China’s rapid economic growth during the past decade has been accompanied by a sharp increase in cargo transport through the nation’s seaports. As well as building a number of new ports to handle the growth in containerised and bulk cargo traffic, China is expanding many existing ports by increasing the number of container berths and installing new quayside cargo handling facilities.
One company following China’s port development programme with close interest is Shanghai Zhenhua Port Machinery Co Ltd (ZPMC), the world’s largest manufacturer of quayside container cranes. Although China is one of ZPMC’s largest markets, this situation has developed only recently after the company established its reputation as major port crane supplier to North America, Europe, the Middle East, and South America in the 1990s before China’s port construction and expansion programme grew to its present size.
Established in February 1992, ZPMC is listed on Shanghai Stock Exchange, and has assets totalling US$220 million. In addition to four crane production complexes, ZPMC owns four subsidiary companies that produce equipment and materials for its crane manufacturing and other business activities – Zhenhua Fengcheng Brake Co, Zhenhua Shenyang Outdoor Elevator Co, Zhenhua Changzhou Paint Co, and Zhenhua Ningbo Transmission Mechanism Co.
“From 1998, ZPMC has been the world number one ship to shore container crane supplier. We have about 50% of the world market,” commented Liu Qizhong, ZPMC vice president and board member, “We specialise in ship to shore and rubber tyre yard cranes. These are over 90% of our revenue. We are different to our competitors. We do everything including our own designing. We have over 400 designers on our staff.”
ZPMC’s full range of products includes quayside container cranes, rubber tyred gantry cranes, bulk material ship loaders and unloaders, bucket-wheel stackers and reclaimers, portal cranes, floating cranes, and engineering vessels. In addition to crane products, the company has diversified into manufacturing other large steel structures including large steel bridge structures, construction steel structures, elevators, couplings, single-lift and twin-lift spreaders, and reducers with hardened teeth. ZPMC also produces a wide range of crane parts and components at its various sites.
According to Liu, ZPMC’s cranes and other products are in use at more than 150 shipping terminals in 37 countries and regions worldwide. By the end of October 2004 ZPMC had supplied 553 quayside container cranes, 892 rubber tyred gantry cranes, and numerous items of non-standard port machinery.
ZPMC’s first export contract was with the Port of Vancouver in 1993. The company followed up this initial success by clinching an order from the Port of Miami in 1994, which helped ZPMC break into the North American port crane market. Further contracts followed with Port of Tacoma and Port of Oakland in 1996 and Long Beach Port in 1997.
“These projects helped establish ZPMC’s reputation. With our North American success other customers in Brazil and the Middle East such as Abu Dhabi Port in the United Arab Emirates, Oman and Sudan felt better about accepting our products,” Liu recalled, “Europe we came to late as there is strong competition in Europe. It’s not easy. Before ZPMC no Asian crane manufacturer had sold to European ports,” he added.
“We tried hard for a Bremen Port tender and almost got a contract in 1997. But then in 1999 we got orders from Maersk in the Port of Bremerhaven and a Port of Amsterdam contract on the same day. We got these orders because of ZPMC’s reputation and because both clients were joint venture companies and allowed to buy cranes using international bidding.”
Competition remains tough in Europe where ZPMC chases mostly large contracts, Liu noted, as most ports buying small numbers of cranes tend to place their orders with local crane suppliers. Among contracts that ZPMC has won in Europe has been an order for 13 double trolley cranes for the Port of Hamburg, as well as large orders for cranes Algeciras Port in Spain, Rotterdam and Felixstowe in England.
ZPMC is expanding production facilities to keep pace with its growing order book. The company owns four crane production complexes in Shanghai and the surrounding area at Jiangyin, Changzhou, Zhangjiang and Changxing where ZPMC is developing a large port machinery production base on Changxing Island, downstream from Shanghai, at the mouth of the Yangtze River.
The current Changxing production site, which was completed in 2001, covers 1 million sq m and has a 3.5km coastline. The facility is capable of manufacturing 160 quayside ship-to-shore container cranes each year along with 300 rubber tyred gantry cranes and 200,000 metric tons of large steel bridge structures.
Plans call for a further 3 million sq m of land to be reclaimed at Changxing, which ZPMC will develop to become its largest production centre.
In addition to expanding the company’s quayside crane construction capacity, ZPMC plans to use the new work yard area to begin construction of heavy-duty equipment for the offshore oil and gas industry.
ZPMC’s business expansion programme involves a large staff development programme to handle the growing volume of orders. The company’s workforce includes 800 engineers in the various mechanical, electrical and hydraulic design departments, among which 250 are senior engineers.
The workforce also includes 2,000 certified welders of whom 400 hold international welding certificates. In 1999 the American Institute of Steel Construction (AISC) awarded ZPMC its certificate for steel structure fabrication, one of only two AISC certificates issued to Chinese companies.
“We design our own container cranes and we have developed our own crane driving system,” Liu said, “We design and build high quality gear reducers for cranes. We produce gears, elevators, cable reels, sheaves, wheels and festoon systems. We use Fuji components that are highly spoken of by our customers…
“We do fabrication, assembling, testing, transportation and commissioning, also service support. We have a reliable delivery schedule and service commitment. We are responsible for the cranes. Even after warranty, we stand behind our products.”
Because of their size, ship-to-shore container cranes have to be transported on purpose designed ships used for carrying large steel structures.
Rather than charter vessels to deliver orders, ZPMC has converted eight bulk cargo ships to carry quayside container cranes and large structural steel items to customer sites around the world.
According to Liu, ZPMC is the only large crane manufacturer that operates its own delivery fleet. Owning specially converted delivery vessels allows the company to offer clients on time delivery and short lead times at reasonable freight prices.
