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  • Apr 24, 2014
  • Updated: 1:58am

Kwai Tsing dock workers strike

On March 28, 2013, dock workers at Kwai Tsing took industrial action seeking a 17 per cent pay rise. The port is operated by Hongkong International Terminals (HIT).

CommentInsight & Opinion

Leave political grandstanding out of negotiations over dockers' dispute

John Meredith says political grandstanding must not be allowed to prevent a resolution to the dockers' strike, which is causing harm to Hong Kong's business as it drags on, to everyone's loss

PUBLISHED : Tuesday, 30 April, 2013, 12:00am
UPDATED : Tuesday, 30 April, 2013, 5:35am

After decades of investment and growth that once established it as the largest port facility in the world, the port of Hong Kong now risks losing business and its global leadership to competitors from Singapore, Taiwan, Japan, Korea, Malaysia and mainland China. These lost cargoes would adversely affect not only the dockers but thousands of others who are involved in related businesses in Hong Kong's pivotally important logistics chain.

For those of us anxious to agree on a positive outcome to the current dispute between striking dockworkers and their employers, a simple basic reality needs to be recognised. Hong Kong's port operators have achieved world leadership by being efficient and cost-effective. The waterfront is not an easy or simple business: it involves tough negotiations with customers on fees and charges as well as with our employees and supporting companies. Negotiations may be tough but they are always in good faith: we share a keen interest in reaching an agreement that can be valued and respected by all parties.

Stirred by a union and its leader that is more concerned with scoring political points than an agreement that secures the livelihoods of these contracted workers, the need for negotiation in good faith has been abandoned. This is perhaps the most disappointing aspect of the current stand-off.

These attacks, together with the claims that Hongkong International Terminals (HIT) has failed to respond to the needs of the industry and the welfare of those working in it, do both an injustice to the staff and are additionally an insult to those of us who are intensely proud of the revolutionary business model that started in Hong Kong, has benefited our great city, and in the process enabled Hong Kong to become a world leader in its field.

Not only are the activities of the Confederation of Trade Unions deceptive, they are dangerous. A crucial point to remember with transhipment cargoes is that they do not have to come through Hong Kong. They can choose to transit at many other ports, and if we lose the trust of the shipping lines to deliver the right product at the right price, then our transhipment traffic will be lost. In fact, a number of transhipment cargoes have already bypassed us, and if our costs increase or our efficiency becomes uncertain, the business won't be coming back.

This does not seem to matter to Lee Cheuk-yan of the CTU, nor do the other facts that he chooses to ignore; his overall strategy being to directly attack Hutchison Whampoa chairman Li Ka-shing with Cultural Revolution-style banners and slogans and by protesting at Mr Li's residence and Hutchison Whampoa retail stores.

The dockers involved in the recent industrial action at the port work for independent contracting companies. They do not work directly for HIT. Lee Cheuk-yan of CTU knows this, yet he is dramatically focusing on Hutchison Whampoa, HIT and Mr Li personally.

Even if the dockers worked for HIT, the company is part of Hutchison Port Holdings Trust, a listed entity on the Singapore exchange, which has an independent board and governance. Hutchison Whampoa holds only a 27.6 per cent stake in Hutchison Port Holdings Trust, and HIT contributes less than 1 per cent to Hutchison Whampoa's overall profit.

What the union leaders and those who follow them choose to ignore is the delicate economic balance that must be maintained to keep the port of Hong Kong operating. The fact is that over 70 per cent of the port's business involves comparatively low-value transhipment cargoes which originate in places like Thailand and Vietnam and are transported in small ships to a hub port, such as Hong Kong, where they are transferred to larger vessels for their eventual destination to the US, Europe and other markets.

HIT has spent 45 years building a successful transhipment operation with facilities specially designed to serve what once was a revolutionary concept for port cargo handling. Mr Li and Hutchison risked investment to grow the industry in Hong Kong even at times when others were hesitant or unwilling, and it has proven beneficial to all.

This dedicated investment and corporate leadership allowed HIT to build up resources required for transhipment traffic and to field a workforce accordingly. This has resulted in the port of Hong Kong becoming a premier transhipment hub in the region, fiercely competitive in terms of operational efficiency, price, quality and consistency.

Yet the model has its challenges. The transhipment business is inconsistent. Container volumes rise and fall week to week, due to a whole host of factors outside our control. Competition is fierce, particularly among developing countries that would very much like to take our place by undercutting the narrow margins we must maintain to be competitive.

