Shipping activity is set to double at the UK's second largest port with the announcement that a £20m cargo terminal is to be built.

Tees and Hartlepool Port Authority said 120 jobs would be created by the development, potentially rising to 200 within the next three years.

Work should be finished in 12 months and will put Teesside at the vanguard of the port industry.

Trevor Meredith, the port's group commercial manager, said: "By bringing this project in, in fairly quick time, it will give us a steal on the market as well as extra investment for the North-East."

The port has experienced impressive increases in its workrate.

Three years ago it handled about 30,000 units a year. That has increased to 85,000 units.

But the site became a victim of its own success and is running close to capacity.

The two-phased development announced yesterday will provide twice the port's existing container handling capabilities.

Phase one will see the 360m long Number Two quay at Tees Dock refurbished and fitted with two 50-tonne capacity gantry container cranes.

That will allow the port to handle 13-container ships for the first time, making it the only facility of its kind north of Felixstowe.

Phase two in early 2004 will see the introduction of secondary handling which will increase capacity to about 200,000 containers a year.

The port will be able to advertise compelling reasons why shipping merchants should consider using the region. David Robinson, managing director, said: "The new facility provides the opportunity for direct calls by larger vessels.

"The natural deep water, short channel and lock-free access are all persuasive factors in Teesport's favour.

"The increasing road, rail and port congestion in the South are all adding to the overall cost for northern shippers using southern ports.

"Calls to Teesport by feeder services and the possibility of direct calls from Iberian Peninsula and the Mediterranean can all help reduce these costs.