More and more iron and steel enterprises have begun to choose logistics partners, to optimize the logistics supply chain through specialization, so as to bring down logistics costs. The system, covering procurement, transportation, storage, packaging, loading/offloading, distribution processing, retailing and after-sale services as well as related information activities, has been dubbed the “third profit margin” of an enterprise.

Creating an interface between iron and steel enterprises and specialized port logistics is a potent way to clear logistics bottlenecks, and also an effective way to save energy and reduce emissions.

Specialization can improve efficiency. Creating an interface between iron and steel enterprises and specialized port logistics is a potent way to clear logistics bottlenecks, and also an effective way to save energy and reduce emissions.

Both Sides Benefit

Baosteel is not the only Shanghai enterprise to depend on Shanghai Port to import its raw materials and export its output.

The port, located at the head of the Yangtze River Delta where China’s coastline meets the mighty Yangtze River, is blessed with unique advantages in convenient land and water transportation, plus easily accessible collection and distribution channels. These have helped the port to develop from a simple transportation center into a comprehensive logistics center incorporating transportation, transshipment, storage, container vanning/devanning, storage management, processing, and information handling.

In July 2008, the second phase of Shanghai Port’s Luojing Area was completed. It is the port’s largest comprehensive area for break-bulk cargo.

Chen Xuyuan, president of the Shanghai International Port (Group) Co., Ltd. (SIPG), told China Today that the modern logistics base jointly developed between SIPG and Pugang incorporates fully variable frequency, automation, and other advanced technologies. The port is responsible for loading/offloading, stockpiling and delivery of all of Pugang’s raw materials, such as iron ore and coal, and manufactured output.

Shanghai Port has unique logistics advantages by reason of its location and the top-notch integrated services it provides. Raw materials can be delivered by conveyer belt from the wharf directly to the steel furnaces in a seamless process. This saves the cost of transportation and of loading/offloading and creates an integrated transportation and production system between wharf and plant.

In addition, as a logistics hub, Shanghai Port provides comprehensive logistic services to ships, trucks and trains as well, deploying multiple modes of transportation so as to reduce freight costs and improve efficiency.

By means of this integrated and systematic service, Shanghai Port has increased the added value and competitive power of its logistics enterprise, at the same time honing its competitive edge for self-development. The 2009 financial report of SIPG shows that the port’s income from logistics amounted to RMB 2.749 billion, and the profit was RMB 890 million, representing 16.62 percent of the group’s main business. In 2009 the port handled 590 million tons of cargo and 25 million standard containers, achieving top and second world rankings respectively.