“We have eight ships of 60,000dwt each to transport our cranes. We are planning a ninth in early 2005 and a tenth later this year,” Liu revealed, “Our ships are very busy. Crane production is no problem but acquiring more delivery vessels is. Ships are more expensive now, even second hand vessels.”
Product innovation and development are a key part of ZPMC’s business development programme. Liu explained that the company’s R&D division co-operates with various scientific research institutes and universities in Shanghai and elsewhere in China.
“We invest heavily in new products. We are launching new cranes including a new double trolley crane with an independent cab to reduce operator fatigue and to increase productivity.”
Indeed, several new products have been developed recently. ZPMC has built the world’s first quayside container crane with a dual hoist designed to handle twin 40ft containers. Previously, only one 40ft or two 20ft containers could be lifted simultaneously. The new crane can lift either two 40ft or four 20ft containers.
The first four units of the dual hoist ship-to-shore crane are being installed in Dubai to enter service this year.
ZPMC also recently completed development of a new straddle carrier similar to a chassis-transporting crane in a yard but designed to load and unload by itself.
“It’s still a first generation prototype,” Liu said, “The second generation will be completed soon. After the third or fourth we can launch it in the market.”
Apart from designing new cranes, ZPMC’s design team also works continuously to improve the various components used in cranes are other lifting devices.
Recent developments include a global positioning system (GPS) for auto-steering rubber tyred gantry (RTG) cranes and dockyard container management. An intelligent spreader and an automatic positioning system also are available to clients along with a newly designed failure display and monitoring system for cranes.
Tougher environmental protection laws in many countries have resulted in new technical requirements being introduced for some port equipment. ZPMC has developed an environmentally friendly RTG crane with super capacitors to reduce diesel consumption. Also, quiet cranes with reduced noise emission have been developed to comply with EU environmental protection requirements.
Other recent developments include an eight-rope system for RTG cranes to provide auto swerve controls; a differential gear reducer for hoists; and the development of anti-collision systems to be installed in quayside and other cranes.
“For ship-to-shore we are developing larger cranes with higher speed and automated for higher safety and productivity. RTG is higher reliability. We use standard designs to reduce delivery times and to make them more friendly for users.”
Although port operators are looking for increased throughput and faster loading and unloading times, safety is another important issue affecting the design and construction of port cranes.
ZPMC’s port cranes are designed with various safety features, such as control devices to prevent the sudden drop of a spreader.
Crane safety during typhoons is an important safety issue. In one well-reported incident, six ship-to-shore cranes supplied by a competing company collapsed in Pusan Port in South Korea during in a typhoon.
“We examine how to anchor cranes in normal and typhoon conditions… We have had none of those problems,” Liu said, “Earthquakes are a consideration too. We always check the earthquake history of the location when we design the cranes.”
ZMPC currently is designing four ship-to-shore cranes for the Port of Los Angeles where specific design requirements have been stipulated for the earthquake prone area, where other design restrictions also are being applied.
“In Los Angeles there are not only earthquake requirements but also a height restriction of 56m as the port is close to Los Angeles airport,” Liu explained. “This makes the earthquake design requirement more severe, so we must have a shuttle boom instead of a traditional apex crane as this is a low profile crane. Now we are designing four of these cranes for the first phase.”
ZPMC also builds individual custom-designed cranes for special applications for the company’s own use and for clients. Currently, it is building two cranes for its own use – one of 4,000t, the other 7,000t. In addition, a 4,000t custom design crane is being built for a local customer.
“We are shortlisted in bidding for a 28,000t crane for the Netherlands which will be the largest in the world. Our 7,000t crane is fully rotating and already is one of the largest in the world,” Liu said, “The client will use the crane to remove obsolete oil platforms. It will take two years to build. Container cranes take eight to 12 months to build. RTG cranes can be built in eight to ten months while a ship to shore crane takes about 12 months.”
Apart from building cranes, ZPMC has used its steel structure design and production capability to diversify into constructing steel bridge box girder and other units.
Port crane orders have risen quickly since the late 1990s. ZPMC’s turnover in 2004 reached US$900 million, up an impressive 50% from US$600 million the previous year.
“We assume there also will be a 50% increase in 2005,” Liu said. “Most of our sales are container handling cranes, bulk material equipment and giant offshore floating cranes to lift oil rig platforms. For sustainable growth in future we will diversify a little, but container cranes will remain our core business.”
The port equipment market depends on the international economy and trade growth. Global demand for port handling equipment remains strong because about 90% of international trade is containerised, and many major ports are looking to upgrade their container handling facilities.
“There is demand for new equipment as ships are getting bigger. Ports replace cranes as they want to be faster. This industry still is very healthy,” Liu commented. “In 1997 and 1998 we noted that North America was the fastest growing port crane market but in 2000 European ports were buying a lot. In 2004 and 2005 China is the fastest growing market. Dubai also is growing strongly. We are waiting for India to wake up and buy more port cranes. There are many ports there.”
China’s rapid economic development and growing foreign trade has resulted in a large increase in cargo traffic in all of the country’s seaports. ZPMC has won a series of port crane contracts from Chinese port operators during the past 18 months. European and North American customers also placed large orders last year.
“China is developing container port throughput. Ports in Shenzhen, Shanghai, Qingdao, Dalian and Ningbo are buying a lot of cranes,” Liu said, “These are all main ports. Shanghai and Shenzhen are the two leading ports. China was 30% of our business in 2004. Previously, it was 5% to 6%. China has been buying so many cranes this past year.
“We have a good reputation, so our customers stay with us. The Port of Vancouver was our first customer and has placed six separate orders with us so far. China’s proportion of our orders is 30%, but our company revenue is growing by 50% annually.
“The future is looking very good; very healthy. We are looking also for more diversification such as into bulk materials. Coal handling is a big market; also iron ore and other minerals.”
