The first phase of the Yangshan Deep-Water Port will open on Thursday — a huge step toward Shanghai's ambition to become a northeast Asian shipping hub.

The US$12 billion container port is on an island at the mouth of Hangzhou Bay and 27 kilometers from the Luchaogang Por t in Shanghai's Nanhui District.

The new port is aimed at attracting the international transference of containers and competing with such existing hubs as Hong Kong, Singapore and Taiwan's Kaohsiung.

With a depth of 15 meters, the port can handle ships loaded with 8,500 containers, more than double the city's current port capacity.

Construction of the first phase of the project started in 2002 and will be finished at year end. It comprises five berths and the 32.5-kilometer Donghai Bridge that links the Yangshan Island to the city's Nanhui District where industrial and logistics parks and residential are located.

When the first phase is operational, the port is expected to handle more than 3 million TEUs (twenty-foot equivalent units) of containers annually.

Another four berths as part of the second phase will be completed a year from now, increasing the port's annual capacity to 5.5 million TEUs. By 2010, it is estimated the port will handle 10 million TEUs a year.

In future, the terminal is expected to have an annual capacity of more than 20 million TEUs with 52 berths.

Shanghai Port handled 14.5 million TEUs of cargo last year, retaining its position as the world's third largest container port after Hong Kong and Singapore. This year, 18 million TEUs of cargo are forecast.

The port has won government approval to be China's first bonded port, allowing tax reductions or exemptions and immediate export rebates for registered companies.

Shipping companies and world procurement offices can also separate cargo at the bonded port, repackage it, put the goods bound for the same destination into containers and distribute the goods to the various destinations.

So far, several big shipping and logistics companies have signed with the port and several dozens are in talks to conduct business there.

The first business at Yangshan Port will be cargo destined for Europe, according to Shanghai International Port Group, the city's port operator.

Many shipping lines heading for and into Waigaoqiao Port will gradually move to the Yangshan Deep-Water Port, the group said.

While investment of the first phase was all government-backed, the second phase, estimated to cost about US$830 million, is welcoming bidders.

Overseas shipping giants Hutchison Whampoa, COSCO Pacific, the port unit of Danish A.P. Moeller-Maersk, APM Terminals and Oriental Overseas Container Line, have all shown interest.

Domestic shipping leaders such as China Ocean Shipping (Group) Co and China Shipping Group are also interested.

A result is expected before June.