The Port of Shanghai, the world's largest port by TEU (twenty-feet equivalent unit) volume has announced it will cooperate with the Port of Ningbo, the world's largest port by cargo turnover, in the development, operation and management of the northern part of Xiao Yangshan port area, which could significantly boost the efficiency of cargo transit on the Yangtze River and lower costs.

The operators of the two ports, Shanghai International Port Group (SIPG) and Zhejiang Seaport Investment & Operation Group, reached an agreement on Tuesday to cooperate on the comprehensive development of the northern Xiao Yangshan area.

According to the agreement and an announcement by SIPG last October, Zhejiang Seaport Group will invest 5 billion yuan ($744.5 million) in Shanghai Shengdong International Container Terminals Co Ltd, a wholly-owned subsidiary of SIPG. Following the investment, SIPG will hold 80 percent of the JV, with Zhejiang Seaport Group retaining the remaining 20 percent.

Up to 70 percent of Shanghai port's throughput comes from the Yangtze River Delta region, and nearly half of the goods in Yangshan require additional transportation by water.

In the operational southern side of Yangshan port, no berths are set aside for feeder vessels, which has hampered its efficiency and economic performance, said Liu Ming, a deputy general manager with a logistics company under SIPG.

"Feeder ships for regional transportation have to wait for a berth to reach their destinations, which is a waste of time and money," said Zhou Dequan, a research director from the Shanghai International Shipping Institute.

The northern side of Xiao Yangshan, though not as deep as the southern side, could well be developed into an international transportation hub for transition between rivers across the region, Fang Huaijin, vice-president of Shanghai International Port Group, was quoted as saying by Xinhua News Agency.

Against the backdrop of the integration of the Yangtze River Delta region and the development of the Yangtze River Economic Belt, the two port groups have decided to cooperate.

The collaboration is also a big step toward fulfilling the action plan for the integration of ports and shipping of the Yangtze River Delta region, jointly issued last year by the Ministry of Transport and local governments of Shanghai and Jiangsu, Zhejiang and Anhui provinces, which stated that construction of the northern side of Xiao Yangshan should start by the end of 2019.

The first phase of the north side project will extend 1.2 km along the coastline, and have a total turnover capacity of 3.5 to 4 million TEUs, according to SIPG Chairman Chen Xuyuan.

Compared to road transition, transport by water will lower costs by 200 yuan to 300 yuan per TEU, and shorten the logistics procedure by between one day and half a day, according to Liu.

"The development of the northern Xiao Yangshan will benefit the integration of the Yangtze River Delta Region and Yangtze River Economic Belt area in multiple levels, and the innovative collaboration creates opportunities for further collaboration across the region in the future," said Zhou.