Hong Kong's biggest competitor for shipping and logistics may turn out not to be Shenzhen or Shanghai but rather Taiwan, once cross-strait relations are normalised. That is the argument of the head of the Polytechnic University's shipping and transport logistics department, Kevin Cullinane, who says the Port of Kaohsiung's natural geography and favourable position along international shipping lanes make it 'well-placed to take a lot of trade away from every port in China'. As such, the only way for Hong Kong to maintain its dominant position in transport and logistics in East Asia might be to focus future development efforts on specific high-value freight sectors, such as time-sensitive air cargo, rather than overall port development. 'Taiwan is a missing variable in discussions' on the future of transport in Hong Kong and China, Mr Cullinane said. He said that a study undertaken on behalf of the Rotterdam and Singapore port authorities on the viability of Asian ports for the next generation of large cargo vessels had found that mainland ports were at a disadvantage to those on the edge of the Pacific, such as Singapore, Hong Kong, Kaohsiung and Yokohama. The advantages of the mainland ports as major hubs were overrated, Mr Cullinane said. 'Shenzhen and Shanghai's competitive advantages, relative to Hong Kong, will disappear over time. Costs are rising in China relative to Hong Kong and their comparable inefficiency means the costs issue will mean even less over time,' he said. What could push Kaohsiung, Taiwan's largest port, to a dominant position in Asia - past that of Hong Kong and its mainland rivals - is direct cross-strait transport links in the next few years. Taiwan is already pursuing the possibility of air cargo links with the mainland, and Taiwanese flag carrier China Airlines is finalising a deal to take an equity stake in the cargo operations of Shanghai-based China Eastern Airlines. Analysts said that for Hong Kong to counter the development of its East Asian port rivals, it needed to concentrate its efforts on developing an integrated plan to capture more of southern China's products for transport. 'Hong Kong has never been able to capture goods from as far away as Shanghai. What it does need to do is expand its hinterland in the Pearl River Delta,' said Philip Wickham, a Hong Kong-based transport and aviation analyst at ING Barings. 'The biggest thing for Hong Kong will be how it integrates [its transport links] with Guangdong province over time,' he said. Last month, the Airport Authority unveiled what it called a 'conceptual' plan to create a freight integration centre in Nansha, at the northern end of the Pearl River Delta, which it hopes will allow Hong Kong to divert river-transported cargo away from Shenzhen. The facility would be connected to Hong Kong via high-speed rail, road and ferry links. Andrew Sharp, director-general of the International Air Rail Organisation, told an audience at the Airports Council International annual conference on Tuesday that such high-speed links would allow transport hubs to 'seriously expand their catchment area'. However, Mr Wickham cautioned that there was a danger that the infrastructure Hong Kong chooses to develop might not match the types of exports the south China region would produce in future. 'Hong Kong doesn't control Guangdong industrial policy. So we can't choose to move just low or high-value goods' at the risk of mismatching our resources, he said.