STEEL BUSINESS: Yingkou Port has five docks exclusively for steel. In 2010, altogether 65 percent of northeast China's exported steel travelled through Yingkou Port (ZHAO XI)

Though it boasts China's fifth longest coastline, Liaoning has long been considered an inland province. During the past few decades, a collection of Liaoning's strongest industrial inland cities—Shenyang, Anshan, Benxi, Fuxin and Fushun—boasted many of the country's key industrial projects.

However, the recent initiation of the Shenyang Metropolitan Area has finally thrust Liaoning's only coastal city into the limelight.

Yingkou, located near the southern edge of the Shenyang Metropolitan Area and at the northeast shore of the Bohai Sea, is the nation's second largest port and the gateway to northeast China.

Wisdom in integration

For Yingkou Port, integration into the Shenyang Metropolitan Area brought new opportunities. Sea transportation is much cheaper than highway, rail and air, said Cao Libin, Director of the Department of Publicity with Yingkou Port Liability Co. Ltd.

"As the only gateway to the sea in the Shenyang Metropolitan Area, Yingkou will surely serve the development of inner industrial cities in the area and benefit from that," said Cao.

As part of the integration, industrial companies from inland cities have begun to make their presence known in Yingkou, as well.

In 2008, Ansteel Group, then the second-largest iron and steel manufacturer in China, established a new integrated iron and steel-making facility at Yingkou Port, 100 km southwest of its current steel-making facilities in Anshan. The new facility has the capacity to produce 6.5 million tons of steel products every year.

A total of 90 percent of the raw material at the Yingkou project is imported. A 2.8 km-long conveyor belt moves the coal and iron ore discharged at the dock directly to the stock ground of the steel plant. With the export dock 200 meters away, it only takes 10 minutes for finished products to be shipped, after rolling off the production line, said Zhang Xiaogang, President of Ansteel Group.

In China, as much as half of the total cost of steel plants were incurred in logistics and storage. Ansteel's expansion to Yingkou Port would thus cut cost and improve competitiveness, said Xu Shouzhen, General Secretary of the Logistics Association of China.

The cooperation of Ansteel and Yingkou Port proved to have produced win-win results. "The Ansteel project increased our throughput by 10 million tons every year," said Pan Weisheng, General Manager of Yingkou Port Liability Co. Ltd.

As a matter of fact, through the Yingkou Port, more enterprises in the inland areas of the Shenyang Metropolitan Area have gained access to a larger market. Last June, the oil pipeline from Liaoyang Petroleum, a subsidiary company of the China National Petroleum Corporation, was formally launched, and 14,000 tons of refined diesel fuel was shipped to southeast China's Zhuhai Port on the launching day. It is estimated that the pipeline—which links Liaoyang and Yingkou Port—will transport more than 2.8 million tons of oil each year and save 100 million yuan ($14.7 million) in logistics costs.

More significantly, Liaoyang Petroleum was able to claim a higher production capacity. In the past, limited freight train capacity restrained production expansion.

The fact is that soon, transportation between Yingkou and the inland cities of the Shenyang Metropolitan Area will become faster. A 62-km-long highway linking Anshan and Yingkou is under construction. "Products from Anshan's Dadaowan Industrial Zone will be able to arrive in Yingkou in less than one hour," said Zhang Baofeng, General Manager of Dadaowan Construction Investment Co. Ltd.

In addition to inviting the inland enterprises into Yingkou, the city has also made efforts to extend its port services inland. Last May, Yingkou launched its first dry port in Shenyang. There businesspeople can have goods freighted directly to Yingkou, saving time and energy, said Cao.

Even more importantly, once the goods move through the Shenyang dry port, it means they have been exported, said Han Ruixiang, Director of the Department of International Communication of Yingkou Municipal Government. It protects them against currency fluctuation. Since they spend less time transporting goods, exporters will be less vulnerable to exchange rate changes, said Han.

In the hope of promoting the development of the Shenyang Metropolitan Area and cutting logistical costs for inland enterprises, Yingkou will establish more dry ports in the near future, said Pan.

In 2010, 70 percent of the bulk cargo freighted in Yingkou Port was from Shenyang Metropolitan Area, according to Cao.

From January to November 2010, Yingkou Port's throughput exceeded 200 million tons, which doubled the number from three years ago. A total of 16 billion yuan ($2.4 billion) was invested in the port in the past five years, which accelerated its development tremendously. Yingkou Port has developed specialized ports for cargo of nine categories, including containers, heavy equipment and natural resources. The port's container shipping routes cover the nation's most important coastal ports. It also opens shipping routes with Japan, South Korea, and Southeast Asian countries.

The land being used for the expansion of the port has been largely reclaimed from marshland. As a result, the social and fiscal costs of development are less than usually required for Chinese urban and industrial development.