China - Three Ports Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 3653-CHA STAFF APPRAISAL REPORT CHINA THE THREE PORTS PROJECT October 14, 1982 Projects Department East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Name = Renminbi Currency Unit = Yuan (Y) US$1.00 = Y1.75 US$0.571 = Y1.00 US$571,429 = Y1,000,000 FISCAL YEAR January 1 to December 31 MEASUREMENT EQUIVALENTS Metric System British/US System 1 meter (m) = 3.281 feet 1 square meter (sq m) = 10.764 square feet 1 cubic meter (cu m) = 35.315 cubic feet 1 kilometer (km) 0.621 mile 1 ton-km = 0.621 ton-mile 1 passenger-km (pass-km) = 0.621 passenger-mile 1 ton = 2,208 pounds PRINCIPAL ABBREVIATIONS AND ACRONYMS USED CFS = Container Freight Station CHC = Cargo Handling Corporation cif = cost, insurance and freight COSA = China Ocean Shipping Agency COSCO = China Ocean Shipping Corporation CSA = Changjiang Shipping Authority dwt = dead weight tons fob = free on board HAB = Harbour Administration Bureau HSO = Harbour Superintendency Organization MLW = Mean Low Water level, or the local datum MOC = Ministry of Communications nrt = net registered ton POD = Port Operating District TEU = Twenty Foot Equivalent Unit  FOR OFFICIAL USE ONLY TRANSLITERATION EQUIVALENTS Pinyin System Conventional System Beijing = Peking Beijiang = North River (of Pearl River system) Changjiang = Yangtze River Chengdu = Chengtu Dalian Dairen Dongjiang = East River (of Pearl River system) Guangzhou = Canton Guizhou = Kweichow Harbin Haerhpin Huanghe = Yellow River Huangpo = Whampoa River Huangpu = Whampoa Junggars = Junggas Nanjing = Nanking Nei Menggol = Inner Mongolia Ningbo Ningpo Qingdao = Tsingtao Qinghai = Tsinghai Shanghai = Shanghai Shaanxi = Shansi Shanxi Shensi Shenyang = Mukden Sichuan = Szechwan Tanggu Tangku Tarim Tarim Tianjin = Tientsin Wuhan Wuhan Xijiang = West River (of Pearl River system) Xingang = Hsingkang Xizang = Tibet Yunnan Yunnan Zhujiang = Pearl River This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -t - t  CHINA THE THREE PORTS PROJECT Table of Contents Page No. I. THE TRANSPORT SECTOR ..... ............... . 1 A. Economic Setting . . . . . . . . . . . . . . . . . . . . 1 B. Transport System . . . . . . . . . . . . . . . . . . . . 2 C. Transport Policy, Planning and Coordination. . . . . . . 6 II. THE PORT SUBSECTOR . . . . . . . . . . . . . . . . . . . . . 8 A. Port Organization . . . . . . . . . . . 8 B. Port Organizational Reform . . . . . . . . . . . . . . . 9 C. Management, Staff and Training . . . . . . . . . . . 10 D. Existing Port Facilities . . . . . . . . . . . . . . . . 10 E. Traffic .............. ......# * 13 F. Operations . . . . .. . 14 G. Costs and Tariffs. . . . . . . . . . . . . . . . . . . . 17 H. Budget, Accounting and Audit . . . . . . . . . . . . . . 17 III. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . 19 A. Investment Plan. . . . . . . . . . . . . . . . . . . . . 19 B. The Project and the Loan . ........ . . . . .. . 19 C. Description of the Main Project Items. . . . . . . . . . 20 D. Cost Estimates . . . . . . . . . . . . . . . . . . . . . 22 E. Financing . . . . . . . . . . . . . . . 22 F. Implementation . . . . . . . . . . . . . . . . . . . . . 24 G. Disbursements. . . . . . . . . . . . . . . . . . . . . . 26 H. Completion Report and Economic Impact Study . . . . . . 26 IV. ECONOMIC EVALUATION . . . . . . . . . . . . ..... .................. . 26 A. Main Benefits and Beneficiaries . . . . . . . . . . . . 26 B. Traffic . . . . . . . . . . . . 27 C. Ship Time Analysis . . . . . . . . . . . . 31 D. Operational Parameters . .. ...... .. ..... . .. 32 E. Benefits and Costs ......... . . . . . . . . 33 F. Project . . ..... . . . . . . . . . . . . 34 C. Overall Economic Evaluation and Risks . . . . . . 35 This report was prepared by Messrs. Kevin C. Rodley (financial analyst), Ismail E. Mobarek (engineer), and Niels Erik Krogh-Poulsen (economist).  Page No. V. FINANCIAL EVALUATION. 36 A. General .36 B. Present and Future Financial Performance . . . . . . . . 37 C. The CHCs .... . . . . . . . . . . . . . . . . . . . . 40 D. Sensitivity Analysis ... . . . . . . . . . . . . . . . 41 VI. RECOMMENDATIONS ... . . . . . . . . . . . . . . . . . . . 41 ANNEXES A. Related Documents and Data Available in Project File B. Reorganization of Port Cargo Handling Operations TABLES 1. Huangpu Port Berth Details of Existing Port 2. Huangpu Port Warehouses and Stocking Yards 3. Shanghai Port Berth Details of Existing Port 4. Shanghai Port Warehouses and Stocking Yards 5. Tianjin Port Berth Details of Existing Port 6. Tianjin Port Warehouses and Stocking Yards 7. Ship Time Analysis for Huangpu, Shanghai and Tianjin Ports 1980 8. Existing Principal Port Charges at Huangpu, Shanghai and Tianjin Ports 9. Detailed Cost Estimates 10. Estimated Disbursement Schedule 11. Operating Manpower requirement for Project Berths 12. Operating Manpower Training Plan for Project Container Terminals 13. Huangpu Port Traffic 1975-95 14. Shanghai Port Traffic 1975-95 15. Tianjin Port Traffic 1975-95 16. Intermodal Transfer of Cargo in Huangpu, Shanghai and Tianjin Ports 1980 17. Huangpu Coal Berth, Operational Parameters Assumed for Economic Evaluation 18. Huangpu, Shanghai and Tianjin General Cargo Berths, Operational Parameters Assumed for Economic Evaluation 19. Huangpu Port, Coal Handling Without and With Proposed Coal Berths 20. Huangpu Port, General Cargo Handling Without and With Proposed Container Berth 21. Shanghai Port, General Cargo Handling Without and With Proposed Container Berth 22. Tianjin Port, General Cargo Handling Without and With Proposed Container Berths 23. Economic Costs and Benefits 24. Representative Ship Costs  - iii - 25. Financial Forecast Methodology and Principal Assumptions 26. Huangpu Port, Income and Expenditure Account 1978-86 27. Shanghai Port, Income and Expenditure Account 1978-86 28. Tianjin Port, Income and Expenditure Account 1978-86 29. Huangpu Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 30. Shanghai Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 31. Tianjin Port, Harbor Masters Division, Income and Expenditure Account, 1978-86 32. Huangpu Port, Traffic and Cargo Handling Revenue 1980-85 33. Shanghai Port, Traffic and Cargo Handling Revenue 1980-85 34. Tianjin Port, Traffic and Cargo Handling Revenue 1980-85 35. Project Ports Balance Sheets as of December 31, 1977-80 36. Project Ports Cash Flow Statements 1977-80 37. Project Ports Balance Sheets as on December 31, 1980-86 38. Project Ports Cash Flow Projections, 1981-86 39. Ministry of Communications Cash Flow Related to Project Ports 1981-86 CHARTS IBRD A Ministry of Communications, Water Transport and Related Activities Organizatonal Structure IBRD B Huangpu Port, Organizational Struture IBRD C Shanghai Port, Organizational Structure IBRD D Tianjin Port, Organizational Structure IBRD E Huangpu Coal Terminal, Construction Schedule IBRD F Huangpu Coal Terminal, Schedule for Equipment Procurement IBRD G Huangpu Container Terminal, Construction Schedule IBRD H Huangpu Container Terminal, Schedule for Equipment Procurement IBRD I Shanghai Container Terminal, Construction Schedule IBRD J Shanghai Container Terminal, Schedule for Equipment Procurement IBRD K Tianjin Container Terminal, Construction Schedule IBRD L Tianjin Container Terminal, Schedule for Equipment Procurement MAPS IBRD 15512R1 China, Railways Ports and Airports IBRD 15816 Huangpu Port, Coal and Container Terminals, Location and Navigation Channel IBRD 15817 Huangpu Port, Coal Terminal IBRD 15845 Huangpu Port, Container Terminal IBRD 15814 Shanghai, Port Terminals and Navigation Channel IBRD 15815 Shanghai Container Terminal, District No. 9, Berths 1 and 2 IBRD 15813 Tianjin Container Terminal, Berths No. 27, 28, and 29   - iv - Acknowledgment This report is based on information provided by the Government, by the consulting firm E.G. Frankel (US); and on the findings of an appraisal mission in July/August 1981 consisting of Messrs. Kevin C. Rodley (mission leader and financial analyst), Ismail E. Mobarek (engineer), Niels Erik Krogh-Poulsen (economist) and Frank Higginbottom (consultant engineer). Mr. J. Richard Bumgarner (Senior Loan Officer) assisted in the appraisal. Additional reports and data related to the project and available in the Bank, are listed in Annex A.   I. THE TRANSPORT SECTOR A. Economic Setting 1.01 China is the world's third largest country in area, covering about 9.6 million square kilometers and comprising the plateaus of Qinghai-Xizang in the West, Nei Menggu, and Shaanxi-Shanxi in the Northwest, and Yunnan-Guizhou in the Southwest; the Junggars, Tarim and Sichuan basins in Central China; and the lowlands in Eastern China. China's population is the largest in the world and numbers about 970 million with about 13% living in urban areas and the remainder scattered in a large number of towns located mainly along the coast and in the river basins of the three principal rivers of the country, the Huanghe, the Changjiang, and the Xijiang. The main centers of population and economic activity are Guangzhou, Shanghai, Beijing and Tianjin which are served by the three project ports. The main agricultural areas are located in the river basins. The topography of the country and the location of population and agriculture along the rivers and the coastline has resulted in river and coastal shipping being the most important traditional modes of transport. Over the past three decades, however, a long term expansion program has enhanced the importance of railway transport to the point where the railways now carry two thirds of freight by domestic motorized transport. 1.02 Domestic freight transported in 1980 was estimated at about 833 bil- lion ton-km of which about 571 billion ton-km moved by rail, about 80 billion ton-km by coastal shipping, 57 billion ton-km by road, about 76 billion ton km by river, and 49 billion ton-km by pipeline. This data exclude transport by traditional means, which in many countries would go by road vehicles. From 1970 onwards, total domestic freight transported has grown at a fairly steady average of about 9% annually; this compares to an average growth in real net material product of about 6% annually, indicating a transport elasticity ratio of 1.5. The major long distance traffic flows are raw materials such as coal and oil movingy from north to south and from west to east. Coal in particular moves east from the Nei Menggu-Shaanxi area to consumption points in the coastal areas. Some coal moves south either by rail, or by coastal shipping through the ports of Qinhuangdao, Qingdao, and Lianyungang. Foreign trade and consumer goods move between the main coastal industrial centers such as Guangzhou, Shanghai and Tianjin, and the interior. 1.03 Since 1977, there has been considerable discussion within China on the ends and means of economic development. From this discussion which is still in progress, has emerged the current economic policy of adjustment, reform, conso:Lidation and improvement, which addresses issues in resource allocation between economic sectors, relative pricing of commodities and services, and the degree of independent economic decision making that should be allotted to communes, enterprises and individuals. The economic policy gives priority to agriculture, energy production and light industry, particularly to consumer goods and export commodities. While implementation  - 2 - of reforms has had important positive economic effects, the ten years of tur- moil of the cultural revolution and the weakness of economic planning in China, resulted in unbalanced economic development. As a result, planned future investment outlays were revised downwards, and a number of projects postponed, slowed down or discontinued. At the same time, the attitude towards reform has become more cautious. This attitude is reflected in the transport sector where the speed of reform and structural change has slowed down and a more cautious policy of providing adequate transport for high priority sectors over the next five years is pursued. B. Transport System 1.04 The transport system of China comprises about 50,000 km of railways; 870,000 km of roads; 107,800 km of rivers navigable by barges of 100 tons or larger; 15 major national ports and a large number of smaller provincial and municipal ports; and 48 major airports. The main transport corridors are Harbin-Dalien; Beijing-Shenyang; Beijing/Tianjin-Shanghai; Beijing-Wuhan- Guangzhou; Shanghai-Wuhan-Chengdu. The first three corridors are served mainly by rail while the last is served mainly by the Changjiang. In addition, the physical characteristics of the country have encouraged coastal shipping services to meet the demand for transport along the coast. (a) Ports 1.05 Details of the ports subsector are discussed in Chapter II. (b) Railways 1.06 The railways are built and operated by the Ministry of Railways. The system consists of about 49,800 route km, of which 49,000 route km are standard gauge and some 800 km meter and narrow gauge. About 8,000 km are multiple track and 1,000 km are electrified. Double tracking and electrification of an additional 3,585 km is in progress. 1.07 Over 60% of the fleet consists of open cars for transport ,of coal, ores, sand and gravel, and the railways have started to produce specialized cars such as bulk grain cars and refrigerated cars. The equipment is well maintained and average availability is about 97%. 1.08 Traffic in 1980 amounted to about 571 billion ton-km of freight and 138 billion passenger-km. Average hauls are 510 km for freight and 142 km for passenger and have been increasing slowly. Annual average traffic growth since 1975 has been 7% for freight and 6% for passengers. The principal commodities transported were coal 39%, construction materials 21%, ores 13%, iron and steel products 6%, and petroleum 5%. The highest traffic densities of 25-35 million net ton-km per line-km are achieved between Beijing-Shenyang, Beijing-Shanghai, and Beijing-Wuhan.  - 3 - 1.09 Freight traffic density has been increasing steadily and, at an average of 11.8 million ton-km per route-km, is now the second highest in the world after that of the USSR. Average train weight of about 2,000 tons has changed little in the last decade. The number of freight cars per train has remained relatively constant at between 48 and 53 cars, largely a conse- quence of the length of passing loops and station sizes which are 650 meters for 75% of the stations and 850 meters for the rest. Wagon turn-around time at 3 days is extremely low by any other railway standards. 1.10 There is no equipment for rail transport and rail terminal handling of containers atnd there are no current plans for procurement of such equip- ment, which means that domestic rail transport of containerizable import and export cargo at least in the near future will take place as break-bulk. There is little specialized suburban equipment and stations which means that short trips put considerable burden on the rest of the system, particularly on the approaches to large cities and stations such as Beijing and Shanghai which are heavily congested. On-time train performance is high at 95% for passenger trains and 90% for freight trains. 1.11 Little is currently known about tariffs and costs, but apparently short distance tariffs do not cover costs; and unified tariffs throughout the country imply regional cross-subsidization of railway users. (c) Highways 1.12 The Central Highway Bureau of the Ministry of Communications (MOC) is responsible for the planning of national roads, and it also operates some road transport services. The design, construction and maintenance of national as well as provincial roads are the responsibility of the Provincial Transport Bureaus who also operate road transport services. 1.13 The highway network in 1979 comprised about 876,000 km of which about 151,000 km were asphalted. Road pavement standards are low and the extent of the paved network is limited. Road maintenance, however, is well organized and currently absorbs much of the attention and resources of the provincial and other road authorities. Except for Western China, the high- way network is still very much a system of feeder roads to the railways. 1.14 Motor traffic on the national highways since 1978 reportedly has grown at a very high overall annual average of 15%, which is about the same rate of growth as the vehicle fleet. 1.15 Until recently public carrier road freight transport has been carried out exclusively by government transport bureaus at the national, provincial, regional, county and municipal levels; tariffs have been set at high levels and, at least in some provinces, substantial transshipment rather than door-to-door delivery has occurred when cargo crossed jurisdic- tional boundaries of different bureaus. Faced with high tariffs and a some- times poor service of public carrier vehicles, manufacturing or production  - 4 - enterprises have increasingly purchased their own vehicles with the result that the fleet of own-account vehicles now amount to about 86% of the vehicle fleet. Own-account vehicles have been prevented from engaging in for-hire activities, however, and public carriers still account for two-thirds of the ton-km moved by truck. 1.16 Public carrier tariffs, which have been revised little since 1966, generally exceed costs by a wide margin. Truck tariffs for haul distances under 50 km are approximately six times higher than railway rates; for haulage distances of 50-100 km and over 100 km, truck tariffs are nine times and nineteen times higher than railway tariffs. At such rate differentials there is little truck public-carrier competition with railways. (d) Inland Water Transport 1.17 Inland water transport is a widely dispersed activity in China. Of the about 107,800 km of waterways in service in 1979 only about 3,000 km on the main course of the Changjiang were under direct control of the MOC, the remaining inland water transport activities were under provincial, municipal, and production enterprise control. More than 320 million tons of cargo were transported on inland waterways in 1979 over an average distance of 170 km. Only about 15% of that cargo was carried by the Changjiang Shipping Authority (CSA) under the MOC. The average distance of cargo carried by CSA exceeds 560 km, which means that other inland water transport goods moved only about 100 km on average. The Changjiang and its tributaries is the most active inland water system with over 230 million tons of cargo moved, or 72% of the total inland water tonnage. The remaining 91 million tons of inland water cargo move on the Zhujiang system, the Heilungjiang system, the Grand Canal, and a large number of smaller waterways. 