MTL Investment in Taicang Terminal Pays Off

Hong Kong-based operator Modern Terminals Ltd (MTL) is enjoying the results of its investment in Taicang International Gateway, a deep-water terminal, as manufacturers relocate from Shanghai to southern Jiangsu, where costs are much cheaper.

The rapid development of Shanghai's financial and service industries has raised labour costs and rents in the city and so to maintain price competitiveness, many manufacturers have left the city for lower-cost areas, such as southern Jiangsu and Zhejiang, reported China Daily.

"In the process, south of Jiangsu has become the new centre for manufacturing," said Mark Weaser, director of business development at MTL. Nearly all manufacturers now based in southern Jiangsu are within 100 km of Taicang.

MTL, jointly controlled by Hong Kong-listed Wharf (Holdings) and China Merchants Holdings (International), is the second largest container terminal operator in Hong Kong.

MTL noticed the migrating trend of manufacturers from Shanghai early on, and began to invest in Taicang in 2004, during the first phase of the Taicang International Gateway development. The company continued to invest in the project during its second phase in 2005.

A company can save up to US$100 for any container shipped via Taicang instead of Shanghai. This means that, in doing so, a company can save up to 30 percent of shipping costs.

According to the Ministry of Transport, the Taicang gateway in Jiangsu and the Ningbo port in Zhejiang will support Shanghai in becoming a global shipping centre.

The Taicang gateway has promoted development in the Yangtze River Delta area, turning it into a manufacturing and shipping hub. In addition to its eight direct shipping routes to Tokyo, Yokohama and Nagoya in Japan, and several ports on the US West Coast, the Taicang gateway manages 17 vessels to Yangshan Port weekly.

MTL currently owns a 51 percent stake in the first phase of Taicang International Gateway, and a 70 percent stake in its second phase - both of which are operational.

Sun Song, bureau chief of the Taicang Port Administrative Committee, said the local government recently completed the project's third phase and will commence trial runs in July.

"We would like to invite industrial leaders to invest here," said Sun. MTL is reportedly very interested in investing in the project's third phase.

The Taicang port currently operates eight routes to overseas destinations. Its TEU capacity will expand to 4.35 million when its third phase becomes fully operational, says Sun.

The port handled 201,900 TEUs in May, up 51.6 percent year-on-year, bringing the total throughput for the first five months to 796,200 TEUs, an increase of 43.23 percent from the previous year.

In contrast to many ports that experienced a drop in throughput since 2008, the Taicang port's TEU throughput grew 42.4 percent in 2008 and 4.3 percent in 2009.