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Shanghai Cargo to Rise 10% Yearly on Inland Factories

(Corrects job title in second paragraph of story published on June 27.)

Shanghai port, the world’s busiest for containers, expects volumes to rise about 10 percent annually for the next five years as manufacturers open plants in western and inland China in search of lower-cost labor.

Rising production in these regions has benefited Shanghai because of increasing cargo volumes along the Yangtze River, Chen Xuyuan, chairman of harbor operator Shanghai International Port (Group) Co., said in a June 23 interview. The river, Asia’s longest, stretches 6,397 kilometers (3,975 miles) across China before meeting the East China Sea in Shanghai.

The Yangtze River Delta “will continue to be the main region driving china’s economic expansion,” Chen said. The river handled 1.34 billion tons of cargo in 2009, more than triple 2000’s volumes, according to government data.

Shanghai’s container traffic this year may rise 12 percent, likely enough to retain its crown for cargo-box volumes over Singapore, Chen said. Volumes leapt 16 percent in 2010 as the end of the global recession triggered a surge in shipments of Chinese-made auto parts, furniture and toys to the U.S. and Europe.

“Last year, we saw incredible growth,” Chen said. “This year, traffic is growing at a more normal and healthy pace.”

Shanghai handled 12.7 million containers in the first five months of this year, compared with 12.1 million by Singapore.

Foxconn, Lee & Man

Apple Inc. supplier Foxconn Technology Group and Lee & Man Paper Manufacturing Ltd. (2314) are among companies to have opened factories in inland provinces because of lower wages and government incentives. The government has encouraged the trend to spread economic growth beyond coastal regions including the Pearl River Delta in Southern China.

The Yangtze, which handles 80 percent of China’s river freight, passes through provinces including Chongqing, Anhui, and Sichuan.

Shanghai Port fell 0.3 percent to 3.91 yuan on the city’s stock exchange today. The shares have risen 2.6 percent this year, compared with a 1.7 percent decline for the benchmark Shanghai Composite Index.

The Shanghai government and Hong Kong-listed China Merchants Holdings (International) Co. are the company’s two biggest shareholders, according to data compiled by Bloomberg.

Shanghai last year surpassed Singapore as the world’s busiest container port, moving 29.05 million 20-foot boxes compared with the city-state’s tally of 28.4 million.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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