1.18 On the larger waterways, most traditional junks have now been displaced by modern self-propelled vessels and pushed or towed barges. Most barges on the upper Changjiang, the Zhujiang, and major tributaries, are of 500-1,000 dwt capacity, while on the lower Changjiang they reach 5,000 dwt. 1.19 With seasonal water levels varying up to 20-30 m at some major river ports, many terminals are restricted to the use of floating piers served by floating cranes and the use of rope or cable ways, sliding ramps, and floating ramps for the docking of vessels and vessel-to-shore cargo transfer. This makes terminal operations difficult, slow, and expensive. Some fixed docking and loading facilities, particularly for bulk commodities such as coal, have been installed as far upriver as Wuhan on the Changjiang, but these types of terminals are still the exception. 1.20 River transport tariffs on the Changjiang vary with distance but are identical for upstream and downstream transport. Furthermore, rates on the upper reaches of the river above Wuhan are higher than those on the  lower reaches between Wuhan and Nanjing/Shanghai, which is consistent with the relative operating costs. Although water transport costs are lower than rail costs per ton-km, the tariff structure gives rail transport a 20-30% advantage over water transport. (e) Coastal. Shipping 1.21 The MOC controls the two coastal shipping operating companies named the Shanghai and the Guangzhou Water Transport Bureaus respectively. Transport carried by the Shanghai and Guangzhou Water Transport Bureaus in 1979 amounted to about 44 billion ton-km and 34 billion ton-km respectively. The average haul distance is around 1,200 km. Coal comprises more than 31% of the total cargo carried by coastal shipping under MOC. The remaining consists largely of mineral ore, petroleum products, cement, fertilizer, and grain. While the Shanghai Water Transport Bureau's traffic has increased by 18% between 1975 and 1979, that of Guangzhou Bureau doubled. This is probably due in part to the resumption of shipping north and south through the Taiwan straits which was previously almost nonexistent. There is also a significant amount of passenger traffic, about 4 million passengers were carried on coastal routes in 1979. (f) Ocean Shipping 1.22 Ocean shipping in foreign trade is mainly performed by the China Ocean Shipping Corporation (COSCO) under MOC with some minor holdings by companies of provincial transport bureaus who have recently acquired ocean-going vessels themselves or in joint venture with COSCO companies. 1.23 The Ministry of Foreign Economic Relations and Trade through the State Trading Corporations controls all of China's foreign trade. The transportation requirements of the foreign trade are organized by the China National Foreign Trade Transport Corporation which assigns all ocean transport requiresments to COSCO, the China National Chartering Corporation, and other Chinese-owned vessels, and foreign charters or foreign liner companies. Recently provincial governments have been allowed to establish their own provincial trading corporations which may assign cargoes to different shipping alternatives as noted above as well as to a Provincial Ocean Shipping Corporation. 1.24 The planning, budgeting, and pricing of ocean shipping is con- trolled by the State Planning, Economic, and Pricing Commissions. Other government agencies involved in the financing of foreign trade, shipping investment, charter parties, and various contractual and financial activi- ties in ocean shipping are the Bank of China, the General Administration of Exchange Control, and the China International Trust and Investment Corporation. Agency services for all foreign ships calling at Chinese ports is performed by the China Ocean Shipping Agency (Penavico or COSA). COSA is the owners' and operators' representative in China, and provides for all services, supplies, port facility requirements, and general representation of foreign ships calling at China's ports.  - 6 - 1 .25 The oceanborne foreign trade of China amounted to about 100 mil- lion tons in 1980 of which 61 million tons or about 61% was carried by vessels under Chinese control (43 million tons by COSCO, and 18 million tons by other ships). 1.26 The average age of oceangoing ships (1,000 gross registered tons or larger) is now about 14 years, which is appreciably higher than the average age of ships worldwide. Tankers in the Chinese merchant fleet vary in size, most being 40-90,000 dwt tankers with a few 10-30,000 dwt. Most dry bulk carriers are 20-30,000 dwt, though there are a few 70,000 dwt mnd 100,000 dwt bulkers as well. General cargo ships are generally under 20,000 dwt with most being about 15,000 dwt. 1.27 COSCO reported that as of November 1980 they operate about 450 oceangoing vessels, with a combined capacity of a little over 7 million dwt. In addition there are several small provincial and specialized shipping companies. COSCO has a number of small semi-container vessels with capacities of 200-300 TEU, two of which are now employed on the first direct COSCO container service between Shanghai and Australia. 1.28 Since 1978/79 China has started to order new ships and contin- ued buying secondhand vessels while at the same time disposing of some of the older or unsuitable used vessels in its fleet. Among the new orders are RoRo vessels, container vessels, and multipurpose general cargo vessels. C. Transport Policy, Planning and Coordination 1.29 Current transport policies emphasize consolidation of the existing system rather than further major expansion. Most main rail projects now under construction or currently planned are directed towards capacity increases on existing lines rather than new line construction. For roads it appears that a number of sections are beginning to reach congestion levels. While the highway network will continue to be extended at relatively low standards to connect areas currently not accessible by motor vehicles, a large portion of road investments can be expected to be allocated for upgrading of existing roads. 1.30 While the above consolidation approach for rail and roads appears adequate, it needs particularly careful assessment in the ports sector. The world trend has been to move from estuarial to coastal locations to facili- tate access of larger ships, with beneficial reductions in capital and main- tenance dredging. Urgent investigations are required into the possibilities for developing deep water ports either at some existing port sites or at new locations as part of a national port strategy and development plan that will allocate to central and provincial ports their appropriate roles. With a view to providing the technical and economic inputs for a national port strategy for the coming decades and to identifying possible coastal locations  - 7 - suitable for deep water port development, MOC has begun work on a port development plan for the country, including forecasts of economic development, origins and destinations of cargo, traffic allocation to ports, and intermodal transfers, together with prefeasibility studies of various port sites. MOC is also conducting various estuarial studies in the approaches to the ports of Huangpu, Shanghai and Tianjin. 1.31 The new economic policies will affect transport structurally through the proposed shift in emphasis from heavy industry to light industry and agriculture which implies a relatively lower growth rate for the trans- port of bulk commodities such as ores and steel, and a relatively faster growth rate for :Light industry products and foodstuffs. Since these pro- ducts usually go shorter distances and between many dispersed origins and destinations in small size shipments, they will be more suitable to road transport than to rail transport, unless containerized and transported between container terminals in unit trains. The Government, however, currently has no plans for container transport by rail, and container transport by road is only taking place on a very local scale. There are plans, however, for establishing a container transport service by road linking Tianjin port with Beijing, a distance of about 150 km for which road transport would be cheaper than rail transport. 1.32 Many agencies are involved in the transport policy and planning process. At the national level, transport is administered by two key Ministries: the Ministry of Railways which covers railways, and the Ministry of Communications which covers national roads, main ports, coastal and ocean shipping, and somne inland water transport. In addition there is the Ministry of Petroleum Industry for pipelines; and the Civil Aviation Administration of China, a special agency of the State Council, which runs the national airline. Decision making in the railways, pipelines and aviation subsectors is highly centralized, but in the roads and water transport subsectors provincial and county government and communes as well as production enterprises play very important roles. 1.33 Transport decisions need to be coordinated, horizontally at the central level among the major government ministries and agencies and, vertically, between the central ministries and the provinces and lower levels of government. In practice, however, coordination between central and provincial authorities, and between ministries is weak and often takes place indirectly through the process of approval and scheduling of investment plans by the State Planning Commission and the State Economic Commission. Given the limited number of staff dealing with transport planning and the wide area of their responsibilities, the extent and depth of specific policy, planning and coordinating efforts that can be expected from these bureaus is limited. The Comprehensive Transportation Research Institute under the State Economic Commission has begun to undertake studies in transport planning and project evaluation techniques.  II. THE PORT SUBSECTOR A. Port Organization 2.01 The Ministry of Communications (MOC) controls China's 15 major national ports at the State level, largely through four of its water transport departments: Operations, Planning, Port Supervision, and Capital Construction (Chart A). At each of the major ports a Harbor Administration Bureau (HAB) is responsible for the management of all onshore port facilities as well as for tug and barge services afloat. The establishment of HABs is governed by Provisional Regulations which became effective in January 1954. These regulations provide that, although directly under the jurisdiction of MOC, HABs are also under the supervision and direction of the local people's government in the areas of administration, business, technical matters and finance. In practice, each HAB Director is directly responsible to MOC and is expected to maintain regular dialogue on port problems with city and provincial governments, other state agencies, and the workers' union. However, no formal mechanism, such as a board of directors, exists at this level to assist in ensuring that the needs of port users and others in day-to-day operations and development planning are adequately met. A deeper knowledge is needed of the interaction between the central government, port management and provincial governments before recommendations can be made to improve, e.g. intermodal coordination, the need for which is more evident in Shanghai than in Huangpu. 2.02 A Harbor Superintendency Organization (HSO) is established under MOC by the State in each port. The HSO is responsible for navigational aids, maritime environmental control, ship operations in the approaches to the port, and ship traffic control. It supervises and implements the policies and decrees of the State. 2.03 Each port, depending on its size, has a full range of operating departments covering planning, engineering, traffic, training, accounting, commercial, etc. (Charts B to D). Besides providing usual port services to ships and shippers, the HABs also manage small ship repair facilities and administer educational, health and welfare services for workers and their families. Each major port is operated as an autonomous enterprise in day-to- day port management within the parameters set by its MOC-approved annual financial operating plan and investment budget. Each operational or service division and each port operating district constitutes a cost and revenue, or budget center, Workers are usually assigned to a department or division on a regular basis. Machinery and equipment is assigned on a permanent basis. Port construction designs are prepared by regional design institutes; civil works are undertaken by regional construction bureaus; and port access channel dredging is performed by regional waterway bureaus, all of which are responsible to the MOC.  - 9 - 2.04 All net cargo handling revenues are being remitted by the ports to Government through MOC. On average, only about 20% of the project ports' net revenues from harbor dues have recently been retained for use by the HAB, the remainder being remitted to MOC to help meet the cost of China's port development and maintenance dredging of approach channels. All major capital works at the project ports are currently financed from Government sources through MOC. B. Port Organizational Reform 2.05 In order to establish clear accountability on the part of the different operational entities within the ports, and as a move in line with Government's overall policy of allocating more decision-making power and responsibility to enterprises, the Government subsequent to appraisal decided to separate port administration from port operations and to organize the port operating districts (POD) in each port into a number of cargo-handling corporations (CHC). Maintenance and repair workshops in similar fashion would be organized into workshop corporations. The MOC plans the creation of CHCs to proceed gradually over several years, both to learn from experiences of the initial CHCs and to avoid confusion by simultaneous conversion of a large number of PODs. The first four CHCs have been established in principle in 1980 in Dalien, Tianjin, Shanghai and Huangpu. The Dalien CHC became vested with full legal powers and responsibilities in January 1982, and the three other CHCs as well as an additional CHC for coal handling in Huangpu will become operational by the completion of the proposed project. 2.06 The CHCs would be independent legal entities directly under the MOC, and would have the ability to enter into contractual arrangements with other corporations. The CHCs would own land, berths, buildings and equip- ment. The CHC manager will be directly responsible to the Waterway Trans- port Bureau in MOC on cargo operational matters, and to the Planning Bureau of MOC on budget and investment matters. All matters on development plan- ning and construction work before being referred to MOC must be reported to HAB, which must endorse those CHC development projects which have effects beyond the CHC, as well as land acquisition. Organizational details of the CHCs are described in Annex B. After separation of administrative and enterprise functions in the port, the HAB would be responsible only for administration and common port services such as pilotage, towing, dredging in port, and port security. In most cases the present individual PODs or groupings thereof are anticipated to become the future CHCs. Since the POD is the basic operating and accounting unit in the port today, the creation of a CHC from a POD or a group of PODs would in practice mean a continuation of present operational and accounting functions, but with direct financial and legal responsibility for production results to MOC, rather than indirect responsibility via the HAB. The port organizational reforms will result in greater accountability on the part of the operating entities of the ports, and is expected to result in increased port operational efficiency in the CHCs.  - 10 - C. Management, Staff and Training 2.07 Operational management is satisfactory, but there is a clear need to strengthen certain aspects, especially the capability to undertake investment planning. In addition, there will be a need to develop the capability to handle containers in the future. 2.08 Port directors and vice directors are appointed by MOC in consultation with provincial and municipal Government. Heads of departments are appointed by the HAB subject to the approval of MOC. All other staff are appointed by the HAB. The HAB can discipline staff, and can hire staff subject to established ceilings approved by MOC. In personnel matters, the CHCs within their area of responsibility will have powers similar to those of the HAB. 2.09 Pay scales, which are determined by the State, are unified through- out the country and classified by trade or profession. Scale entry points for new workers are determined by fellow workers. Bonus incentives and rewards, based upon individual and overall port performance. Annual targets for profit, cargo throughput, cost per thousand tons of cargo handled, and cargo loss/damage are determined and an overall annual bonus of 5% of total wages is awarded if the plan is fulfilled. The bonus takes the form of individual or group cash awards and allocations to staff welfare projects. In addition, 20% of the profit earned in excess of the preceeding year can be used by the HAB for developing future productivity, collective staff welfare and special rewards for meritorious effort. 