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Jake's View
PUBLISHED : Sunday, 13 October, 2013, 12:00am
UPDATED : Sunday, 13 October, 2013, 3:59am

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


Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

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.



More on this story

Kwai Tsing port still important
9 Oct 2013 - 12:00am

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This article is now closed to comments

I read JvdK not for simple first order estimates, things
that he could well delegate to any intern of his subordinates
that sensible readers would register in a normative and not an absolute scale
It’s disappointing that the article is abused for bashing LKS
and mouthing half-baked housing irrelevance
While everyone knew all along that it was problematic, until recently
logistics was billed an important pillar of the city’s economy
But now the industry is publicly recognized as dying and it’s generally presumed
that housing development is the only or best substitution for logistics
Even if logistic workers could instantly turn construction workers
the question remains:
how do those who move into these new housing make their livings?
Go home.....
"The urban area of Hong Kong has the highest population and employment density in the world. Measured at block level, some areas may have population densities of more than 400,000 people per square kilometre."
Are you so ignorant of land matters here that you don't realize that the lease restricts the use to terminals and premia have to be paid for change if use. If that is your level of knowledge go and do some reading before you comment again.
It wasn't me who proposed rezoning a quarter of the port, it was Mr van der Kamp. And I don't think he means: use 25% for houses, and use 75% for roads etc. He means: shut 25% of it, use the land for residential development (incl roads etc), and keep 75% of the port. For now.

You can work out -crude- actual density ratios of some existing areas here: ****www.gov.hk/en/about/abouthk/factsheets/docs/towns&urban_developments.pdf

Tsing Yi/Tsuen Wan covers around 3,250 hectares with a population of about 800,000 people. That is of course only including land for actual development, not the large parts of Tsing Yi that are undeveloped and green.
LKS shouldn't mind moving the port as he can make more money on housing.
John Adams:
I will not rule out LKS is timing his waterfront property for housing through a public’s outcry like today’s article and comments. He wants the best price offer by government for those properties that may not deem all suitable for luxury flats. We must respect LKS's wit at least.




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