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Lack of yard space, regional competition and the impact of mega-ships and mega-alliances all mean an uncertain future for Hong Kong’s container port.
According to the government’s Port Development Council data, Hong Kong’s container volumes plummeted by 13.5% in March, compared with 2014 – the ninth straight month of declining throughput and an alarming trend that has prompted some stakeholders to call for government action to safeguard the port’s future.
In a recent column for the South China Morning Post, Jessie Chung, chairman of the Hong Kong Container Terminal Operators Association, highlighted the impact of mega-ships on terminal productivity and the substantial increase in barge traffic due to higher transhipment volumes as key challenges for the port.
Mr Chung called on the government to provide new land for yard operations and extra barge berths to keep the port competitive.
“Hong Kong’s port industry faces such a crossroads, either to prosper by maximising the use of its existing Kwai Tsing port facilities or to stop investing and watch shipping lines move their ship calls to other regional ports,” Mr Chung wrote in the opinion piece.
“The container operator industry has already invested in infrastructure, equipment and human resources to increase efficiency and handling capacity. However, for these investments to have a real impact, the government must urgently implement the key recommendations of its own studies.”
Indeed, a study by consultant BMT Asia Pacific also noted the need for further co-operation between government and stakeholders to safeguard the port’s edge.
“The competitiveness of Hong Kong’s logistics industries largely relies on the policy commitment of the government of Hong Kong. Facing strong competitors and business bottlenecks, Hong Kong is now at a critical stage of development,” BMT wrote in the Sustainable Development Study for the Hong Kong Logistics Industry report.
Meanwhile, external factors, such as shifting manufacturing dynamics in the Pearl River Delta (PRD), have also meant Hong Kong has moved from primarily handling gateway cargo to transhipment flows.
“The decline [of volumes] is mainly due to the changing role of the PRD, which is the hinterland or cargo source for both the Hong Kong and the Shenzhen Ports,” said Sunny Ho, executive director of the Hong Kong Shippers’ Council.
He explained that transhipment now accounted for more than 70% of Hong Kong’s volumes, an almost complete reversal from the year 2000, when 75% of its container traffic originated from PRD factories.
At the same time, the detrimental impact of mega-ships and alliances on terminal operations – although inconclusive – means Hong Kong’s port productivity is being scrutinised like never before.
Rohan Nevrekar, general manager, liner procurement and operations at MOL, is sympathetic to Hong Kong’s terminal operators.
“The terminals are faced with the double jeopardy of shortage of mega-vessel berths and limited availability of ground slots, which creates congestion in the terminals,” Mr Nevrekar told The Loadstar. “Additionally, the dwell time of boxes needs to be reduced to a minimum to keep the terminal fluid and operating to the required productivity levels.”
Mr Nevrekar believes carrier alliances are also having an impact: “The recent formation of mega alliances has resulted in splitting of volumes between two major terminal operators in Hong Kong.
“This augments the predicament of streamlining the operations as the outcome results in more inter-terminal transfer of boxes, which drains terminal trucking resources of both terminals and results in increased costs – initiating a move by lines away from the hub port to consolidate volumes in a single terminal.”