2.10 Apart from annual bonus awards, the pay of stevedores and cargo handling equipment drivers is partly based on gang productivity. Between 25% and 30% of take home pay is related to output at Huangpu and Shanghai; whereas bonuses at Tianjin reach 50% when output targets are achieved. Stevedore and wharf labor is integrated into gangs comprising 16 persons each. Other categories of workers receive monthly bonuses averaging about 12% of basic pay. 2.11 Most staff training is provided at educational facilities operated by MOC and the HABs. MOC offer courses at higher management levels while HABs give basic and intermediate level training. Courses are also arranged in association with local universities. D. Existing Port Facilities (a) Huangpu 2.12 Huangpu, South China's largest port, is an estuarial port situated close to the estuary of the Zhujiang, about 130 km northwest of Hong Kong, and is connected to the South China Sea by a 115 km navigation channel (Maps 15816, 15817, and 15845).  - 11 - 2.13 The port comprises two existing terminals (districts). District 1, the older terminal, has 7 berths totalling 1,334 m in length with 8 m depth below MLW alongside. The recently built District 2 has 5 berths totalling 920 m in length with 11-12.5 m depth below MLW alongside (Table 1). Berths 6, 7, and 8 in District 2 are under development, with Berths 7 and 8 comprising the proposed project container terminal. The proposed new coal terminal is to be developed North of District 2 across one of the many branches of the Dongjiang. 2.14 The tide is semi diurnal (twice daily) with an average range between mean high and low water of 1.6 m. In the port area are a multitude of river branches: the Dongjiang, the Beijiang, and the Xijiang, all of which combine into the Zhujiang estuary. The port approach channel has two bars one north of Tiger Island, and the Ling Ting bar south of Tiger Island (Map 15816), with the Ling Ting bar being the greater navigational obstacle. The two bars have a combined length of about 53.7 km with a siltation rate necessitating average annual maintenance dredging of 3.8-4.5 million cu m to maintain depths of 9 m and 8.6 m below MLW respectively. 2.15 Both port districts are well served by railway with adequate connections to the hinterland. The Guangzhou--Huangpu highway also serves both port districts, but it is very narrow (8-12 m) and carries heavy traffic. It is currently being widened to 18 m and this is expected to be completed by June 30, 1983. 2.16 Transit sheds, storage warehouses and open storage areas are adequate (Table 2) and the bulk grain berth has silo storage. 2.17 Power and water supply, and waste disposal systems are adequate, while telecommunications need some modifications. (b) Shanghai 2.18 Shanghai, China's largest port, is an estuarial port, situated on the Huangpo river and is connected to the East Sea through the Changjiang estuary. The Huangpo river flows into the Changjiang about 90 km from the light buoy at the Changjiang mouth. The seaward entrance channel to the port is therefore located in both the Changjiang and the Huangpo river. (Maps 15814 and 15815). 2.19 The port of Shanghai, one of the largest in the world, has 95 berths totalling 12,759 m in length and is divided into 14 districts with water depths alongside varying from 3.0 m to 10.5 m below MLW. Only 50 berths can accommodate vessels of 10,000 dwt or more (Table 3). The entrance to the Huangpo river from the Changjiang is protected by the Wusong groin mainly to keep the Changjiang sediment away from the harbor. The Changjiang entrance channel is obstructed by 3 bars: (i) the Tongsha bar which is maintained at a depth of 7 m below MLW for a length of 32.3 km; (ii) the Jiangya bar, maintained at a depth of 7.20 m below MLW for a length  - 12 - of 6-7 km; and (iii) the Yawosha bar, maintained at 7.40 m below MLW for a variable but short distance. Larger bulk ships are lightened at the Luhuashan anchorage south of the Changjiang estuary entrance, after which they can proceed to the port with an acceptable draft. Lightening is achieved through a 100,000 dwt bulk carrier, anchored in position and fitted with appropriate cranage. 2.20 Tides are semi diurnal with an average range of about 4.4 m between mean high and low water levels. The port experiences very heavy siltation particularly in the Changjiang approach channel. The quantity of siltation and resulting need for maintenance dredging varies each year depending on the flood conditions of the Changjiang river, and dredging has averaged about 21 million cu m during the period 1975-80. 2.21 Road access to the existing and project container terminals are currently adequate. Traffic for the project container terminal will be able to pass under the main Shanghai port access road to transfer station (Map 15815) once a nearby bridge has been built. The city of Shanghai has included this bridge in its plan; work on the bridge will begin in 1985 and take two to three years. Shanghai's city authorities will be responsible for taking the necessary steps to alleviate any traffic congestion that may develop before completion of the bridge by arranging for container traffic bypass. A large amount of cargo is currently transported from the port by inland waterway barges and river steamers. Rail access is available in Districts 6, 9 and 10 and rail connections are available to the North, West, and Southwest provinces. Rail is one of the major modes of transport to and from Shanghai. 2.22 Adequate transit sheds, warehouses, and open storage areas are available and both rail and road services in the port area are adequate (Table 4). 2.23 The existing container terminal in District 10, has a maximum practical capacity of 40,000 TEUs per year. The project container terminal at Berths 1 and 2 in District 9 is currently under construction. 2.24 Power and water supplies, waste disposal and telecommunications systems are adequate. (c) Tianjin 2.25 Tianjin is located about 42 km from the mouth of the Hai river and 120 km Southeast of Beijing. The city-s main port is sited at Xingang, at the river mouth. Construction of these facilities begun in 1939, replaced much older and since abandoned shallow facilities near the city. There are also shallow draft berths for fishing vessels and ships up to 3,000 dwt at Tangku, a few km upstream of Xingang. A barrage has been built on the Hai river between Xingang and Tangku for irrigation purposes, and access to Tanggu is through a navigation lock (Map 15813). 2.26 Tianjin Port has 18 operative berths totalling 3,405 m in length, with water depths alongside between 8.0 m and 12.0 m below MLW. An addi- tional 11 berths under construction will add a total length of 2,632 m with water depths alongside between 11 and 13 m below MLW (Table 5). The port is  - 13 - protected by North and South breakwaters of 5 km and 8 km in length respec- tively. The access channel extends from the east side of Xingang lock to the entrance channel Tagu light tower and is about 24 km in length and 8 m depth at MLW. 2.27 Tides are semi diurnal with a range of about 2.5 m between mean high and low water levels. Ice conditions prevail for about three months of the year during the months of December through February with most severe conditions in January, but they do not hinder shipping or port operations. The port and access channel experience heavy siltation necessitating about 8 million cu m in annual maintenance dredging. 2.28 Tianjin Port is connected to the city by two railway lines. The port is served also by two highways, with a third highway under construction that will bypass the city of Tangku, and relieve traffic congestion in the city., 2.29 Adequate transit sheds, warehouses, and open storage areas are available and both rail and road service in the port area are adequate (Table 6). 2.30 The existing container Berth 21 has been designed to serve second generation containerships, with a maximum capacity of 100,000 TEUs per year. The project container Berths 27, 28, and 29 are now under construction. 2.31 Power and water supplies, waste disposal and telecommunication systems are adequate. E. Traffic 2.32 The total cargo handled by the 15 national ports in 1980 was 217.3 million tons, of which Shanghai alone handled 39% and Huangpu and Tianjin 6% and 5% respectively. The three project ports serve as the principal land sea transfer points for the three most important industrial hinterlands in China. The three principal bulk cargo ports are Dalian, Qinhuangdao and Qingdao which together account: for about 35% of total port throughput. The remaining 9 ports, handle only about 15% of the total throughput. Traffic volumes through the 15 national ports and the three project ports are shown on the next page for 1975 and 1980. 2.33 The annual growth of port traffic through the 15 national ports during the period 1975-80 was about 9% which reflects the economic opening of China to foreign trade. The largest growth is in foreign trade, where imports more than doubled in five years while exports increased by 83%. Domestic or coastal traffic also increased significantly during the period, with annual landings increasing by 6% and annual loadings by 7% between 1975 and 1980. In 1980 coastal traffic accounted for two-thirds of the traffic through the 15 major ports under MOC.  - 14 - Million tons % Annual 1975 1980 growth in In Out Total In Out Total total All National Ports Foreign 19.8 18.4 38.2 43.6 28.7 72.3 13.6 Domestic 47.7 57.8 105.5 67.7 77.3 145.0 6.6 Total 67.5 76.2 143.7 111.3 106.0 217.3 8.6 Huangpu Port Foreign 1.9 1.1 3.0 3.5 1.4 4.9 10.3 Domestic 2.7 1.5 4.2 4.8 2.4 7.2 11.4 Total 4.6 2.6 7.2 8.3 3.8 12.1 10.9 Shanghai Port Foreign 6.6 2.7 9.3 13.6 4.3 17.9 14.0 Domestic 33.6 12.9 46.5 44.4 22.5 66.9 7.5 Total 40.2 15.6 55.8 58.0 26.8 84.8 8.7 Tianjin Port Foreign 3.6 1.4 5.0 6.3 3.0 9.3 13.2 Domestic 1.5 1.6 3.1 1.6 1.0 2.6 -3.5 Total 5.1 3.0 8.1 7.9 4.0 11.9 8.0 2.34 Traffic composition and projections for the project ports are detailed in paras. 4.03 through 4.12. F. Operations 2.35 Each HAB currently is in charge of all cargo handling operations, port maintenance, administration and security. Most port labor is directly employed by the HAB on a permanent basis. With the reorganization of port operations, responsibilty for cargo-handling operations and labor and physical assets associated therewith will be transferred to the CHCs as they are established (paras. 2.05 and 2.06). Stevedores, wharf and shed labor work three shifts daily for seven days each week; rest days are staggered on a rotational basis. Overtime is paid for holidays or rest days worked.  - 15 - 2.36 Maintenance of both civil works and equipment is adequate. Each port has its maintenance and repair workshops, which keep the equipment in good operating condition, and has its own construction unit for civil works maintenance. 2.37 Most cargo is moved from and into the ship's hold by portal cranes. Inward cargo stored in sheds or open storage areas can remain in port for four days free of charge. The HAB may transfer non-delivered cargo to warehouse storage and charge consignees for removal costs; however, long-term storage space is limited. 2.38 A large percentage of the time a ship spends at berth is lost due to nonship related factors such as unavailability of equipment. Together with ship waiting time for berths, it results in vessels spending only 40-50% of their port turnaround time productively. For instance, in 1980 at Huangpu, out of an average time in port of 8.5 days per vessel, 1.9 days were spent waiting for a berth and another 2.4 days waiting unproductively at a berth (Table 7). The proposed project will contain unproductive ship time in the three project ports through provision of additional berths with high produc- tivity cargo handling equipment. 2.39 Access to all major ports is depth restricted. The ports of Huangpu, Shanghai and Tianjin all have a limiting depth of 7.2 to 8.6 m at mean low water Level; only a few berths have alongside depths of 10 to 12 m allowing some deeper draft vessels to enter and exit at high tide. The access channels to the project ports are under study by MOC for the least cost dredging that will attain maximum utilization of the project berths. Some access channel dredging of the project ports is carried out at the moment as part of the general improvement program for these ports. After completion of the project, high tide will be utilized as much as possible to get the larger ships to berth. 2.40 In general, capital and maintenance dredging of ports and their approaches appears to be excessive, and could be greatly reduced by methods identified through hydraulic, physical and mathematical model studies based on updated surveys. In recognition of this, MOC is carrying out continuous estuarial studies to identify dredging dumping sites and to minimize dredging quantities at the project ports. River training, channel realignments, and use of offshore terminals are included in the studies since they might result in major savings in dredging costs and increased depths in access channels. It would also appear that in the long run some of the smaller ports as well as some new locations could offer more economic port development sites than expansion of existing port facilities. Thus, there are some port sites such as Qingdao, and Ningbo, which may offer better opportunities than existing port sites which will require channel deepening to accomodate modern vessels. 2.41 A significant proportion of cargo moving through congested ports such as Huangpu and Shanghai is transshipment cargo arriving by waterborne transport and reloaded at the port onto other waterborne transport. More  - 16 - attention should continue to be given to direct delivery and use of vessels which can be utilized both for coastal and inland water transport. In particular the use of oceangoing barges should be investigated. Furthermore, a major proportion of the rapidly growing traffic at the project ports is neither destined for nor arriving from, the immediate hinterland of the project ports, but to and from places which could be effectively served by rail, coastal or inland water connections from other national or provincial ports. Many of these minor ports have equal or better depth than the three ports, are less congested, and may offer more economical opportunities for expansion. For the future expansion plans of the major ports, the most economic and effective global port development program will be generated by minimizing total transport and investment costs with due regard to expansion opportunities and the needs of changing technology. Recognizing the need for such an overall view, MOC has begun work on a port development plan for the country (para. 1.30). 2.42 Rail traffic within the port is controlled by the railways in some ports and by the HABs in other ports depending on local conditions. Wagon turn around time within the ports is normally less than 24 hours. 2.43 In general there appears to be a lack of effective understanding of the role and the method for introducing modern integrated physical, opera- tional, and managerial controls. As more modern equipment is introduced, China will require skills in integrated system controls, including computer or special purpose data handling devices and the proposed project includes training therefor. 2.44 Many of the delays in port are caused by the lack of timely information, such as manifests, cargo plans, and other documents including even ship or cargo characteristics. Futhermore, data on traffic, operations and port conditions vary considerably among ports and even among sections of the same port. There is an urgent need for uniform specification of cargo, and other data as well as for the collection, aggregation, storage, retrieval, and analysis of information to permit improved management and decision making at all levels; the proposed project includes training for establishing computerized management information systems in the three project ports. 2.45 Planning and development of container technology has so far been limited to the ports with little attention given to transport and storage of containers inland. Container operations can be even more technically and economically successful if an integrated, intermodal systems approach is planned and implemented. The government recognizes the need for this and as a first step is currently planning the establishment of an inland container terminal at Beijing to be linked to Tianjin Port by road container transport. As part of the project, the Government will carry out, before December 1984, a containerization study for the hinterlands of the three project ports with a view to identifying the inland intermodal terminals, other facilities, and transport equipment required to take advantage of the door-to-door transport potential of containerized cargo through the project ports.  - 17 - G. Costs and Tariffs 2.46 The level of operating costs at the project ports appear to be reasonable, e.g., not more than 55% of total revenue in 1980. A great deal of cost data is collected by the HABs; however, no costing system exists which readily reveals the unit cost of individual port services. Through the maintenance of separate income and expenditure accounts for some operating units, a broad indication of the adequacy of some tariff levels is derived. Additional information on the matter of tariffs and costs will need to be gradually developed through project and sector work. 2.47 Tariffs for various port services such as ships' dues, wharfage, storage, etc., are determined by the MOC in consultation with the State Price Commission. Most current rates were set in 1978 and are generally lower than comparable charges at Hong Kong (Table 8). Few tariffs are cost based. Those applicable to foreign ships and import cargo have been purposely set close to but lower than charges at Hong Kong. Tariffs for domestic ships and cargo are influenced by state commodity price control, and export incentive policies. In order to minimize unproductive berth time, a higher rate of Y 0.10 per net registered ton per day is charged to vessels for overstaying instead of Y 0.02 per net registered ton per day. However, storage charges per ton of cargo do not increase with storage time. HABs now have power to impose storage penalty rates subject to the agreement of the provincial government. So far increases have been resisted on the grounds that inadequate means exist to transport cargo out of the ports. H. Budget, Accounting and Audit 2.48 The MOC prepares for each port operating district annual targets of traffic throughput, average cost per thousand tons of cargo handled, length of port stay per ship, ratio of current assets to revenue, average utilization rate of cargo handling equipment, ratio of cargo loss and damage to total tonnage handled. From this data, an operating financial plan is prepared and a net profit projected. The plans are examined by MOC and when approved by MOC and the Ministry of Finance they constitute the port's operating budget. Separate budgets are prepared for each HSO. Some budget flexibility is allowed, such as transfers between items with the exception of wages. Supplementary budgets can be approved by MOC and the Ministry of Finance should the need arise. 