Shanghai port expects business volumes to rise about 10% annually for the next five years. As more manufacturers move plants inland, cargo volumes along the Yangtze river have been increasing, said Chen Xuyuan, President of the harbor operator Shanghai International Port (Group) Co. The river handled 1.34 billion tons of cargo in 2009, more than triple the volume in 2000. Shanghai’s container traffic may rise 12% this year, down from 16% in 2010, and retain its No 1 position, ahead of Singapore. Shanghai handled 12.7 million containers in the first five months of this year, compared with 12.1 million by Singapore. Shanghai last year surpassed Singapore as the world’s busiest container port.

Shanghai International Port (Group) (SIPG) will slow its pace of investment in ports, terminals and related infrastructure along the Yangtze river after a massive spending boom in the past few years. SIPG Vice President Yan Jun said the company had spent CNY8 billion developing a network of ports and container handling facilities along China’s longest river. He believes this capacity is sufficient to meet “demand in the next two or three years”.  “Further development will be dependent on demand,” he said on the sidelines of a conference organized by the Journal of Commerce. Jon Monroe Consulting, which has studied shipping and port facilities on the Yangtze river, estimated total container handling capacity along the upper reaches of the Yangtze would grow from 1.9 million TEU in 2009 to 7 million TEU by 2015, but even with the most optimistic forecasts actual throughput at these ports, including Chongqing and Yibin, would only reach 2.2 million TEU by 2015. Yan could not comment on the impact of competition from rail lines on container volumes along the Yangtze river, saying it would depend on the speed of development of container rail transport.

Falling water levels and cutthroat competition are among the five main challenges facing port operators along the Yangtze river, just as manufacturers increasingly shift production to central and western regions. Gu Qiangsheng, General Manager of the Wuhan Port Group, said the other difficulties were terminal overcapacity, obsolete port equipment and inadequate support facilities, including container repair and data processing. He said the water depth during drought conditions was down to 2.8 meters and cargo-carrying vessels were unable to reach Wuhan. Gu said that although there were plans under the 12th Five Year Plan to increase the navigable water depth to 4.5 meters during the dry season, proposals to dredge the river bed by 2015 were still being prepared. He added that local and provincial authorities had encouraged the development of terminals and docks, causing overcapacity. This meant port operators offered “low-quality services and price-cutting competition to attract customers”, Gu said. Hutchison Port Holdings, in a joint venture with Sinotrans and Shanghai International Port (Group), has invested in terminals in Wuhan, while SIPG has stakes in seven ports along the Yangtze river. Joe Monroe Consulting, said CNY36.6 billion had been earmarked to improve port and transport facilities along the Yangtze – nearly three times the budget under the 11th Five Year Plan.

Authorities were trying to unsnag snarled shipping traffic in May and prevent accidents along the drought-stricken Yangtze River, a key route to fast-growing inland markets. The government said a prolonged dry spell had left water flows dangerously low along the river. Water levels at some measuring stations had dropped to record low levels. The problem is adding urgency to plans to spend CNY18 billion to dredge much deeper channels through the lower reaches of the heavily silted waterway – a crucial step in an effort to develop major inland ports to handle growing cargo volume as manufacturers shift production away from heavily developed coastal regions. Shanghai, at the mouth of the Yangtze, has long had to conduct dredging operations to keep its ports accessible. Jiangsu province and the Ministry of Transport plan to deepen navigation channels along the lower Yangtze to enable 50,000 DWT vessels, such as bulk freighters, to travel as far as Nanjing. Further inland, Wuhan and Chongqing face even larger hurdles: the water level at Hankou in Wuhan was only 2.87 meters in early May, below its dry-season average level of 4 meters. The water level of the Yangtze river has dropped sharply since February, with its middle reaches falling to levels not seen in 50 years. Dozens of emergency teams were deployed along the river’s middle reaches to help prevent accidents. Authorities in Hubei province decided in the middle of May to close the middle reaches of the Yangtze river due to the persistent drought conditions between Wuhan, capital of Hubei province, and Yueyang city in Hunan province. Although sluice gates in the Three Gorges Dam have been opened partially to allow more water to flow downstream, shallow water continued to impede shipping traffic until June, Wu Heping, Director of the Waterway Management Department under the Changjiang (Yangtze river) Wuhan Waterway Bureau, told China Daily.

“The severe drought, the first seen in the past half century, has kept the water level in the Yangtze the lowest since 2003, when the Three Gorges Dam went into operation. Even though heavy rains are expected in coming months, it’s possible they won’t raise the water level much along the Yangtze river,” Wu said in mid-May. He added that the waterway is about 150 meters wide on average, which is 50 meters narrower than it was in 2010. Some experts blamed the low water level along the Yangtze river on the Three Gorges Dam, but Yan Fei, Director of the China Three Gorges Corporation’s press office, said such assertions were groundless, as the dam’s increased discharge of water has helped to relieve the drought. The Three Gorges Dam has been ordered to release nearly five billion cubic meters of water in a two weeks time period to help relieve the severe drought downstream amid grim forecasts of a prolonged dry spell. At full capacity, the dam holds back 39.3 billion cu m of water, so it has been ordered to release about 12% of that amount.

China plans to get more freight moving along the Yangtze River to allow industries along the banks to prosper. The 6,418-kilometer river is already the world’s busiest freight waterway for the sixth straight year. About 1.5 billion tons of cargo were transported on the Yangtze and its tributaries last year. Two-fifths of China’s top 500 companies are located along the Yangtze and most of the industrial materials used by these companies are carried by river freight, said Tang Guanjun, Director of the Yangtze Navigation Administration under the Ministry of Transport. The Chinese government has set a goal to raise the country’s inland river freight capability to 3 billion tons per year by 2020. This means the average tonnage for cargo ships moving on the Yangtze is set to almost double to 1,600 tons by the end of 2015, Tang said.