Qingdao Port, the seventh-largest port in the world, is gearing up to make itself the international freight center of Northeast Asia, constructing a series of new docks and developing a newly approved bonded area.

"Actually, we are building another Qingdao Port," said Tian Guangwen, vice president of Qingdao Port (Group) Co Ltd, referring to the new construction project in Dongjiakou, south of the port's 117-year-old base in Kiaochow Bay.

In 2008, business at the port increased by 13 percent despite a gloomy economy. From January to July this year, traffic and revenues at Qingdao Port enjoyed 5 percent year-on-year growth.

The port has gross capital of 21.7 billion yuan, with a debt ratio of 20 percent. And the company is going to clear off all debts within one year, according to port representatives.

Tian said the first project being built at Dongjiakou is an iron ore dock requiring an investment of 3 billion yuan. Its partner will be Brazilian mining giant Vale, the largest iron ore producer in the world.

Vale, which lists China as its main market, annually produces 300 million tons of iron ore.

Tian said because of the economic slowdown, Vale is looking for ways to reduce costs.

"The transportation distance for Brazil's iron ore is very long, so huge ships are needed to cut the cost efficiently," Tian said.

Serving larger ships

Vale is planning to complete 16 ships, each with a capacity of 400,000 deadweight tons (dwt), and reportedly will launch the first ship in 2010. Each ship will save 30 percent in costs.

"How huge a ship can be depends on how huge a dock we have," said Wang Baosheng, vice head of the group business department for the Qingdao Port.

Wang said the new dock at Dongjiakou will be the first in China to accommodate the ships large enough to carry 400,000 tons of minerals.

The port will build four docks for ships with a 400,000-dwt capacity, two for ships with a 200,000-dwt capacity and five docks for ships with a 100,000-dwt capacity.

According to the construction plan, 112 berths will be constructed at Dongjiakou, 21 more than at the existing port.

Tian said the capacity of the new docks will be about 40 million tons in three to five years, exceeding the traffic of the existing Qingdao Port.

"Operations of all projects at Dongjiakou will begin in eight years. Once finished, the Qingdao Port is expected to surpass Pusan Port in South Korea, and realize our goal to become the international freight center of Northeast Asia," Wang said.

Tian declined to reveal the total investment for the entire port expansion project.

Dongjiakou is surrounded by seawater on three sides and a coastline of more than 29 km. The natural depth near shore averages 15 m, and the depth increases to 20 m at a distance of 1,000 m from the shore.

Connections with international freight lines, highways and railroads are added advantages at Dongjiakou.

Being a natural deepwater port, free of silt and freezing, the port has established trade relations with more than 450 ports in more than 130 countries and regions.

Bonded port

As part of its expansion project, Qingdao Port also is developing a bonded port area to attract more domestic and international resources.

On Sept 1, the Qianwan Bonded Port Area was approved as the seventh of its kind in China.

The 9.8 sq m first phase consists of eight container berths, two multifunctional berths, and dock operations for comprehensive logistics, international logistics and export machining.

The area will provide bonded service for foreign and domestic cargo.

"The area will boost development of Qingdao Port in the future. And companies will enjoy convenient customs formalities, favorable tax policies, less trade restrictions and so on," Wang said.

Ren Minqiang, head of Qingdao Qianwan Container Terminal Co Ltd, (QQCT), said the bonded area is a chance for the port to become an international container transfer facility.

"We should take advantage of the policies and increase container quantity first, then attract cargos from Pusan Port with our great service," Ren said.

In 2005, Pusan Port invested 8 billion dollars to expand and maintain its leading role in Northeast Asia.

Other Chinese ports -- including Shanghai's Yangshan Port, Dalian Port and Tianjin Port -- are also eying expansion plans.