2.49 Additions to, and replacements of port assets are the subject of separate budgets called capital plans. Ministerial approval is required for any capital expenditure exceeding Y 150,000. In the case of new projects designed to handle more than one million tons of cargo annually, approval of the State Planning Commission is also required.  - 18 - 2.50 The PODs currently prepare and provide to the HAB the following financial statements: Funds Balance Sheets (yearly); Statement of Fixed Assets (yearly), an elaboration of a Balance Sheet item; Special Funds and Appropriations (yearly), an elaboration of a Balance Sheet item; Statement of Seaport Handling Cost (monthly), containing information on the plan for the year and the performance for the reporting month as well as cumulatively to date; and Statement of Profit (monthly). These financial statements are now routinely prepared by each POD which forms part of the HAB. The statements of the PODs are consolidated by the HAB which reports to the MOC. Identical statements would be provided annually by the CHCs to MOC. Accounting at the project ports is entirely manual; neither mechanical nor electronic data equipment is used. Each RAB maintains accounts on a double entry cash basis for port service transactions but some bureau factories and repair facilities employ double entry accrual basis accounting. No credit is allowed by the port to shipping firms and cargo agents. Management accounting consists of monthly key indices and capital construction progress statements. Revenue, handling costs and administrative expenses are examined quarterly and compared with budgets. Final accounts for the year including a balance sheet are prepared within 50 days of the fiscal year ending December 31. Annual financial statements on capital construction are ready within 60 days of the fiscal year end. A separate annual income and expenditure account is prepared for each HSO, but all HSO assets and liabilities are incorporated in the HAB's balance sheet. 2.51 Each project port HAB maintains an internal audit system which exercises current control over sectional accounts and preaudits all bills for port services and reconciles revenue with cargo manifests. Expense payments are also preaudited and payrolls verified. A materials control department checks stores inventories against records on a continuous random basis. 2.52 A contintous audit is conducted by the city financial bureau, in the case of Shanghai and Tianjin, and, in the case of Huangpu, the provincial financial bureau. These financial bureaus represent the Ministry of Finance. No annual certificate is issued by these external auditors who submit reports directly to the MOC only if they are dissatisfied. During negotiations, assurances were obtained from Government that it will provide the Bank with audited accounts, by auditors acceptable to the Bank, for each project CHC within six months of each fiscal year end. 2.53 Additional financial control is exercised by the People's Bank of China in that cash withdrawals by HABs for wages are restricted by the bank to the total wage allocation contained in the annual financial plan.  - 19 - III. THE PROJECT A. Investment Plan 3.01 The objective of the Government of China is to promote investments in the transport sector that would prevent the sector from becoming a serious bottleneck to the country's economic development. It is at present drawing up a five-year national economic development plan for the period 1982-86 and the total medium and long-term investment needs of service sectors such as transport will become clear only when the plan draft is released, Until the five-year plan is finalized, therefore, the MDC and the ports will only have annual budgets; these are reviewed in Chapter 5. Even at this time, however, certain bottlenecks in the transport sector have become obvious, such as the inadequacies of the three project ports to handle growing container traffic and some special categories of traffic, such as coal. The Government has indicated that coal handling facilities in Huangpu, and container handling facilities in Huangpu, Shanghai and Tianjin will be accorded high priority in the five-year plan. B. The Project and the Loan 3.02 The Government recognizes that while transport in general is of great importance, ports in particular have a special position not only in the transfer of resources between North and South China, but also as the gateways to foreign markets and to foreign sources of plant, equipment and technology. Imports of capital and intermediate goods are required to help modernize industry and agriculture in order to increase productivity and living stan- dards, and exports are vital to pay for the needed imports. In fulfillment of this policy, the Government has already approved major investment programs at the three project ports of Huangpu, Shanghai and Tianjin for modernization and expansion of facilities and has requested the Bank's support in their finan- cing. The objective of the proposed project is to meet short term traffic requirements in the three most important ports of China while Government evolves a long-term strategy for meeting the country's requirements for port facilities through the remainder of the century. The proposed project is designed to meet short-term traffic requirements of the three project ports until the mid-1980's and the loan would assist in financing the implementation of the project. Also, in preparation of future investments in the transport sector, particularly in relation to this project, the Government would do as part of the project a containerization study of the hinterlands of the three ports. This study would identify inland intermodal terminals, other facilities and transport equipment required to optimize the door to door transport potential of the containerization of cargo through these ports.  - 20 - C. Description of the Main Project Items 3.03 The proposed project consists of: (a) Huangpu Coal Terminal (Map 15817): (i) construction of a 440 m coal wharf with an alongside depth of 12.5 m below MLW, capable of accomodating two bulk vessels of up to 35,000 dwt. Also construction of a 400 m quay at right angles to the wharf for barge loading of coal, with an alongside depth of 4 m below MLW for 200 m and 3 m below MLW for the other 200 m. The northern extremity of the wharf will be protected by revetment; (ii) reclamation of the area required for the stockpile yard and the rest of the facilities in the terminal and paving of roadways; (iii) dredging in front of the coal wharf to a depth of 12.5 m below MLW. Also dredging for the barge quay as necessary for the depth of water required; (iv) construction of the required auxiliary buildings, a highway bridge, a railway bridge and ancillary works for the ter- minal; (v) procurement of coal handling equipment; and (vi) design and supervision of construction. (b) Huangpu Container Terminal (Map 15845): (i) a 470 m long container wharf now under construction, with an alongside depth of 12.0 m below MLW. The wharf is an extension to the iron and steel wharf in District 2. The south side of the wharf bordering an existing creek will be protected by revetment; (ii) reclamation and paving of the area required for the container yard and ancillary facilities in the terminal; (iii) dredging of a basin in front of the wharf to a depth of 12.0 m below MLW; (iv) construction of a railway CFS and a roadway CFS and the rest of the required ancillary buildings and infrastructure; (v) procurement of container handling equipment; and  - 21 - (vi) design and supervision of construction. (c) Shanghai Container Terminal (Map 15815): (i) demolition of existing structures and acquisition of the land; (ii) construction of a 424 meters long container wharf, with an alongside depth of 10.5 m below MLW; (iii) reclamation and paving of the required area for the container yard and ancillary facilities; (iv) dredging the required basin to a depth of 10.5 m below MLW; (v) construction of a roadway/barge CFS and ancillary buildings and infrastructure; (vi) construction of an auxillary transfer station approximately two kilometers away from the container terminal with roadway CFS and container yard and ancillary facilities; (vii) procurement of container handling equipment; and (viii) design and supervision of construction. (d) Tianjin Container Terminal (Map 15813): (i) an 890 m long container wharf now under construction with an alongside depth of 12.0 below MLW. (ii) reclamation, consolidation, and paving of the area required for the container yard and ancillary facilities in the terminal; (iii) dredging of the required basin to a depth of 12.0 m below MLW, and dredging of the channel to a depth of 10.0 m below M LW; (iv) construction of a railway CFS and a roadway CFS and ancillary buildings and infrastructure; (v) procurement of the necessary container handling equipment; and (vi) design and supervision of construction. (e) Training (i) training of personnel in operating procedures for the coal terminal at Huangpu, and the container terminals at Huangpu, Shanghai and Tianjin; and  - 22 - (ii) training of personnel for the establishment of computerized management information systems for container operations in Huangpu, Shanghai and Tianjin; (f) Carrying out and completion by December 31, 1984, of a container- ization study of the hinterlands of the ports of Huangpu, ShanghaLi and Tianjin, to identify inland intermodal terminals, other facilities and transport equipment required to optimize the door to door transport potential of the containerization of cargo of these ports. D. Cost Estimates 3.04 Total project cost is estimated at Y 748 million or US$427 million equivalent with a direct foreign exchange component of Y 220 million or US$126 million equivalent and an estimated indirect foreign exchange component of about Y 150 million or US$85 million equivalent. Project cost estimates are summarized on page 23. Details of costs are presented in Table 9. 3.05 Cost estimates for civil works including design and supervision are based on final designs and unit prices for ongoing similar works in China. Equipment costs are based on costs of similar equipment recently purchased in China and on other Bank financed projects in other countries. Estimates are in September 1982 prices, and include physical contingencies for civil works and price contingencies for both civil works and equipment., Physical contingencies of 10% have been included for all terminal civil works except Huangpu container terminal, for which only 5% physical contin- gency has been added due to it's advanced stage of construction. Based on discussions with Government, price contingences for all civil works and local costs assume an annual price increase of 6%. Price contingencies for foreign direct costs assume an annual increase of 8%, for 1982 and 1983; 7.5% for 1984; 7% for 1985; and 6% for 1986. Customs duties amounting to about 15% of purchase price would be levied on imported equipment. The direct foreign exchange component has been based on the cost of all imported materials and equipment and its erection. The resulting estimated direct foreign exchange requirements in each project component is shown in para. 3.04 and for the whole project amounts to about 30%. The indirect foreign exchange component consists mainly of materials and plants for civil works and has been estimated at Y 150 million or US$85 million equivalent and amount to about 20% of total project cost. E. Financing 3.06 Financing of the project, estimated at US$427 million equivalent with a direct foreign currency component of US$126 million equivalent will be met as follows:  Summary of Cost Estimates Y thousand US$ thousand Foreign % Item Local Foreign Total Local Foreign Total Loan of total Huangpu Port A. Civil works, coal terminal 54,508 - 54,508 31,147 - 31,147 - - B. Civil works, container terminal 78,857 - 78,857 44,948 - 44,948 - - C. Equipment, coal terminal 3,745 54,968 58,713 2,140 31,410 33,550 31,410 94 D. Equipment, container terminal 782 13,491 14,273 447 7,709 8,156 7,709 95 Subtotal 137,892 68,459 206,351 78,682 39,119 117,801 39,119 33 Shanghai Port E. Civil works, container terminal 72,152 - 72,152 41,230 - 41,230 - - F. Equipment, container terminal 2,944 47,248 50,192 1,682 26,999 28,681 26,999 94 Subtotal 75,096 47,248 122,344 42,912 26,999 69,911 26,999 39 Tianjin Port G. Civil works, container terminal 197,266 - 197,266 112,720 - 112,720 - - H. Equipment, container terminal 3,686 57,023 60,709 2,106 32,584 34,690 32,584 94 Subtotal 200,952 57,023 257,975 114,826 32,584 147,410 32,584 22 I. Training 2,625 2,625 5,250 1,500 1,500 3,000 - 50 J. Containerization Study 3,500 - 3,500 2,000 - 2,000 - - Subtotal 6,125 2,625 8,750 3,500 1,500 5,000 - 30 K. Customs duties 27,683 - 27,683 15,819 - 15,819 - - Base Cost 447,748 175,355 623,103 255,739 100,202 355,941 98,702 29 L. Physical contingencies 35,277 - 35,277 20,149 - 20,149 - - M. Price contingencies 45,536 44,272 89,808 26,026 25,298 51,324 25,298 49 Subtotal 80,813 44,272 125,085 46,175 25,298 71,473 25,298 30 Grand Total 528,561 219,627 748,188 301,914 125,500 427,414 124,000 29  - 24 US$ million equivalenlt Source of finance Foreign Local Total IBRD Loan 124e 0 124.0 Government 1.5 30K9 303.4 Total 125.5 301 9 427.4 The Bank loan would cover only the direct foreign exchange costs of imported equipment or the ex factory costs of locally manufactured equipment as wel:L as direct foreign exchange costs of installation and commissioiaing of the equipment. Civil works will be financed by the Governme it. Training requirements and studies will be financed by the %overnment. The Government also requested Bank assistance in arranging grant financing for training of port design engineers, and the Government of Norway has agreed to finance such training as part of its ongoing program of bilateral assistance to China. F. Implementation 3.07 The civil works will be implemented by the MOC using the respective Construction Bureaus at each port site as its contractors and will be supervised by the respective RAB by full-time engineers and by the MOC. The Government has already started the construction of the container terminals at Tianjin, Shanghai, and Huangpu and the work on the coal terminal at Huangpu. 3.08 Cargo handling equipment totalling US$124 milliorn equivalent inc:Lud- ing contingencies, and excluding customs duties, would be grouped 4n appro- priate bidding packages by MOC and procured by the China National Technica:L Import Corporation acting as Government's agent for the procurement process in coordination with MOC and the other agencies normally involved in procurement. International competitive bidding in accordance with the Bank's Guidelines for Procurement will be used for procurement of all equipment, except for a list of small items agreed with the Bank, amounting to less than US$200,000 per contract up to a total of US$1,000,000 which may be procured under contracts awarded after evaluation and comparison of quotations solicited from at least three qualified suppliers. Qualifying domestic manufacturers would receive a preference in bid evaluation of 15% of the cif price or the import duty, whichever is the lower. Bidding packages subject to international competitive bidding would be subject to the Bank's prior review of procure-ment documentation and proposed contract award. To help complete the preparation of the equipment specifications and tender documents, the Government has been  - 25 - assisted by foreign experts financed by UNDP. Tenders for supply of coal handling equipment would allow bidders to make offers with alternative systems designs. The tender documents will specify prequalification or postqualification requirements and the condition for either will be approved by the Bank. 3.09 Civil works and cargo handling equipment installation are expected to be completed by the end of 1986, assuming effectiveness of the proposed loan by February 1983. Construction, procurement, and installation schedules are shown in Charts E to L. During negotiations these schedules were confirmed with Government. 3.10 In order to operate the three project container terminals at Huangpu, Shanghai, and Tianjin, the Government intends to train 3,850 staff, technicians, operators and laborers. The coal terminal at Huangpu requires training of 430 persons of various categories. In all, the proposed project requires training for 4,300 persons (Table 11). Coal terminal training facilities already exist in China. For the training of container terminal personnel, however, the MOC has prepared a 2-3 year recruitment and training plan Requirements are divided into two groups: (i) technical staff, including managers, foremen, heavy machinery drivers and maintenance engi- neers, and computer specialists; and (ii) administrators, computer program- mers, and maintenance personnel, technicians, drivers, and laborers. The first group will be trained mainly abroad, e.g., Japan, Hong Kong and Singapore. The second group will be trained in the Shanghai Maritime Insti- tute for varying periods of time depending on specialization. MOC is also planning, at a later stage, to invite some foreign and Chinese experts to conduct on-site training for various categories of staff and advise on oper- ational improvements (Table 12). MOC expects to require foreign technical assistance in computerization of terminal control procedures for which they have no experience so far. During negotiations training programs were discussed and agreed with Government, and assurances were obtained that the above training programs would be carried out as agreed. 