Midstream container operators join forces in fight for survival

PUBLISHED : Wednesday, 20 January, 1999, 12:00am
UPDATED : Wednesday, 20 January, 1999, 12:00am

Midstream container handling operators have joined forces to fight for their survival due to continuous pressure from shipping lines to reduce rates.

The operators plan to form the Hong Kong Midstream Operators Association, seen by the industry as a move to unify prices among operators and to increase prices later this year.

'Cut-throat competition in the midstream business over the past few years has forced prices down to very low levels,' a source said.

Wang Jiemin, who will head the association once registration is complete, said tariffs in the midstream business, which made up 25 per cent of Hong Kong port's container throughput, were at the same level as 10 years ago.

'Carriers are now asking for not only reduced prices, but also more added-value services at the same price,' he said.

Midstream handled an estimated 2.8 million teu (20-foot equivalent units) last year, down 6.66 per cent from three million teu in 1997, he said.

The decline was mainly due to the economic downturn, falls in intra-Asia trade and containers moving through Yantian and Shekou, Mr Wang said.

He urged the Government to consider banning Chinese self-propelled vessels - which use the tackle method of transferring containers in midstream - as it was unsafe.

The law does not allow self-propelled vessels to park alongside ocean-going vessels as it is dangerous.

This form of container handling, which makes up 50 per cent of midstream business, is about $100 to $200 cheaper per container compared with those operators who use barges and vessels with cranes for midstream loading.

Midstream operators also made huge investments in computerisation, refurbishment of facilities, employing extra workers, extension of service hours and staff training to raise standards.