Kwai Tsing port fights to hold onto business against mainland China rivals

In a city whose skyline is dominated by skyscrapers and the neon displays of world banks, Kwai Tsing container port works out of sight from most Hongkongers.

But the port is a linchpin of Hong Kong's trade and logistics activities, which contribute 25 per cent of the city's gross domestic product. Hong Kong held the title of the world's busiest container port between 2000 and 2004, until Singapore, Shanghai, and then Shenzhen overtook it.

Kwai Tsing has lost ground to regional rivals in exporting cargoes of mainland manufacturers.

"Any southern China manufacturer exporting full container loads of cargo will not dream of using Hong Kong, where terminal handling charges and other ancillary charges are over 20 per cent more expensive than Shenzhen and Guangzhou," said a logistics manager of a Hong Kong-based multinational that exports 50,000 20-foot equivalent unit (teu) containers a year from its mainland coastal factories.

The firm said it embarked on a strategic shift to move exports out of Shenzhen since 2005, with only 4 per cent of its cargoes now being shipped from Hong Kong. The advantages Hong Kong has are in the handling of transshipment cargo and the consolidation of some cargoes.

About two-thirds of traffic via Hong Kong port now comes from transshipment. Mainland ports are barred from handling transshipped goods due to China's cabotage regulations. China forbids foreign carriers providing transport services along the coast and its inland waterways.