3.11 The containerization study will be carried out by the Comprehen- sive Transportation Research Institute and completed before December 1984. During negotiations, agreements were reached with Government that it will provide draft terms of reference for the study and discuss them with the Bank before commencing the study and that it will exchange views with the Bank on the progress and findings of the study. 3.12 None of the proposed container terminals will affect the existing ecology of the ports; reclamation dredging is envisaged for landfill at the project sites for Huangpu, and Tianjin. At Shanghai, where the dredged mate- rial is not planned to be used as fill, it will be disposed of at the regular dumping sites well away from the port area. For the coal terminal at Huangpu, the design incorporates necessary precautions to minimize pollution.  - 26 - G. Disbursements 3.13 Disbursements from the proceeds of the loan would be made on the basis of 100% of foreign cost of imported cargo handling equipment and erection and commissioning thereof, and 100 of ex-factory cost of domesti- cally manufactured cargo handling equipment and foreign cost of erection and commissioning thereof. On this basis and on the basis of the Implementation Schedules shown in Charts E to L, a schedule of estimated disbursements has been prepared (Table 10). The estimated schedule for quarterly disbursements is based on the assumption that the proposed loan will become effective by February 1983. The estimated disbursement schedule was based on disbursement profiles of other similar port projects in China carried out by MOC. The estimated disbursement profile for the three ports project is compressed in time compared to that of other Bank financed transport projects since 1970, since: (i) the civil works of the projects are well advanced and, in the case of of Huangpu Port, almost complete; and (ii) the project involves the supply of equipment which is usually disbursed quite rapidly and on time. Disbursement by the Bank is expected to be completed by June 30, 1987. During negotiations, the disbursement schedule was discussed and agreed with Gove rnment. H. Completion Report and Economic Impact Study 3.14 Promptly after completion of the project, the MOC will prepare and furnish to the Bank a report on the execution and initial operation of the project, its costs, and the benefits derived and to be derived from it. Also, in order to assess the economic impact of the container CHCs on general cargo handling after completion of the project, MOC will instruct each of the container CHCs to carry out economic cost-benefit analyses on their impact on general cargo handling in their respective ports. These economic analyses will be carried out at the end of the first and fourth years following completion of the project. IV. ECONOMIC EVALUATION A. Main Benefits and Beneficiaries 4.01 The proposed project will increase port handling capacity and reduce cargo handling cost in the three largest ports of China, Huangpu, Shanghai and Tianjin. During the past five years, coal traffic through Huangpu port, and general cargo traffic of containerizable cargo through all three ports has  - 27 - increased rapidly and further increases are anticipated as a consequence of general growth in production of agricultural and light industrial products as well as in regional consumption of coal. Substantial foreign and local cost savings will be achieved by increased port handling capacity and by more efficient port handling methods, and the proposed project would support berth construction and conversion as well as acquisition of modern coal and container handling equipment for this purpose. The main direct beneficiaries from the proposed project and their estimated direct shares of the project benefits will be ship operators, 79%, cargo owners, 14%, and the ports, 7%. If 60% of total containerizable traffic is assumed to be carried on Chinese- controlled ships (para. 1.25) and all benefits on containerizable import cargo acrue to China, the direct Chinese share of benefits from the container berths would amount to about 62% of total, with the remaining 38% of benefits accruing to foreign ship and cargo owners. If all benefits from the Huangpu coal berth accrue to China, the direct Chinese share of the combined benefits from the coal and container project berths would amount to about 70% of total with the remaining 30% of benefits accuring to foreign ship and cargo owners. 4.02 The weighted economic return on the main project components inclu- ding training is 29%. B. Traffic 4.03 Traffic statistics covering the period 1975-80 and traffic forecasts covering the period 1980-95 were prepared by the three project ports and are shown in detail in Tables 13-15. The traffic forecasts were based on past trends in traffic growth adjusted by traffic expected to be generated by specific development projects within the respective port hinterlands. Given the current absence of an approved five-year development plan and the uncertainty about traffic growth arising from the ongoing readjustment of the economy, the overall traffic growth forecast is reasonable. (a) Huangpu 4.04 The port of Huangpu, situated on the Zhujiang some 130 km northwest of Hong Kong, serves the city of Guangzhou and environs, which constitute one of China's major concentrations of industrial activities and the largest in South China. Huangpu serves many of the adjoining provinces both for international and domestic trade and is the third port in China in terns of economic importance. 4.05 In 1980 the port handled 12.1 million tons of cargo, of which 4.9 million tons were in foreign trade and the balance of 7.2 million tons in domestic trade. Of foreign trade, imports constituted 3.5 million tons and exports 1.4 million tons. Coal traffic accounted for 1.7 million tons, and general cargo accounted for 3.4 million tons of which about 960,000 tons were containerizable. Only foreign traffic is containerized and accounted for 59,000 tons in 1980.  - 28 - 4.06 Huangpu port traffic 1975-95 is shown in detail in Table 13 and is summarized below: Million tons % Annual growth 1975 1980 1985 1990 1995 1975-85 1985-95 Coal 2.5 1.7 3.2 5.9 6.6 2.5 7.5 Other dry bulk 1.8 2.9 4.6 9.2 10.6 9.8 8.7 Liquid bulk 0.7 2.7 3.2 4.7 5.9 16.4 6.3 Bagged cargo 0.5 1.4 1.7 2.7 3.4 13.0 7.2 General cargo 1.7 3.4 3.9 4.5 7.5 8.7 6.8 Total 7.2 12.1 16.6 27.0 34.0 8.7 7.4 Containerizable 0.4 1.0 1.2 1.4 1.7 11.6 3.5 Containerized - 0.06 0.4 0.8 1.0 n.a. 9.6 The drop in coal traffic through Huangpu between 1975 and 1980 reflects a switch from coastal shipping to railway transport due to lower railway trans- port cost for which the coal consuming enterprises had to account seperately from 1980 onwards. The switch caused congestion on the railway and coal traffic through Huangpu is now recovering: traffic growth is expected to remain high due to regional growth in power demand. Of containerizable cargo, only foreign cargo is projected to be containerized. The low traffic projec- tion for containerizable cargo during the period 1985-95 is very conservative and reflects the current cautious view of the long term direction of the economy. (b) Shanghai 4.07 Shanghai port is located on the Huangpu River some 30 km upstream its confluence with the Yangtze. With a population of over 10 million and an industrial work force of over 2 million, the Shanghai area contains the most important concentration of industrial activities in China, from the manufac- ture of textiles to heavy industry of all types. The port serves not only the foreign trade needs of the city for imports of steel and export of finished products, but also as the main gateway for the area industries in their domestic movement of raw material and finished products through coastal and river shipping. For foreign trade, the port also serves inland cities such as Nanjing and adjoining provinces of central China. 4.08 In 1980 the port handled a total of 84.8 million tons of cargo, of which 17.9 million tons was foreign trade traffic and the rest domestic. Of the foreign trade, 13.6 million tons were imports and 4.3 million ton exports. General cargo traffic accounted to 21.8 million tons of which 5.4 million tons were containerizable. Only foreign traffic is containerized and amounted to 244,000 tons in 1980.  - 29 - 4.09 Shanghai port traffic 1975-95 is shown in detail in Table 14 and is summarized below: Million tons % Annual growth 1975 1980 1985 1990 1995 1975-85 1985-95 Dry bulk 29.6 48.1 54.0 66.3 73.3 6.2 3.1 Liquid bulk 10.2 11.5 13.4 14.6 14.6 2.8 0.9 Bagged cargo 2.0 3.4 3.2 4.1 5.1 4.8 4.8 General cargo 14.0 21.8 32.4 40.0 47.0 8.8 3.8 Total 55.8 84.8 103.0 125.0 140.0 6.3 3.1 Containerizable 3.2 5.4 9.3 11.6 13.7 11.3 3.9 Containerized - 0.24 1.3 6.0 7.0 n.a. 18.3 Of containerizable cargo, only foreign cargo is projected to be containerized. The low traffic projection for the period 1985-95 is conservative and reflects the current cautious view of the long term direction of the economy and the future development of Shanghai port which has limited expansion possibilities in its present location. (c) Tianjin 4.10 Located some 120 km southeast of Beijing, the Tianjin area contains the second largest concentration of manufacturing activities in China with some 1.25 million workers. The port is, therefore, the leading port of north China serving both the country's capital and the Tianjin industrial complex. In addition, its hinterland includes large areas of the north and northwest and ports of Shandong and Henan. Farm products, handicrafts and manufactured goods are exported through the port. The area abounds in natural resources salt, petroleum, natural gas, geothermal power, coal and building materials within a radius of 200 km. The region is thus poised for rapid growth, with resultant impact on its foreign trade which is expected to grow 8-10% p.a. 4.11 In 1980, the port handled 11.9 million tons of cargo of which 8.7 million tons was in foreign trade and 3.2 million tons in domestic, coastal trade. Of the foreign trade traffic, imports constituted 6.3 million tons, mostly wheat and iron and steel, and exports only 2.4 million tons. General cargo traffic accounted to 5.4 million tons of which 2.3 million tons were containerizable. Only foreign trade is containerized and accounted for 138,000 tons in 1980. 4.12 Tianjin port traffic 1975-95 is shown in detail in Table 15 and is summarized below:  - 30 - Million tons % Annual growth 1975 1980 1985 1990 1995 1975-85 1985-95 Dry bulk 3.0 5.1 6.6 8.7 9.2 7.2 5.5 Liquid bulk 0 .6 0 .6 0.9 1.3 1.4 4.1 4.5 Bagged cargo 0.4 0.8 0.9 0.9 1.0 8.4 1.1 General cargo 4.2 5.4 7.9 11.5 14.7 6.5 6.4 Total 8.2 11.9 16.3 22.4 26.3 7.1 4.9 Containerizable 1.4 2.3 3.4 4.9 5.6 9.3 5.1 Containerized - 0.1 1.9 3.8 4.0 n.a. 7.7 of containerizable cargo, only foreign cargo is projected to be container- ized. The low traffic projection for the period 1985-95 is conservative and reflects the current cautious view of the long-term direction of the economy. (d) Intermodal Transfer 4.13 Intermodal transfer of cargo in the ports is shown in Table 16, which shows the mode of transport by which cargo enters and leaves the project ports. Intermodal transfer volumes are not directly comparable to the traffic volumes shown in paras. 4.03-4.12, which represent the tonnage handled over the docks, counting cargo arriving and leaving by wster transport twice and cargo entering or leaving by land transport only once. 4.14 Hluangpu. The most important modes of transport to and from Huangpu in 1980 were coastal shipping, river and railway, with road transport playing a rlatively minor role. Most coal arrived by coastal and ocean shipping with onward transport by river, 600,000 tons, and rail, 250,000 tons. With the establishment of the proposed coal berth, the volume of coal to be transported to and from Huangpu will increase by more than 100% over the next 5-7 years. The railways have indicated that transport of coal is among their highest priorities over the next 5-10 years, and are expected to allocate sufficient wagons to accommodate demand of coal trans- port by rail from Huangpu. River transport is also expected to handle ade- quately the demand for coal transport by river generated through the new coal berth. For general cargo, river transport, 954,000 tons, and rail transport, 923,000 tons, are the most important modes. Since currently there are no plans for rail transport of containers, and since only a small amount of containers will be carried by road, it has been assumed that containerized traffic will continue to be carried as break bulk by rail and road with most of the increase in general cargo being carried by road. Of the potential benefits from containerization, therefore, only those occurring within the port perimeter would be realized in the near future and are accounted for in the analysis. The proposed containerization study (para. 2.45) would identify ways in which all potential benefits from containerization could be captured in the longer term.  - 31 - 4.15 Shanghai. The dominating modes of transport to and from Shanghai in 1980 were coastal shipping, 36,554,000 tons, river transport, 30,369,000 tons, and lighterage, 23,802,000 tons, followed by road, 12,294,000 tons, and rail, 5,382,000 tons. River transport takes place mainly on the Changjiang. Road transport is mainly short distance between the port and the immediate indus- trial hinterland in the Shanghai area. It is expected that containerizable cargo will be carried mainly by rail, 1,296,000 tons, and road, L,100,000 tons, with road transport covering short distance local traffic and railway transport covering medium and long distance traffic. Since there are no firm plans for either rail or road transport of containers, it has been assumed that containerized traffic will continue to be carried as break bulk by rail and road with most of the increase in general cargo being covered by road. Of the potential benefits of containerization, therefore, only those occurring within the port perimeter would be realized in the near future and are accounted for in the analysis. The proposed containerization study (para. 2.45) would identify ways in which all potential benefits from containeriza- tion could be captured in the longer term. 4.16 Tianjiin. The most important modes of transport serving the port of Tianjin are rail, 6,291,000 tons and road, 2,811,000 tons. Containerizable cargo is transported almost exclusively to and from the hinterland by road, 2,299,000 tons, and containerized cargo are expected to be exclusively carried by road. The two cities of Tianjin and Beijing and the surrounding province Hebei, plan to establish a joint transport company for container transport by road between Tianjin and the industrial area of Beijing. There are also plans for establishing in the industrial area south of Beijing, a container termi- nal, which will act as a container freight station and cargo consolidation area. As is the case for the two other ports, the railways currently have no plans for carrying containers, and container traffic in the future is expected to be carried almost exclusively by road. The proposed containerization study (para. 2.45) would identify ways in which potential benefits from containers transport by rail could be captured in the longer term. C. Ship Time Analysis (a) Huangpu 4.17 In 1980, coal carriers spent an average of 4 days in port, of which waiting for berth accounted for half a day and unproductive time at berth for nearly one day. Foreign trade general cargo ships spent an average of over 10 days in port, of which waiting for berth accounted for nearly two days and unproductive time at berth for more than three days. With the projected growth in traffic, by 1985 ship time waiting for berth will increase further, with resulting severe congestion in the port, unless the facilities are improved and expanded to cope with the growing traffic. General cargo berth occupancy in 1980 was above 90%. (b) Shanghai 4.18 In 1980, foreign trade general cargo ships spent an average of over nine days in port of which waiting for berth accounted for more than two days  - 32 - and unproductive time at berth for more than five days. The anticipated growth in traffic will result in serious congestion in the port unless the facilities are improved and expanded to raise cargo handling capacity in step with the growth of traffic. General cargo berth occupancy in 1980 was about 70%. (c) Tianjin 4.19 In 1980, foreign trade general cargo ships spent more than 8 days at Tianjin port, of which waiting for berth accounted for more than three days and unproductive time as berth for two days. The port plans to deal with these problems partly through additional facilities and equipment and partly through operational improvements. Without such measures, ship time in port, particularly ship time waiting for berth, will increase to unacceptable levels by 1985. General cargo berth occupancy in 1980 was about 70%. D. Operational Parameters (a) Coal Berths 4.20 Operational parameters for the existing and proposed berths of Huangpu assumed for the economic evaluation are shown in Table 17. Average ship load is based on actual performance. Maximum berth utilization has been assumed at 65% with scheduled ship arrivals. Ship size has been assumed at 17,000 dwt, which is the largest vessel size that can be accommodated by the river access channel to the port without major capital dredging. (b) Container Berths 4.21 Operational parameters for existing, converted, and proposed con- tainer berths at Huangpu, Shanghai and Tianjin assumed for the economic evaluation are shown in Table 18. Average shiploads are based on actual performance in 1980. Maximum berth utilization has been assumed at 95% for break-bulk berths and 50% for container berths with random ship arrivals. Average ship size has been assumed at 10,000 dwt for break-bulk vessels and 17,000 dwt (1,000 TEUs) for container vessels. All three ports have some congestion now, with foreign trade general cargo vessels waiting times ranging from 2.5 days in Huangpu and Shanghai to 3.5 days in Tianjin. With the projected annual growth in coal through Huangpu and general cargo foreign trade through all three ports over the next decade of 12% and 8% respectively, the situation by 1985 would become intolerable in Huangpu and Shanghai and difficult in Tianjin, unless the facilities are improved and expanded and new facilities provided where required. Berth occupancy at all three ports is close to 90% in the busy fall season and productivity is already very high. The ports are working an average 16.3 hours per day 320 days a year; this takes into account working time lost due to repair and maintenance of equip- ment, weather, and holidays.  - 33 - E. Benefits and Costs (a) Benefits 4.22 Quantifiable benefits attributed to the proposed improvements in the project ports consist of: cargo-handling savings, ship time savings, and cargo time savings. Project berths have been assumed to reach full utiliztion in the third year after commissioning. Benefits from project berths have been assumed constant from the third year after commissioning onwards. The traffic demand and ship berth and waiting time without and with proposed project is shown in Tables 19 through 22 and the estimated benefits for each project component are summarized in Table 23. 4.23 Cargo Handling Savings. Port handling cost for coal over existing and proposed berths were estimated at Y 1.00/ton and Y 0.75/ton respectively. Port handling costs for container cargo over existing and proposed berths were estimated at Y 15/ton and Y 10/ton respectively. For coal the costs represent handling from ship to dock; for general cargo and containers the costs repre- sent handling costs from ship to transit shed and CFS respectively. Since currently the ports have no cost information on specific port handling opera- tions for coal, break bulk cargo, or containers, the costs were estimated on the basis of cost and tariff information on similar port handling operations in the region, modified in the light of lower labor costs in Chinese ports. 4.24 Ship Time Savings. These include both the reduction in ship time while awaiting berth and lower berth occupancy time due to improved cargo handling productivity. Estimates of ship time in port without and with the project were based on estimated operational parameters for existing and proposed berths in the three project ports (paras. 4.20 and 4.21). Ship berth and waiting time savings are estimated on the basis of representative ship costs in port shown in Table 24. The ship costs in port used for the economic analysis are Y 15,000/day in port for break bulk general cargo ships and bulk carriers, and Y 25,000/day in port for medium sized container vessels. 4.25 Cargo Time Savings. These include both the reduction in cargo time while awaiting berth and lower berth occupancy time due to improved cargo handling productivity. Cargo time savings were calculated as saved interest on cargo value; cargo value is estimated at an average Y 120/ton for coal and Y 1,500/ton for container cargo. Coal cargo value was based on an average US$55/ton fob Australia plus ocean freight and trans-shipment to barges at Chinese port of destination at about US$15/ton. Container cargo value was based on current average value of containerizable cargo through the three project ports. 4.26 Other Savings. These include avoided cargo diversion to other ports with consequent increase in transport time and cost, as well as reduced breakage and pilferage of container cargo. While information is insufficient for their estimation, these savings would be substantial, and their inclusion would increase the economic viability of the project.  - 34 - (b) Costs 4.27 Project cost estimates were adjusted for the economic evaluation as follows: (i) price contingencies, taxes and duties were excluded; (ii) an annual maintenance cost of 2% was assumed for civil works and 7.5% for equipment; and (iii) a project life of 20 years was used for all project components. To reflect higher maintenance costs and/or replacement costs of project equipment as it grows older, equipment maintenance costs were increased by 50% from 1996 through 2005. The economic project costs for each port are summarized in Table 23. For the purpose of the economic evaluation the cost of capital was assumed to be 15% and the foreign exchange rate was assumed to be Y1.75 = US$1.00, which was the foreign exchange rate effective at the time of appraisal. Estimates of the opportunity cost of foreign exchange were not attempted, but would probably result in a higher rate of exchange than the one assumed above as well as a higher economic return of the project. F. Project (a) Huangpu 4.28 The Huangpu project components include: (i) construction of two coal berths totalling 440 m and provision of appropriate coal bulk handling equipment for two berths; and (ii) cargo handling equipment for use at a 470 m long container wharf now under construction and due for completion in late 1982. The project would be implemented during the period 1982-85. Capital costs inclusive of supervision and training costs would amount to Y 223.7 million of which Y 116.7 million would be for the coal berth and Y 107.1 million would for the container berth. Annual recurrent costs would amount to Y 8.7 million until 1995 and Y 11.9 million thereafter. Savings in 1988 would amount to Y 191.5 million, of which Y 82.2 million for the coal berth and Y 109.6 million for the container berth. Based on a project implementation period of four years and a project life of twenty years, the Huangpu project would yield a combined economic return of 39%, or 39% for the coal berth and 39% for the container berth. (b) Shanghai 4.29 The Shanghai project component includes cargo handling equipment for use at a 424 meter long container wharf, construction of which is expected to start in late 1981 and be financed from government's own sources. The project would be implemented during the period 1982-85. Capital costs inclusive of supervision and training would amount to Y 139.6 million followed by annual recurrent costs of Y 5.3 million until 1995 and Y 7.2 million thereafter. Savings in 1988 would amount to Y 51.4 million. Based on a project implementation period of four years and a project life of twenty years, the Shanghai project would yield an economic return of 23%. (c) Tianjin 4.30 The Tianjin project component includes cargo handling equipment for use at an 890 meter long container wharf now under construction. The wharf is  - 35 - due for completion in late 1981. Allowing for delay in fill consolidation, port officials expect completion of yard paving and auxiliary buildings by 1984. The project would be implemented during the period 1982-85. Capital costs inclusive of supervision and training would amount to Y 297.1 million followed by annual recurrent costs of Y 9.4 million until 1995 and Y 12.0 million thereafter. The project is specifically designed to attract container traffic. By expanding and improving cargo handling and storage facilities, the project will reduce ship and cargo time and port handling costs. Savings in 1988 would amount to Y 113.4 million which would grow with traffic. Based on a project implementation period of four years and a project life of twenty years the Tianjin project would yield an economic return of 21%. G. Overall Economic Evaluation and Risks 4.31 Overall economic evaluation shows that implementation of all project items are well justified. The economic returns for each major project element as well as their sensitivity to variations in costs and benefits are shown below (in %): Huangpu Shanghai Tianjin Coal Container Total container container Total Assumptions berths berth berths berths berths project Best estimate of costs and benefits 39 39 39 23 21 29 15% increase in costs Best estimate of benefits 35 36 36 21 19 23 Best estimate of costs 25% decrease in benefits 31 33 32 18 16 26 15% increase in costs 25% decrease in benefits 28 30 29 15 14 20 The results show that even with 15% increase in project costs and 25% decrease in benefits, the total project would still yield an economic return of 20%. Assuming, as a worst case, a 10 year project life, a 15% increase in costs and a 25% decrease in benefits, the economic return for the total project would still be 18% which is acceptable.  - 36 - 4.32 All project components involve proven technology that has been in extended use in other parts of the world; technological risks connected with the project are therefore small. In addition, MOC and the three ports involved have successfully undertaken large scale port construction works and have competent managerial and technical expertise therefor; erection of the cranes and conveyor systems will be the responsibility of the supplier. Project implementation risks, therefore, are small. Managerial and technical expertise in container handling operations, however, is currently limited. Risks from inexperienced container terminal operation, therefore, are present in the early years, but the project includes training to reduce those risks. V. FINANCIAL EVALUATION A. General 5.01 The project ports are efficiently operated and a reasonable level of budgetary control is achieved through the use of annual financial plans based upon preset operational targets. During 1978-80 the highest working ratio achieved was 58, but ratios below 50 resulted in most years, which is a very commendable performance. The lowest financial rate of return, calculated as net operating revenue as a percentage of average net fixed assets in use, was a satisfactory 12.6%. Some features of the financial system, however, are less than satisfactory and should be reviewed. Some fixed assets whiclh are referred to as basic facilities, i.e., wharves, breakwaters, roads and rail track, are undoubtedly undervalued in Shanghai as much of the port's infrastructure was constructed many years ago. By comparison, assets at Huangpu, which is a relatively new port, are probably valued at close to current replacement cost. It is significant that Huangpu and Tianjin show rates of return of 12.7% and 12.6% respectively in 1980, whereas Shanghai shows a rate of return around 31%. An annual depreciation charge is made only in respect of fixed assets other than basic facilities. The cost of renewing or rehabilitating basic facilities is charged against revenue from harbor dues earned by the HAB in the year in which it is incurred. Although large sums have been forecast for expenditures of this nature, such an accounting practice could result in the postponement of necessary renewals expenditure to ensure that the year's net revenue is maintained at an acceptable level. Not surprisingly, actual renewal expenditures during 1978-80 were considerably less than the liberal forecasts for 1981-86. This practice also tends towards uneven expenditure levels, making a comparison of annual results difficult. It is also less reliable than a universally accepted depreciation charge when determining cost of services for tariff setting purposes. 5.02 A unique formula is employed by the Government to determine what proportion of annual net revenue is retainable by the ports and how much is to be remitted (monthly) to the Government. Details of this formula are given in Table 25. Application of the formula results in the ports remitting about 88% of their annual net income to the Government. The Government uses these resources to finance capital works at the major ports and for the procurement  - 37 - of major equipment. Such new fixed assets are taken into the port's balance sheet as construction or acquisition is undertaken. The Government also uses port remittances to finance port access channel maintenance dredging. 5.03 Consideration is now being given by MOC to alternative methods of providing greater incentive for ports to maximize the use of their financial resources. However, until this formula is changed, the project ports will not finance new basic facilities or service a loan in respect thereof. This financial evaluation is therefore based on the present formula which will result in the Government being responsible for financing the proposed project and servicing the related Bank loan. This evaluation assumes that Bank loan terms will be borne by MOC out of surplus monies received from the project ports. B. Present and Future Financial Performance 5.04 Income and expenditure accounts for 1978-86 for Huangpu, Shanghai and Tianjin are given in Tables 26 to 28 respectively. Tables 29 to 31 show revenue from harbor dues and HSO harbor services as well as the expenditures incurred in collecting harbor dues and providing HSO harbor services in each port. The HSO net revenues are incorporated in Tables 26 to 28. The HSO has no independent budget resources and passes on all revenue collected by it to the HAB, which in turn, out of its budget, covers all cost incurred by HSO. Summarized comparative data for the ports are given below for 1981, 1984 and 1986 (in Y million): Year Huangpu Shanghai Tianjin 1981 Operating revenue 72.0 293.8 104.4 Operating expenditure 44.9 165.4 63.4 Net operating revenue 27.1 128.4 41.0 1984 Operating revenue 86.0 336.0 137.4 Operating expenditures 58.4 196.1 89.4 Net operating revenue 27.6 139.9 48.0 1986 Operating revenue 101.8 373.3 163.2 Operating expenditure 71.5 223.3 110.9 Net operating revenue 30.3 154.0 52.3  - 38 - 5.05 Projected revenues are based on traffic forecasts in Tables 32 through 34. Forecasts of revenue from loading and unloading cargo, which represents more than 60% of alongside port operations, are given in Tables 29 to 31. Forecast operating expenses allow for a 67 annual rate of inflation on most costs. Key financial assumptions used in forecasting are given in Table 25. 5.06 Tables 26 to 28 show forecast working ratios. Huangpu ranges from 51% to 567% during 1981-84, decreasing to around 557. by 1986. Tianjin ranges from 53%/ to 58!. during 1981-84, remaining at 58% by 1986. Shanghai ranges from 5M% to 52X during 1981-84, remaining at 527% by 1986. The financial rate of return at Huangpu and Tianjin ranges from 11.2% to 15.1% during 1981-84. In 1986 the rate of return deteriorates to 7.37% at Huangpu and 9.37% at Tianjin due partly to the cumulative effect of inflation since 1981 and because the full cost of the proposed project is included in net fixed assets in 1986, whereas the new facilities will not be operating at maximum capacity until several years later. The rate of return at Shanghai was 24.8% in 1981, falling to 23.97. by 1986. The above operating ratios are satisfactory; however the rate of return at Huangpu and Tianjin is inordinately low after 1984 indicating a need to revise tariffs to take account of the effects of inflation on operating expenses after 1981. Tariff revisions in 1985 would coincide with the coming into use of part of the proposed project at these ports. In the case of Shanghai, fixed assets need to be revalued (para. 5.01) following which rates of return similar to those earned at Huangpu and Tianjin could be expected. Tariff revision at Shanghai also is expected to become desirable by 1985. 5.07 Balance sheets of the project ports for 1977-80 are given in Table 35 and cash flow during this period is shown in Table 36. Balance sheets for 1981-86 are given in Table 37 and cash flow forecasts for the same period in Table 38. Current tatios throughout are adequate, ranging between 2.4 and 3.5 at Shanghai and between 4.3 and 8.0 at Huangpu and Tianjin. It has been assumed that the proposed loan will not appear in future port accounts but will be serviced by MOC. If the loan were to be shown in the port accounts, the debt equity ratio and debt interest coverage would be as follows: Ratios 1984 1986 Huangpu Debt/Equity Ratio 10/90 13/87 Interest charge coverage (times) 8.3 3.7 Shanghai Debt/Equity Ratio 3/97 8/92 Interest charge coverage (times) 63.3 21.7 Tianjin Debt/Equity Ratio 6/94 10/90 Interest charge coverage (times) 17.9 6.3 The above ratios are satisfactory.  - 39 - 5.08 Table 39 shows forecasts of cash resources derived by MOC from the project ports, the proceeds of the proposed loan and the forecast disposition of these resources in the execution of the proposed project. The table is, in fact, an estimate of MOC's financing plan related to the three project ports during the construction period. The MOC cash flow related to the project ports is summarized below (in Y million): Total 1981-86 % Cash Requirements Investment-proposed ports project /a 741.1 55 Project ports channel maintenance dredging 269.6 20 Containerization study 3.5 0 Staff training 5.3 1 Proposed IBRD loan interest and charges 42.5 3 Balance-available for other investments 284.5 21 Total cash requirements 1,346.5 100 Cash Available Remittances from project ports Share of net revenue 1,O 13.4 75 Share of depreciation 51.5 4 Levy on Shanghai assets 64.6 5 Subtotal 1,129.5 84 Proposed IBRD Loan 217.0 16 Total cash available 1,346.5 100 /a Y 38.7 million expended on project prior to January 1, 1981. 