good corporate culture that respects talent.

Thanks to its innovative management techniques and achievements, Longkou Port was awarded the ISO9001 certificate in 2002.

(China Daily 08/09/2007 page19)