To keep the port of Hong Kong successful and benefit the many who depend on it, we have established baseline resources but must also depend on external contractors whenever the workload rises above a point at which we cannot operate effectively. They are a key component of our successful model, and we value their contribution. Negotiation in good faith can settle this dispute. Grandstanding theatrics cannot.

Dr John Meredith is group managing director of Hutchison Port Holdings

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Observer
Even as a recent shareholder of Hutch and a long time follower and admirer of Mr Li, I am unable to understand why Mr Li or Hutch representatives have been unwilling to meet/discuss with strikers until recently & have promises been made to independently investigate allegations of poor working conditions? Can 3rd party health and safety inspectors not be appointed? Does the company have ISO 18000 certification for health & safety/other 3rd party certifications? Even for shareholders, bondholders & institutional investors, I am sure many would like to know the truth of the allegations. While I suspect there has been some exaggeration to suit the political motives of the trade union leaders, on the other hand, Hong Kong is a wealthy city and we should not tolerate the poor working conditions that have been described in the press, if indeed they are true. While the tactics of the dockers may be questionable, the question is - if management refuse to meet with them, are they forced to radicalise and therefore become prey to, and prone to manipulation by, those with more political or ulterior motives? By hiding behind 3rd party contractors, are management not also inflaming the situation? The tactics being used by both sides seem only to be pushing the other side to be more intransigent. While I suspect that ultimately management will win this battle, at what cost to the company's reputation? The public needs more communication from the company such as above
xiaoblueleaf
One scenario may be that the container port will be closed down; move all operations to Yantian, Shenzhen. The water-front land will be re-developed into luxury housing, adding few more billions to ****. "Let HK and the dock workers eat Sh..t".
captam
Yes but, No but, Yes but.........
The current system of having a long string of sub-contractors does lead to the erosion and dilution of workers comforts, benefits, rights and protections. This may be more convenient for large corporations but it leaves the managers at the top so far removed that they are now and sometimes ignorant of actual conditions on the ground.
When the British colonial hongs had almost exclusive and monopolistic controls of Hong Kong’s major industry, they did actually employ most of their workers directly and there was far less of this sub-contracting out. It is only after the likes of Li Ka-shing took over these companies that contracting out of their workforces gathered momentum (witness how (British-owned) Cable & Wireless’ Hong Kong Telephone Co. became PCCW and within months had laid off almost its entire workforce.
Lee Cheuk-yan does have a point!
megafun
Firstly, I do not agree with the preset Trade Union tactics. However, HIT's sub-contracting policy is not acceptable. Transferring of "risks" in shipment fluctuations to ordinary workers is not, and ought not, be a part of any good, just and fair social arrangement. Our present laws are painfully inadequete in this respect, and I believe Trade Unions should direct their energy in changing the law first!
dynamco
Self serving Op-Ed. Maybe he should move to Shenzhen to their other company at Yantian port which is currently handling the diverted shipping ?
www.rcslogistics.com/wp-content/uploads/2013/04/HIT-Strike-Threatens-Long-Term-Impact-on-Hong-Kong-4-22-13.pdf
This quote says it all: “Whether the current strike is eventually viewed as catalyst for a change of liner strategy or a short-term operational blip remains to be seen. What is certain is that Li Ka-shing, Asia’s richest man and the owner of HPH Trust, is unlikely to lose out if more cargo starts being diverted from Hong Kong to ports in Southeast China. HPH Trust operates a roster of facilities over the border, including Shenzhen’s Yantian International Container Terminals, one of the main beneficiaries of current boxship diversions from HIT.”
www.chinabidding.org/news/386022
Hutchison subsidiary 65% owners of Yantian.
****www.molpower.com/VLCWeb/UISTATIC/Tariff/surcharge/MOL000004%2030-01-2012%20AET%20SURCHARGES.pdf
compare HK port greedy container handling charges (THC) to the rest of the world
The busiest port in the world is Shanghai (THC for 40’ FCL) is RMB 880 versus HKG’s RMB 2,186 (HK$2750). Why is that ?
“Hong Kong's port operators have achieved world leadership by being efficient and cost-effective.”
Cost effective for whom ? How does having the most expensive port handling charge in the world morph into ‘cost effective’?

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