5.09 The above table shows that the difference between total project cost, and the proposed bank loan, will be met from surplus revenues and depreciation funds remitted to MOC by the three project ports. In addition, using these remittances, MOC will be able to finance the containerization study, channel maintenance dredging at the project ports, and the proposed loan service charges. Furthermore, MOC will have available over the 6-year period about Y 285 million to meet capital investment needs other than the proposed project. At the time of writing, these needs are not yet known as the Government's Five-Year Development Plan 1982-86 remains under preparation. In the event that less than Y 285 million is required by the project ports for additional port improvements, the balance will be available for capital works at other major ports.  - 40 - C. The CHCs 5.10 While project preparation and appraisal has been based on the traditional organization and operation of the entire port, the reforms now in progress (paras. 2.05 and 2.06) will make the CHCs the primary organiza- tional and economic/financial entities for the project. Their financial and operational performance will be the object of the project dialogue with the Bank in the future. To ensure an adequate basis for this dialogue with Government, it was agreed that it would provide to the Bank financial and operational information related to the project as follows: (a) Financial Reporting. For each project CHC, the following will be provided annually: the Funds Balance Sheet, the Statement of Fixed Assets, the Statement of Special Funds and Appropriations; the Statement of CHC Handling Cost; and the Statement of Profit; and (b) Operational Reporting. For each project CHC, monthly data on the following will be collected and then provided annually: (i) tonnage and containers handled and stored, and percentage of break bulk cargo and containers transported in and out by rail, road and waterway; and (ii) ship arrivals; ship waiting time; berth time vacant; berth time occupied, unworkable; berth time occupied, workable but unworked; berth time occupied, worked; gang and crane time total; and gang and crane time idle. 5.11 In view of the need for continuing generation of adequate resources by the project CHCs to cover expenditures made for project CHC operations, assurances were obtained from Government during negotiations that, for each fiscal year starting with fiscal year 1986 it will take or cause each project CHC to take such measures as shall be necessary to ensure that in respect of each project CHC total CHC expenditures excluding depreciation shall not exceed 50% of total CHC revenue. 5.12 As described earlier (para. 2.46) there does not now exist a costing system for the unit costs of individual services. Therefore, assurances have been obtained from the Government that it will cause each of the Project CHCs to carry out a study of the annual operating costs it incurs during at least the first full year of operation of its facilities constructed under the Project, and will exchange views with the Bank on the terms of reference and findings of each such study.  - 41 - D. Sensitivity Analysis 5.13 The following table shows the resultant decline in cash available to MOC during 1981-86 in the event of (i) operating expenses exceeding estimates by 5% annually; (ii) revenues falling by 5% annually due to lower than forecast traffic growth; and (iii) proposed project costs increasing by 10% overall during the period 1982-86 (in Y million): Assumption Total 5% increase in operating expenses 100.5 5% reduction in revenue as a result of lower traffic growth 164.8 Subtotal 265.3 Less reduction in variable operating expenses resulting from lower traffic 44.9 Total decline in cash available to ports 220.4 Total decline in cash remitted to MOC 194.0 10% increase in project costs 66.1 Total decline in surplus monies related to project ports and available to MOC for non-project investments 260.1 The result would be a decrease of about Y 260 million during 1981-86 in the total project port related surplus monies to HIOC. This would eliminate all but Y 25 million of the funds which would otherwise be available for major capital works other than the proposed project during 1981-86. Until details of the Government's 1982-86 investment plan is announced, it is not possible to indicate what significance this would have on the execution of the plan insofar as the project ports are concerned. VI. RECOMMENDATIONS 6.01 During loan negotiations, agreements were reached with the Borrower on the following principal matters: (a) it will provide the Bank with audited accounts, by auditors satisfactory to the Bank, for each project CHC within six months of each fiscal year end (para. 2.52);  - 42 - (b) it will carry out a training program in accordance with a plan agreed with the Bank (para. 3.10). (c) it will, starting with fiscal year 1986, take or cause each project CHC to take such measures as shall be necessary to ensure that in respect of each project CHC total CHC expenditures excluding depreciation shall not exceed 50% of total CHC revenue (para. 5.11). (d) it will cause each CHC to carry out a study of the annual operating costs it incurs during at least the first full year of operation of its facilities under the project, and will exchange views with the Bank on the terms of reference and findings of each such study (para. 5.12). 6.02 The proposed project constitutes a suitable basis for a Bank loan of US$124 million to the People's Republic of China for a term of 20 years including a five-year grace period.  ANNEX A -43 - Page I of 3 CHINA THE THREE PORTS PROJECT Related Documents and Data Available in the Project File Huangpu 1. The Budgetary Estimate Table of Xiji Coal Quay Project of Huangpu New Harbour. Fourth Design Institute, Ministry of Communications, March 1981 (modified July 1981). 2. The DetaiLed List of Machinery of Xiji Coal Quay Project of Huangpu Port - Fourth Design Institute, Ministry of Communications, June 1981. 3. Instruction for Xiji Coal Quay Project of the Huangpu Port. - Fourth Design Institute, Ministry of Communications, June 1981. 4. The Main Technological Parameters of Xiji Coal Quay Project Equipment of Huangpu Port. - Fourth Design Institute, Ministry of Communications, June 1981. 5. Equipment Performance Specifications of Huangpu Container Terminal - Appendix. - Fourth Design Institute, Ministry of Communications, June 1981. 6. Huangpu Harbour Container Terminal the seventh and eighth berth of new Port), Schedule of Equipments used Each Year. - Fourth Design Institute, Ministry of Communications, June 1981. 7. The dynamic Consolidation Tests of the Container Area of the Second Period Engineering of Huangpu Port. - Fourth Design Institute, Ministry of Communications, February 1981. 8. The Calculation List of the Inner River Berth of Duntou Xiji Coal Quay. - Fourth Design Institute, Ministry of Communications, February 1981. 9. The Connecting Project of the Fifth Five Year Plan of Huangpu New Harbour, Hydraulic Structures (Brief introduction of the design). - Fourth Design Institute, Ministry of Communications, February 1981. 10. Hydrological and Sediment Features and Fluvial Process of Huangpu Navigation Channel. - Guangzhou Research Institute of Navigational Channel Design, Ministry of Communications, undated.  ANNEX A - 44 - Page 2 of 3 11. Dredging Situation in the Huangpu navigation channel. - Guangzhou Research Institute of Navigational Channel Design, Ministry of Communications, undated. 12. Port of Huangpu. - Huangpu Harbour Administration Bureau, Ministry of Communications, October 1980, February 1981, July 1981. 13. Xiji coal quay engineering of Huangpu Hiarbour. - Fourth Design Institute, Ministry of Communications, June 1981. Shanghai 1. Loan Item List of Equipment Used for District No. 9 Container Terminal of Shanghai Harbour. - Third Design Institute, Ministry of Communica- tions July 10, 1981. 2. Design Material of container terminal, District No. 9, Port of Shanghai." By the Third Design Institute, Ministry of Communications, July 1981. 3. Equipment Type Specifications for the Container Terminal, District No. 9, Port of Shanghai. - Third Design Institute, 2Iinistry of Communications, February 1981. 4. Technical Data for the sea traffic channel of the Shanghai Harbour.- Waterway Bureau, Shanghai, Ministry of Comaunications, February 1981. 5. Compaction Method of Yard Ground and Results of Tests. - Third Design Institute, Ministry of Communications, February 1981. 6. Information of the Port of Shanghai.- Shanghai Harbour Administration Bureau, November 1980, March 1981, July 1981. 7. Design specifications, Berth 1 and Berth 2 at the container terminal in Zone 9, Shanghai Harbour. - Third Design Institute, Ministry of Communications, July 1980. 8. Brief Introduction to the Nanjing Hydraulic Research Institute. Nanjing Hydraulic Research Institute, July 1981. 9. The Yangtze Estuary, a Hydraulic Model Study, Including Improvement Schemes and Model Tests. - Nanjing Hydraulic Research Institute, July 1981.  45 - ANNEX A Page 3 of 3 Tianjin 1. Detailed List of Equipment, Container Terminal at Basin No. 4.- Tianjin Harbour Administration Bureau, undated 2. The Test Pile Results of Basin No. 4.- First Design Institute, Ministry of Communications, July 1981. 3. Revised General Layout Plan and Total Estimate and List of Imported Equipment of the New Container Terminal at Basin No. 4, Port of Tianjin.- First Design Institute, MDVC, July 1981. 4. Data for the World Bank Mission.- Tianjin Harbour Administration Bureau, February 1981, July 1981 5. Tianjin New Harbour Dock No. 4, Initial Plans for the Container Wharf.- First Design Institute, Ministry of Communications, July 1980. 6. Revised PrelLminary Design of New Container Terminal at Basin No. 4, Port of Tianjin, Vol. I, II, III and IV." First Design Institute, Ministry of Communications, February 1981. October 1981  - 46 - ANNEX B Page 1 of 3 CHINA THE THREE PORTS PROJECT Reorganization of Port Cargo Handling Operations 1. A tentative organization chart of a typical CHC is shown in the Chart. The CHC manager will be directly responsible to the Waterway Transport Bureau in MOC on cargo operational matters, and to the Planning Bureau of MOC on budget and investment matters. All matters on development planning and construction work before being referred to MOC must be reported to HAB, which must endorse those CHC development projects, which have effects beyond the CHC, as well as land acquisition. The various organizational units under the CHC will have the general responsibilities described below. 2. The Manager's Office will provide secretariat services for the CHC and liaison between CHC and outside agencies. 3. The Dispatch Department will direct all cargo operations of the CHC, including vessel arrival and departure, allocation of manpower and equipment. The CHC Dispatch Divisions are coordinated by the Port Dispatch Office in the NAB. The Dispatch Offices in the HABs are coordinated by the Dispatch Office in the Water Transport Bureau of the MOC. Coordination Meetings between port dispatch offices are held at MOC level monthly to arrange monthly arrival/sailing schedules for each national port. Similar coordination meetings between CHC Dispatch Offices are held regularly at HAB level to arrange arrival/sailing schedules for each POD and CHC. 4. The Business Department will be responsible for all cargo matters, and liaison with shippers and consignees. It bills the shipowners and cargo owners for berthing and cargo handling fees, but the actual payments will be submitted to the financial division of the Comprehensive Department. 5. The Comprehensive Department will be divided into four divisions: (a) the Financial Division is responsible for financial planning and budgeting and for daily receipts and expenditures; (b) the Planning Division is responsible for planning of produc- tion, capital construction, and maintenance, and for devel- opment and control of the labor force; (c) the Personnel Division is responsible for employment, train- ing, testing of skills, payroll and bonuses; and  - 47 - ANNEX B Page 2 of 3 (d) the Administration Division is responsible for general CHC administrative matters and personnel welfare matters. 6. The Technical Department will be responsible for: (a) maintenance of installations, buildings, equipment and for providing maintenance planning input to Planning Division for incorporation in the overall CHC plan; (b) specifications for new equipment and introduction of new technology; (c) establishment of skills standards for technical personnel; and (d) training and testing of technical personnel in coordination with 'Personnel Division. 7. The Operational Department will be divided into four teams: (a) a cargo handling team, that is responsible for operations between ship's hold and warehouse or storage area; (b) a warehouse and storage team that is responsible for all warehousing and storage functions, including container control in container yard and CFS functions; (c) a mechanical team that is responsible for drivers and equipment operators, and maintenance workers; and (d) a supply team that is responsible for materials supply, fuels, and bunkers. 8. The future HAB will be responsible for general port administration and security, coordination of CHC development plans and other CHC activities which have effects beyond the individual CHCs, and common port services, such as port dredging and piloting. Common services will be covered by a charge to be paid by each CHC to the HAB. The future HAB can carry out fact finding studies on RAB and CHC costs and on that basis make recommendations to MOC on harbor rates and tariffs. When approved by MOC, the HAB and the CHC can charge such rates and tariffs. 9. The future workshop corporations will be responsible for providing maintenance and repair services to the CHCs and the HAB. The workshop corporations would be independent legal entities similar to the CHCs. Cost of services provided by the workshop corporations will be covered by the CHCs and the HAB.  - 48 - ANNEX B Page 3 of 3 10. The performance targets currently being used for the PODs will also be used for the CHCs. (a) Physical targets are: (i) total production expressed in tons handled; (ii) quality of handling operations, expressed for general cargo as maximum ratio of damaged cargo pieces over total number of pieces handled, currently 0.005; (iii) productivity of labor expressed as total production divided by total labor input; and (iv) ship turnaround time in port. (b) Financial targets are: (i) total profit calculated as total revenue minus total cost minus tax and expressed in Yuan. Both revenue and cost include nonport-related activities, if any; and (ii) production unit cost reduction expressed both as an absolute amount and as a ratio of current year's production unit cost over the previous year's production unit cost, currently about 2%. This target has ranged from 1-4% for MOC over the past 5 years.  - 49 - ANNEX B Chart CHINA THE THREE PORTS PROJECT Typical Cargo Handling Corporation After Reorganization I Ministry of Communications Harbour Cargo II Workshop IAdministration Handling Corporations Bureau I Corporation I Manager Deputy Manager I I I ~~~Manager's ____ ____ ____ ___ Office ff ~ l I I Dispatch I I TCechnicalI loperationall I Business I IComprehensivel IDepartmentII Departmentl IDepartmentI I DepartmentI I DepartmentI I Team I Jj~I I I _I~~~~ ~~~~~~~~ I s~~~~~ ~~~ Ia u Plnnn Fiac Perg sone ) Wdrknhop Source: Mini isstrio of Commu Dandlin n Dvnsions Di May 1982 Be I Divisionio {_ ~ ~~~~~~I II I I I Handling I Team IMandtrager _ ea May~~~ ~ ~ ~ 1982aers   - 50 - Table 1 CHINA THE THREE PORTS PROJECT Huangpu Port Berth Details of Existing Port Depth Berth alongside Length District (no) (m) (m) Type of cargo (no) 1 1-7 -8 1,334 Ore and general cargo, sulfur, coal 2 1 -12.5 920 Grain, bagged cargo, 2-5 -11 fertilizers, timber, general cargo, and occasionally coal Total 12 2,254 Source: Huangpu Harbor Administration Bureau. October 1981  - 51 - Table 2 CHINA THE THREE PORTS PROJECT Huangpu Port Warehouses and Stacking Yards District Total area Usable area Capacity (no) Type of storage Quantity (sq m) (sq m) (tons) 1 Warehouse 12 62,300 /a 208,900 Yard - 138,000 7i Subtotal 200,300 /a 2 Warehouse 6 51,100 /a 197,800 Yard 79,700 /a (including silo capacity) Subtotal 130,800 /a I + 2 Warehouse 113,400 /a Yard 217,700 /a Total 331,100 /a /a Not available. Source: Huangpu Harbor Administration Bureau. October 1981  - 52 - Table 3 CHINA THE THREE PORTS PROJECT Shanghai Port Berth Details of Existing Port Depth District Berth Length alongside (no) (no) (m) (m) Type of cargo 1 8 750 6-10 Salt, rubber and general cargo 2 5 969 9.5 Coal, grain and sugar 3 8 920 3-8 General cargo, passenger 4 4 689 9-10 Timber 5 7 1,120 8.5-9 Foreign trade general cargo 6 5 808 7-9 Coal and transhipment 7 11 1,389 8-10 Coal 8 10 1,754 9.2 Ore and fertilizers 9 6 1,079 9-10.5 Foreign trade general cargo 10 6 1,080 9.2-10.5 Foreign trade general cargo 11 1 93 3 Ore, construction material 12 10 832 5 Ore, construction material Passenger 10 933 5 Passenger Chankahan 4 343 12 Coal, ore, construction (outside) material Total 95 12,759 Source: Shanghai Harbor Administration Bureau. October 1981  Table 4 - 53 - CHINA THE THREE PORTS PROJECT Shanghai Port Warehouses and Stacking Yards Warehouses Yards District Total area Productive area Total area Productive area (no) (sq m) (sq m) (sq m) (sq m) 1 76,988 29,887 90,419 25,483 2 59,174 53,580 117,128 106,845 3 83,658 45,464 69,865 37,903 4 12,634 9,993 47,126 43,871 5 130,791 81,980 46,752 43,030 6 10,098 7,200 109,969 90,460 7 24,474 16,969 233,333 201,137 6 117,719 47,397 166,291 91,072 9 29,380 26,302 92,942 70,171 10 35,613 30,469 78,571 8,374 11 15,135 2,875 10,483 /a 12 65,269 18,700 3,142 64,305 Chankahan 9,165 3,704 149,922 /a Passenger 28,880 8,238 4,073 3,132 Total 698,978 382,758 1,220,016 /a Capacity (tons) 110,000 1,310,000 /a Not available. Source: Shanghai Harbor Administration Bureau. October 1981  Table 5 - 54 - C HINA THE THREE PORTS PROJECT Tianjin Port Berth Details of Existing Port Depth District Berth alongside Length (no) (no) (m) (m) Type of cargo Existing Berths 1 1-5 8 870 General cargo 1 6 10 201 Salt (under repair) 2 7-8 10 360 General cargo 2 9-11 10 535 General cargo 2 12-13 12 500 Bulk grain 2 14-15 10 380 General cargo 3 16-18 10 550 General cargo (17 and 18 temporarily used for salt) Subtotal 3,396 Berths Under Construction 19-20 11 370 Pig iron, steel, general cargo containers 21. 