Hutchison port chief slams Lantau proposal

Hutchison Whampoa's top port executive has labelled Hong Kong as one of the least efficiently designed ports in the world and said plans to extend container facilities to Lantau would only make things worse. John Meredith, the head of Hutchison Port Holdings, the group's international port investment arm, said Kwai Chung's inefficient design bore some of the responsibility for the high costs driving shipping lines into the waiting arms of rival operators across the border. Shenzhen, comprised of Hutchison's Yantian facility, and the ports of Shekou and Chiwan, saw cargo volumes grow a comparative 49 per cent in the first five months to more than 2.6 million teu (20 ft equivalent units). Hong Kong's main terminals at Kwai Chung, by comparison, saw a marginal volume retraction over the period despite moving back into the black in April and last month. Mr Meredith called proposals, championed by Port Development Board chairman Sir Gordon Wu Ying-sheung, to build CT10, 11 and 12 on Lantau Island next to the airport 'ridiculous'. 'Hong Kong is already one of the least efficient container ports in the world in terms of the way it is structured. Next year we will have five operators working seven locations. It is a fundamental flaw in the way Kwai Chung was developed and now we have proposals to put more terminals out on Lantau. It's a ridiculous concept,' Mr Meredith said. Mr Meredith's concerns about fragmented cargo-handling infrastructure mirrored those expressed earlier this week by Almon Yu Ngai-cheung, chief executive of Sun Hung Kai Super Logistics. Mr Meredith said having so many operators with allegiances to specific clients meant berths sat idle while shipping lines waited for space at facilities to which they were contracted. While Mr Yu was referring to the disparate way in which freight facilities were developing at Chek Lap Kok, Mr Meredith said parallels can be drawn with port's design and the proposals for expansion. 'The present structure of the port is like giving each operator at the airport its own runway, contracted to specific groups of airlines. If the runway is in use an aircraft would have to circle until the berth opens. Then, because landing fees are perceived to be too high, the planners say we'll create more competition by re-opening Kai Tak,' he said. 'This is how stupid these ideas are and they are coming from senior people in the community who should know better, but obviously they don't.' Mr Meredith dismissed suggestions there would be operational synergies if the port extension was built close to the airport. '[Proponents of the Lantau plan] argue that no other country has done that so it is therefore a fantastic idea. But there is a reason why no other country has done that: there's no rationale for doing so. The cargoes are different, there is no synergy. In fact it is the opposite. The interference factor is substantial,' he said. When CT8 was developed in Kwai Chung, Mr Meredith said special, bent cranes had to be developed so they would not interfere with the radio signals from Stonecutters Island that were guiding the planes into Kai Tak. 'Imagine putting cranes at CLK and adding in the interference from shipping. You don't want them anywhere near the airport. And for anyone to suggest it is completely nuts,' he said. Industry watchers have been quick to point to the high comparative cost of doing business in Hong Kong when searching for a reason for its declining south China cargo market share. But Mr Meredith defended the operators' reluctance to substantially drop cargo handling charges (CHC). 'What is the point of reducing CHC on the assumption the shipping lines will also reduce the THCs [terminal handling charges, the port-side costs the lines pass on to their customers]?' he asked. 'Our tariffs have been reducing over the past five years because of competition from Shenzhen, but the THC has not come down to match it.' To solve the dispute about which sector is responsible for the high cost of using the port, Hutchison has proposed to Modern Terminals Ltd (MTL), the other main operator at Kwai Chung, cargo charges be jointly audited. The proposal was made last month, and the companies have had 'a few' follow up sessions. 'What we are trying to do is get MTL to agree to have CHC audited with us to report on the whole [port],' he said. 'Then we will not have to argue about it anymore or appear evasive [because of confidentiality agreements with shipping lines]. 'I'm quite happy to do that. And it will show what we have been achieving on the CHC and what is happening with the THC.'