Future of Hong Kong's container port industry in jeopardy

Jessie Chung says more barge berths and enlarged storage areas a priority to maintain hub status

PUBLISHED : Tuesday, 28 April, 2015, 2:50pm
UPDATED : Tuesday, 28 April, 2015, 9:28pm

History has shown that the decline of a business or an industry often starts with subtle shifts in trends that seem innocuous or even favourable at the time. Yet, when those trends snowball into immovable obstacles, we inevitably wonder why nothing was done to address the issue when it could have been easily managed.

Hong Kong's port industry faces such a crossroads, either to prosper by maximising the use of its existing Kwai Tsing port facilities or to stop investing and watch shipping lines move their ship calls to other regional ports. The Kwai Tsing container terminals finished the first quarter of 2015 down 9.8 per cent in throughput year-on-year, with March recording a rare double-digit drop of 16.2 per cent year-on-year. It also marked nine consecutive months of year-on-year fall in throughput.

Fortunately, studies commissioned by the government in 2004 and 2014 arrived at essentially the same set of key measures that can safeguard the industry's competitiveness for the foreseeable future. These include enlarging the container terminal yard storage areas, adding barge berths and allowing the rationalisation of existing on-terminal facilities.

According to the findings of a study on the strategic development plan for Hong Kong port to 2030, its long-term competitiveness and sustained growth are under threat due to several growing trends that undermine our handling capacity. One is the sharply increased deployment of mega container vessels to call at hub ports. Their size and high volume of cargo combine to drive down container handling volumes per vessel-call due to insufficient yard capacity, resulting in lower productivity and terminal congestion.

A second trend affecting the port's handling capacity is the substantial increase in barge traffic as more cargo containers are being handled by river barges, rather than through inland transport. In 2008, the average barge waiting time at the Kwai Tsing container terminals was about two hours; now it can take more than two days during peak periods. For container vessels, the average waiting time has risen from 2.8 hours to up to 13 hours at congested periods.

A third trend identified in the 2014 government-commissioned study is the port's increasing reliance on international transshipments. These have strained handling capacity as the efficient movement of containers across terminals has been undermined by limited yard space.

With container throughput projected to grow at a modest rate until at least 2030, the 2014 study arrives at the stark conclusion that "all buffers at [Kwai Tsing container terminals] will be lost in the coming years if some capacity is not added". The issue takes on even more urgency when we consider the potential for having to turn away business during current peak periods because of stretched handling capacity, putting at risk our city's reputation as an international port.

The container operator industry has already invested in infrastructure, equipment and human resources to increase efficiency and handling capacity. However, for these investments to have a real impact, the government must urgently implement the key recommendations of their own studies. Among the eight recommended measures, two which can easily be implemented and will be effective in improving handling capacity are: increasing the number of barge berths and integration of land around the terminals.

The industry consensus is that 12 barge berths can be integrated immediately, and container terminal operators are working with the Transport and Housing Bureau on the feasibility of integrating 70 hectares of adjacent land. The government should also establish an independent port authority empowered to make investments and create the regulatory environment needed to maximise economic contributions to Hong Kong.

Hong Kong has consistently remained a global leader in the container port business. We now have a critical opportunity to protect our position. Port and logistics jobs represent a significant work community here. The Kwai Tsing port provides 93,500 direct and indirect jobs. Hong Kong needs to boost our port's efficiency and competitiveness. It would be difficult to remain an economic powerhouse without a thriving container port industry.

Miss Jessie Chung is chairman of the Hong Kong Container Terminal Operators Association