12.5 397 22-24 11 530 25-26 11 440 27-29 13 895 Containers Subtotal 2,632 Total . 6,028 Source: Tianjin Harbor Administration Bureau. October 1981  55 Table 6 CHINA THE THREE PORTS PROJECT Tianjin Port Warehouses and Sakn ad District Type of Total area Usable area Capacity (no) storage Quantity (sq m) (sq m) (tons) 1 Warehouse 9 23,203 15,371 11,205 Yard 17 140,812 73,896 102,223 Subtotal 26 164,015 89,267 113,428 2 Warehouse 18 67,389 46,591 28,532 Yard 31 195,458 97,914 100,013 Subtotal 49 262,847 144,505 128,550 5 Warehouse - Yard 3 14,624 10,384 12,000/a Subtotal 3 14,624 10,384 12,000/a 1 + 2 + 5 Warehouse 27 90,592 61,962 34,737 Yard 51 350,894 182,194 214,236 Total 78 441,486 244,156 253,973 /a Estimated. Source: Tianjin Harbor Administration Bureau. October 1981  CHINA THE THREE PORTS PROJECT Ship Tine Analysis for HEuangpu, Shanghai and Tianjin Ports 1980 /a (Ship days) THuangpu Shanghai /b Tianjin /h General Con- General Con- General Con- Coal cargo /b tainer /b Total cargo /c tainer /c Total /d cargo tainer Total Number of ships 112 251 46 1,021 410 89 2,061 859 58 1,383 Total Time in Port - All Ships Waiting for berth 63 632 21 1,960 939 84 2,938 2,878 71 4,472 Unproductive time at berth 99 818 11 2,433 1,507 100 7,048 1,726 81 2,486 Productive time at berth 296 1,310 14 4,294 1,283 113 7,905 2,738 63 4,181 , Total 458 2,760 46 8,687 3,729 297 17,891 7,342 215 11,139 Average Time in Port - Per Ship Waiting for berth 0.56 2.52 0.'' 1. 2 2.29 0.94 1.43 3.35 1.22 3.23 Unproductive tine at berth 0.88 3.26 0.24 2.38 5.67 1.12 3.42 2.01 1.40 1.80 Productive tine at berth 2.64 4.82 0.30 4.21 3.13 1.27 3.84 3.19 1.09 3.02 Total 4.08 10.60 1.00 /e 8.51 9.10 3.33 8.68 8.55 3.71 8.05 /a Actual ship days. /b Foreign trade only. /c July-December 1980. 7W January-Decermber 1980 /e At present, container vessels calling at Hluangpii are small, 1,000 tons only. H Source: EHuangpu, Shanghai, and Tianjin Ilarhor Administration Bureaus and Bank staff. November 1981  57 ~~~~~~Table 8 Page I of 2 CIIINA THE THREE PORTS PROJECT Existing Principal Port Charges at Huangpu, Sha,nghai and Tianjin Ports A. Chas ainst Vessels (Y) Opening and General cargo Mooring at Harbor Berthing at closing dues Pilotage Buoy Wharf dues Buoy Wharf hatches Inward Outward /b Foreign 0.20/a 120 80 0.25 0.02 0.02 200 3.00 0.10 per per per per per per per per per (exceeding) nrt ship ship nrt nrt nrt ship ton ton 2000 NRT) per day Local 0.10 nil nil 0.10 0.02 0.05 10 1.50 0.10 per per per per per ner Dcr nrt nrt nrt nrt hatch ton ton per day /a Shanghai rate is-Y 0.30 per nrt. /b The change increases to Y 0.10 nrt per day in cases where a vessel remains at berth four or more hours after completing loading/unloading. B. Loading/Unloading Charges Against Cargo - Foreign (Y/ton) Between Ship and Storage Between Ship and Ship side Cargo Type Ship gear Port gear Ship gear Port gear Dangerous 16.0 18.40 8.00 10.40 Coal (bulk) 6.40 7.40 3.20 4.20 Cement (bags) 12.00 13.80 6.00 7.80 Steel 10.40 12.00 5.20 6.80 Timber 9.20 10.60 4.60 6.00 General 13.20 15.20 6.60 8.60  Table 8 - 58 - Page 2 of 2 C. Loading/Unloading Charges Against Cargo - Local (Y/ton) Ship to Ship to To storage To storage Cargo Type shore lighter and train and truck Dangerous 2.40 2.20 1.20 0.90 Coal (bulk) 1.20 1.10 0.70 0.50 Cement (bags) 1.20 1.10 0.70 0.50 Steel 1.60 1.40 0.80 0.70 Timber 1.60 1.40 0.90 0.80 General 1.60 1.40 0.90 0.80 D. Storage Charges Against Cargo - Foreign and Local (Y/ton-day)/c Free Foreign Local storage General Light General Light Direction period cargo cargo cargo cargo Dangerous Inward 4 days 0.25 0.30 0.10 0.15 0.30 Outward 1 day 0.05 0.10 0.02 0.05 0.10 /c From expiration of free storage period. Source: Nilnistry of Communications. October 1981  59 Table 9 CGHifNA TIUL THRE h PORTS PROJECT Detailed Cost Estimate Y thousand US$ thousand Item Local Foreign Total Local Foreign Total Civil Works Hiuangu Coal Terarinal Qucywoll an.l cuveilteriwt 14,233 - 14,233 8,133 Reclamatloa, lovolling & dredgig 9,300 - 9,300 5,314 - 8,133 Auxi.liary bu:tlding 4,244 - 4,244 2,425 - 5,314 Rail and highway bridges 4,568 - 4,568 2,610 - 2,425 Environmenital. protection 1,382 - 1,382 790 - 2,610 Yard and road pavement 2,376 - 2,376 1,358 - 790 Others 16,817 - 16,817 9,610 - 1,358 Design and supervision /a 1,588 - 1,588 907 - 9,610 - 907 Subtotal 54,508 - 54,508 31,147 - 31,147 Huangpu Container Terminal Construction 76,560 - 76,560 43,639 - 43,639 Design and supervision 3% 2,297 - 2,297 1,309 - 1,309 Subtotal 78,857 - 78,857 44,948 - 44,948 Shanghai Container Terminal Construction of quays 9,644 - 9,644 5,511 - 5,511 Yard and road pavement 11,8?7 11.897 6,798 - 6,798 Reclamation 6,929 -- 6,929 3,958 - 3,958 CFS 1,746 - 1,746 998 - 998 Auxiliary 2,905 - 2,905 1,660 - 1,660 Transfer station 6,776 - 6,776 3,872 - 3,872 Others 30,154 - 30,154 17,232 - 17,232 Design and supervision /a 2,101 - 2,101 1,201 - 1,201 Subtotal 72,152 - 72,152 41,230 - 41,230 Tianjin Container Terminal Dredging 58,160 - 58,160 33,230 - 33,230 Container wharf 18,810 - 18,810 10,750 - 10,750 Earth backfill 3,340 - 3,340 1,910 - 1,910 Yard & road pavement 38,870 - 38,870 22,310 - 22,310 Railroad 790 - 790 450 - 450 Raid & road CFS 3,390 - 3,390 1,940 - 1,940 Auxiliary buildings 9,170 - 9,170 5,240 - 5,240 Service cars & boats 980 - 980 560 - 560 Others 58,010 - 58,010 33,050 - 33,050 Design & supervision ia 5,746 - 5,746 3,280 - 3,280 Subtotal 197,266 - 197,266 112,720 - 112,720 Total - Civil Works /b 402,783 - 402,783 230,045 - 230,045 Equpmen~t Huangpu Coal Terminal. 4 Level luffing cranes 1,120 12,880 14,000 640 7,360 8,000 4 Stacker-reclaimers 998 11,602 12,600 570 6,630 7,200 3 Ship loaders (1,000, 500, 500) 262 3,203 3,465 150 1,830 1,980 Conveyors 1,312 14,945 16,257 750 8,540 9,290 Others 53 1,129 1,182 30 645 675 Electrical equipment & coraputer - 4,081 4,081 - 2,332 2,332 Spare parts 15% - 7,128 7,128 - 4,073 4,073 Subtotal 3,745 54,968 58,713 2,140 31,410 33,550  - 60 - Table 9 Page 2 of 2 Y thousand US$ thousand Item Local Foreign Total Local Foreign Total Equipment (cont'd) Huangpu Container Terminal 1 Quay crane (40.5 t) 420 4,830 5,250 240 2,760 3,000 3 Transtainers 357 4,106 4,463 204 2,346 2,550 8 Forklift trucks - 210 210 - 120 120 (to be purchased outside loan) 12 Tractor - 840 840 - 480 480 36 Chassis - 945 945 - 540 540 Others 5 623 628 3 356 359 Computer - 175 175 - 100 100 Spare parts 15% - 1,762 1,762 - 1,007 1,007 Subtotal 782 13,491 14,273 447 7,709 8,156 Shanghai Container Terminal 4 Quay cranes (40.5 t) 1,680 19,320 21,000 960 11,040 12,000 9 Transtainers 1,071 12,317 13,388 612 7,038 7,650 2 Forklift trucks (25 t) - 700 700 - 400 400 4 Forklift trucks (16 t) - 700 700 - 400 400 60 Forklift trucks (2.5 t) - 1,575 1,575 - 900 900 33 Tractors - 2,310 2,310 - 1,320 1,320 55 Chassis - 1,444 1,444 - 825 825 Others and computer 193 2,719 2,912 110 1,554 1,664 Spare parts 15% - 6,163 6,163 - 3,522 3,522 Subtotal 2,944 47,248 50,192 1,682 26,999 28,681 Tianjin Container Terminal 5 Quay cranes (40.5 t) 2,170 24,150 26,320 1,240 13,800 15,000 11 Transtainers 1,309 15,054 16,363 748 8,602 9,350 2 Forklift trucks (25 t) - 700 700 - 400 400 4 Forklift trucks (16 t) - 700 700 - 400 400 35 Forklift truclks (2-2.5 t) - 919 919 - 525 525 30 Tractors - 2,100 2,100 - 1,200 1,200 100 Chassis - 2,625 2,625 - 1,500 1,500 Others and computer 207 3,337 3,544 118 1,907 2,065 Spare parts 15% - 7,438 7,438 - 4,250 4,250 Subtotal 3,686 57,023 60,709 2,106 32,584 34,690 Total - Equipment 11,157 172,730 183,887 6,375 98,702 105,077 Training 2,625 2,625 5,250 1,500 1,500 3,000 Containerization Stuidy 3,500 - 3,500 2,000 - 2,000 Subtotal 6,125 2,625 8,750 3,500 1,500 5,000 Customs Duties 27,683 - 27,683 15,819 - 15,819 Total Base Cost 447,748 175,355 623,103 255,739 100,202 355,941 Physical contingencies Ic 35,277 - 35,277 20,149 - 20,149 Price contingencies 45,536 44,272 89,808 26,026 25,298 51,324 Subtotal 80,813 44,272 125,085 46,175 25,298 71,473 GRAND TOTAL 528,561 219,627 748,188 301,914 125,500 427,414 /a Design and supervision estimated at 3% of construction. /b Indirect foreign exchange costs of civil works are mainly for materials and plant and amount to an estimated 30% of total cost of civil works for the three ports. /c Physical contingencies estimated at 10% of base cost except for the container terminal at Huangpu, for which it is estimated at 5% since the structure is almost finished. Source: Ministry of Communications and Bank staff.  - 61 - Table 10 CHINA THE THREE PORTS PROJECT Cumulative Disbursement Schedule (US$'000 equivalent) Cumulative disbursement profile /a Bank-wite Cumulative Disbursements at End of Quarter subsector Years IBRD fiscal Huangpu Shanghai Tianjin for ports & from year and Coal Container container container waterways approval quarter terminal terminal terminal terminal Total x (%) 1983/84 1 lst half 09/30/83 - - - - - - - 12/31/83 1,440 360 1,180 1,520 4,500 3.6 0.9 1 2nd half 03/31/84 4,680 1,170 3,860 4,790 14,500 11.7 - 06/30/84 7,920 1,980 6,530 8,070 24,500 19.8 6.2 1984/85 2 1st half 09/30/84 9,840 2,460 8,120 10,080 30,500 24.6 - 12/31/84 13,100 3,300 10,890 13,210 40,500 33.0 14.2 2 2nd half 03/31/85 16,280 4,070 13,430 16,720 50,500 40.7 - 06/30/85 19,520 4,880 16,100 20,000 60,500 48.8 24.0 1985/86 3 1st half 09/30/85 23,040 5,760 19,000 23,700 71,500 57.6 - 12/31/85 26.`0u (6,6S 21,950 27,300 82.5, ; ... 3 2nd half 03/31/86 30,160 7,540 24,880 30,920 93,500 75.4 - 06/30/86 33,880 8,470 27,950 34,700 105,000 84.7 46.5 1986/87 4 1st half 09/30/86 37,200 9,300 37,550 38,130 117,180 93.0 - 12/31/86 40,000 10,000 35,000 41,000 124,000 100.0 57.5 4 2nd half - - - - - - - 67.6 5 Ist half - - 76.2 5 2nd half - - - - - - 83.4 6 Ist half - - - - - - 89.1 6 2nd half - -- - - - 93.7 7 Ist half - - - - - - 97.3 7 2nd half - - - - - - 100.0 /a All 75 projects in the profile contain Bank financing of equipment as well as civil works. This project only covers equipment which is more rapidly disbursed, and civil works started in 1979. Source: Bank staff. September 1982  - 62 - Table 11 CHINA THE THREE PORTS PROJECT Operating Manpower Requirement for Project Berths Number required Huangpu Shanghai Tianjin Coal Container Container Container Manpower category terminal terminal terminal terminal Stevedores (loading/unloading) 134 351 473 612 Drivers 90 128 351 378 Maintenance and repair 62 125 128 272 Management and administration 76 299 224 130 Ancillary staff 65 197 96 97 Subtotal 427 1,100 1,272 1,489 Total Container 3,861 GRA4D TOTAL 4,288 Source: Minist-ry of Communications. October 1981  .63 _ Table 12 CHINA THE THREE PORTS PROJECT operating Manpower Training Plan for Project Container Terminals /a Description La ~ r-_lor . vrseas r 1 Group 1 Cot ainer terininal management personnel 15 porsons fromi Shanghai and 12 persons from Huangpu, training for 3 months in Japan or other places. Group 2 Heavy machinery drivers and maintenance personnel 8 persons from Shanghai, 12 persons from Tianjin, and 4 persons from Huangpu, training will be arranged free of charge by equipment supplier. Group 3 - Computer process design and operation personnel 8 persons from Shanghai, 8 persons from Tianjin, and 4 persons from Huangpu training for 6-12 months abroad. Category 2 - Local Training Shanghai Maritime Institute - Management personnel Container port managem.ent 3 semesters, 6 months each about 35 persons each semester. Water transport management - Engineers department Major in computers, one year study period. Harbor Technician School - Crane drivers and maintenance personnel Classes of 20-30 or more persons for 6 months each. Another class will be arranged for English language training for container operations (30 persons for 3 months for each port). Invite foreign and chinese experts - On-site staff training in circulation of bills, management of container yard and operation. - Short-term courses on specific subjects pertaining to container terminal operation. Category 3 - Training for Coal Terminal Group 1 - Technical operators. The equipment supplier will arrange training for personnel who will be operating the terminal. Group 2 - On-the-job training at other terminals in China. /a The training plan is expected to take 2-3 years, starting in October 1982, before which date, the detailed plan will be worked out. Source: Ministry of Conmunications. September 1982  _ 64 _ Table 13 CHINA TILE T1R3F. PORTS PROJECT iluangpu Port Traffic, 1975-95 ( 000 toils) Actg.:l Forecsta -1 T 6 7 _ _ _ _ _ _ _ _ _ _ _ _ _ _ -_ - i943- Como,olity To 0ut Total In 0Out Total In Ott t ot al In OLt Total In 0ut Total Coal Foreign 515 4 519 197 15 212 200 250 450 300 800 1,100 300 B500 1,10 DuI.estlc 1,08 862 1,942 812 712 1,524 1,550 1,2011 2,750 3,00 1, 750 4,750 3,500 2,OO 5,500 Tot.al 1,595 866 2,461 1,009 727 1,736 1,750 1,450 3,200 3 300 2 550 5,R50 3,800 2,800 6,900 Petrnoeubu L,roducts Foreign - 98 98 - 15, 156 - 200 200 500 350 850 500 800 1,300 Domestic 456 175 631 2,324 2285 2,552 2,900 100 3,000 3,50n 300 3,800 4,200 400 4.6nn Total 456 273 7229 2,324 384 2,708 2,900 300 3,200) 4,000 4 50 4,6951 4,700 1,20(' 5,90o 'iAeral ore Foreign 18 12 30 - 8 8 - - - - - - - - Domestic 58o 6 59 71o - 716 1,000 - 1,000 2,000C - 2,0O0 2 000 - 2,000 sotal bO4 18 622 716 8 724 I,00 - 1 ,000 2,000 - 2,000 2,001 - 2,0no Iro,n and steel Foreign 441 54 5l)3 632 28 660 350 100 450 500 200 700 700 540 1, 100 DoUOsLltl. 2 33 35 10Y 57 166 150 50 200 250 100 350 350 190 500 .oLa 1 4i 8d7 538 741 85 82f, 500 150 650 750 30(0 1.090 I,017 590 1,600 4000 ItOrut 6w, nasturio,l. Foreigi1 60I 600 iOt,Cst1i 185 6 1 91 81 Hr 86 50 - 5S - _ _ 700 - 700 'o tal 16S 7 192 66 - So 50 - 50 - - - 700 60n 1300 (;er.o 0 L vore,,Ll 1 79 69 9D 21 111 100 20n 300) - 650 680 - 7 0 7no 2ou LStic - 1.1 13 3 6 5 68 - 5() 50 500 101 600 600 200 1O5o To tal 10 92 102 913 16 179 100 250 350 5D0 750 1,290 600 900 1,500 Tt,nber Foreig,t 14 2 16 41 - 41 10o 40 140 101 511 1511 1011 51 1950 Dol, stir 18 a 26 17 16 35 20 - 20 20 - 20 20 n 20 Total 32 1C 42 58 18 76 120 40 160 120 10 170 121 50 170 Nonmetallic ores Forei,n 26 14' 171 - 18 138 - 350 350 - 800 800 - 100 10n o;laestic 20 31 53 135 2 137 540 351) 890 2,400 1,7 01 4,100 2,70n 2,000 4,700 Total 46 176 224 135 190 325 5440 700 1,240 2,400 2, 500 4,900 2,700 2,1R00 5 ,500 Chenical fertilizers Forei,n 322 1. 323 727 - 721 b.0 - 800 800 - 00C 1,000 - 1,(){0 Do,aestic - 12). 121 1 449 450 - 500 500 - 6110 600 - 900 900 Total 322 122 444 728 449 1,177 800 5711 1,300 800 600 1,400 1,000 900 1,100 Salt Foreign - - - - - - - - - - - - - - - )olaestie 18 58 236 119 13 132 150 50 200 2511 50 300 430 100 530 intal 180 53 238 119 13 132 1511 50 200 250 50 3001 430 1011 530 Crain Foreiabn 276 249 527 765 373 1,138 1,000 400 1,400 1,000 400 1,400 1,000 700 1,700 Do,lestic 14 87 103 145 418 563 150 600 750 150 600 750 300 60n 900 Total 294 33'S 630 910 791 1,701 1,150 1,000 2,150 1,190 1,000 2,150 1,300 1,300 2,600 Others Foreign 303 412 715 1,074 609 1,679 1,16( 96u 2,120 1,200 1,060 2,260 1,600 1,400 3,000 Doiaestic 145 98 243 285 471 756 450 480 930 420 600 1,020 700 700 1,400 Total 448 510 958 1,355 1,000 2,435 1,610 1,440 3,050 1,620 1,660 3,280 2,3O0 2,0on 4,400 Total Foreign 1 ,935 1,056 2,991 3,522 1,398 4,920 3,7111 2,500 6,210 4,400 4,31n 8,710 5,200 6,250 11,450 Do-estio 2,b83 1,501 4,149 4,752 2,433 7,185 6,960 3,380 10,340 12,490 5,800 15,290 15.500 7,050 22,550 Total 4,623 2,557 7,180 8,274 3,831 12,105 10,670 5,PF80 16,550 16,89n 10,113 27,C00 20,700 13,300 34,000 lontainerizable cargo Foreign 177 1 54 335 458 363 821 550 339 888 606 455 1,061 727 541 1,26R DomesLic 42 61 1053 19 30 139 130 131 262 144 175 319 173 209 3812 Totao 219 219 438 567 393 960 68(1 470 1,150 750 630 1,380 900 750 1,650 Contaf-ri.eed cargo Foreign - - - 33 26 59 5228 172 400 440 360 300 580 420 1,000 Dotnestic - - - - - - - 'tUtal - - - 33 26 59 228 172 400 440 360 100 580 420 1,000 Sourcr .-loang9 p 8 arbo8r Adr;ni ae.iu 13oreno a,,d aflose6taff. ,Jotober 1961  _ 65 - Table 1' CffINA THE THREE PORTS PROJECT Shanghai Port Traffic, 1975-95 (OOO tons) Actual Forecast 1975 1980 1985 1990 1995 Commodity In Out Total In Out Total In Out Total In Out Torll In Out Total Coal foreign 63 - 63 53 - 53 - - - - - - - - - Domestic 14,072 6,229 20.301 19,344 9,231 28,575 27,950 9,200 37,150 35,000 10,000 45,000 37,000 11,000 48,000 Total p 14,135 6,229 20,364 19,397 9,231 28,629 27,950 9,200 37,150 35,000 10,000 45,000 37,000 11,000 48,000 Petrcleun- products Foreign - 277 277 61 929 990 - 1,000 1,000) - 1,200 1,200 - 1,200 1,200 Doi,estic 1,839 1,134 9,953 9,580 881 10,461 11,200 1,150 12,350 12,000 1,400 13,400 12,000 1,400 13,400 Total 8,839 1,391 10,230 9,641 1,810 11,451 11,200 2,150 13,350 12,000 2,600 14,600 12,000 2,600 14,600 iineral ore Foreign 1,131 - 1,131 3,977 9 3,986 4,200 - 4,200 5,000 - 5,000 5,000 - 5,000 Domestic 645 1,002 1,647 1,284 4,587 5,871 1,300 - 1,300 1,500 - 1,900 1,500 - 1,S50 Total 1,776 1 002 2,778 5,261 4,59f 9,857 5,500 - 5,500 6,500 - 6,500 6,500 - 6,500 tron and steel Foreign 1,659 103 1,762 1,593 162 1,755 1,950 SOO 2,450 2,000 700 2,700 2,100 1,000 3,100 Uomestic 2,774 521 3,295 3,292 966 4,258 3,000 1,550 4,550 3,300 1,900 5,200 3 500 2,1G0 5,600 Iotel 4,433 624 5,057 4,885 1,128 6,013 4,950 2,050 7,0O0 5,300 2,600 7.900 5,600 3,100 8,701 ionstructior.l materials Foreigen 3 12 15 - 12 12 - 50 50 - 102 10 1 - 150 150 Donestic 2,283 473 2,756 4,941 704 5,645 7,100 1,350 8,450 9,20f' 1,601 in,800 11,000 1,850 1?,850 lotal 2,286 485 2,771 4,941 716 5,657 7,100 1,400 8,500 9,200 1,700 10,900 11,000 2,000 13,000 Ceo.eat Foreig-n 183 204 387 305 331 636 400 130 530 5(0 20G 700 550 300 85( Domestic 83 !l8 201 97 154 251 300 370 670 500 5(f) 1,O0o 550 700 1, 250 Total 266 322 58d 402 435 887 700 500 1,200 1,300 700 1,100 6,100 1,000u 2,100 Ti..er Forei6n 54 8 b2 821 2 823 600 50 650 805 50 850 1, 010 5