Mr Lo said the rising costs of handling containers in Hong Kong would put pressure on shippers and shipping lines, as it had on Nedlloyd, to seek cheaper alternatives in China or Taiwan.

He said even if the territory had good infrastructure, communications and good management, it was natural in the long run that his company would seek less expensive ways of handling the boxes.

'After all, the people are in the business of moving containers to make money and if the high overheads are going to eat into their profits, they will take their business elsewhere,' he said.

'We expect to see a huge slice of the existing business moving away from Kwai Chung [port] by the end of the decade as the volume of containers at Chinese ports grows, attracting major lines to call at their berths.' Johan Nanninga, Nedlloyd's commercial general manager for Hong Kong and Taiwan, said Nedlloyd - which was part of the global alliance comprising Orient Overseas Container Line, American President Lines and Mitsui OSK Lines - was studying how the operations could be rationalised.

Nedlloyd started making calls at both Shanghai and Yantian ports last month.

Mr Nanninga said the call at Yantian port fitted the company's philosophy of providing another opportunity to shippers to ship out their cargo from Hong Kong and China.

Mr Lo said Nedlloyd's participation in the global alliance would help it to reduce costs and enjoy economies of scale.

He said the carrier was investigating how to use the southern China port as a transshipment hub, and also looking at the many customs regulations that were involved.

'If that is possible, we can keep some of the transshipment out of Hong Kong,' he said.

Mr Lo said there would be a 'substantial cost difference' if the transshipment was done at Yantian port.

Although the terminal handling charges were lower than Hong Kong's, there were other costs such as tugs which were quite expensive, he said.

Nedlloyd was expected to record a slower growth this year, Mr Lo said, adding that the carrier's business had grown tremendously over the past three years.

He said part of the business volume came from Compagnie Generale Maritime (CGM), when it pulled out of the Europe service in November 1994.

Nedlloyd's capacity was up 50 per cent over the previous year as a result of this, he said.

'We have doubled our frequencies and services to Europe,' Mr Lo said.