Jake's View

Let container port go into terminal decline, then let's build some flats

PUBLISHED : Sunday, 13 October, 2013, 12:00am
UPDATED : Sunday, 13 October, 2013, 3:59am

There have been suggestions that Kwai Tsing Container Terminals is no longer needed. Some even suggest it would be better suited as a location for housing.

This might alleviate the city's housing shortage, but how would this affect Hong Kong's logistics industry which employs some 200,000 people?

Gerry Yim, Managing director,
Hong Kong International Terminals

Letters to the Editor,October 9

Teacher, teacher, I had my hand up first. The answer is that it will affect Hong Kong's logistics industry very little as only a small fraction of these 200,000 people are employed in moving containers from one ship to another.

Increasingly this is all that we do at the container port. Now that the mainland has its own smoothly functioning ports it no longer makes sense to ship goods from workplaces in China the long way round. Why go through a Hong Kong border, with the many grasping hands that afflict all border crossings, and then down yet more congested roadways to a Hong Kong port when the shorter route is much easier and cheaper?

As the chart shows, the tonnage of actual exports and imports moving through our port has declined steadily over the past 15 years, while the total tonnage of freight through mainland ports has risen more than sevenfold.

The business we still have left is transshipment of goods from one mainland port to another, and this now accounts for more than 60 per cent of the business through our container port.

The reason we still have it is that Beijing forbids foreign-flagged vessels from carrying goods between mainland ports. This is called cabotage, and is considered a very bad thing by protectionist-minded governments.

Hong Kong, however, is not considered foreign for these purposes and so we are allowed to handle these shipments.

The continued existence of our port therefore depends heavily on Beijing not realising that an artificial restraint on shipping really does not make much economic sense and only adds unnecessarily to the cost of trade at a time when the mainland's exports already face pricing pressure.

Let the authorities once appreciate this and our transshipment business will go into rapid decline. Costs will then rise even more rapidly for the bedrock import and export business. Its decline will then accelerate as well, and we shall have the answer to our chief executive's prayers for more land to solve our supposed housing shortage.

That comes to 2.7 square kilometres of land. Cover a quarter of this land with 30-storey housing blocks featuring flats of 750 square feet each and we get 290,000 flats.

Consolidate this with container facilities on Tsing Yi and a little reclamation infilling and we could have perhaps five square kilometres of land. This is enough land for well in excess of the 470,000 flats our bureaucrats are talking of building.

Now I am not saying that we should tell our container port operators to get out of Kwai Chung and send in the bulldozers immediately. Mr Yim is right that there is still a worthwhile business being carried out there.

But it is one in terminal decline and we should no longer be propping it up with infrastructure projects for a future demand that we can now see will never materialise.

Let this business come to its natural end, as it did in London and New York. Around the world it has become apparent that inner cities are not the right places for big ports.

Let's just stand by, build no more facilities to serve the port and wait until our big redevelopment opportunity falls into our hands.