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Greater Bay Area

Where does Hong Kong’s container port fit into the smart city vision and Greater Bay Area initiative?

Peter Levesque says with container traffic falling at Kwai Tsing in recent years, the container port should be included in the city’s modernisation drive, to create a new operating model that can be part of the regional integration plan

PUBLISHED : Tuesday, 10 July, 2018, 6:37pm
UPDATED : Thursday, 12 July, 2018, 9:54am

Under the leadership of Chief Executive Carrie Lam Cheng Yuet-ngor, Hong Kong is at last embracing tech and innovation to move our maturing economy up the value chain and remain competitive. This is a bold vision for a city that has historically thrived on trade and finance.

Recently, the American Chamber of Commerce launched its inaugural Smart City Conference, which highlighted the role of technology and design in enhancing Hong Kong’s position as a world-class city. It also underscored the critical role of human capital in bringing the government’s smart city initiative to fruition.

Tom Murphy, the former mayor of Pittsburgh, Pennsylvania, who was seminal in transforming his city from a dying steel producer into a research and development tech centre, gave a compelling keynote address at the conference.

He stressed the need for Hong Kong to tear down the conventional barriers to progress, and think differently to achieve transformative smart city development. “The challenge is for cities to be intentional about reaching the future, not to drift into it or be protective of the status quo”, he said.

The idea of a “smart city” covers a wide range of opportunities, but the essence is to merge advanced technology and infrastructure to improve the places and spaces where people live and work.

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Hong Kong is fortunate to have some of the finest infrastructure in the world, including the MTR, which moved 2 billion passengers in 2017, and Hong Kong International Airport, which handled 73 million passengers last year.

The smart city blueprint looks to integrate road, rail, tunnel and airport infrastructure, yet the plan is silent on the opportunity to connect and enhance Hong Kong’s other world-renowned piece of infrastructure, the container port in Kwai Tsing.

Around the world, container ports enable the physical flow of international trade, and Hong Kong’s port is among the very best, handling over 17,000 container ships and 53,000 river barges in 2017 with 20 million containers of volume throughput. These stats are a tangible reminder of the critical role Hong Kong plays as a super-connector to the global economy.

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The Hong Kong Special Administrative Region’s free-port status, rule of law, ease of doing business and proximity to the mainland make it unique in the region, and a vital component of the global supply chain. With the development of equipment automation, sensor technology, artificial-intelligence-enhanced operating systems and blockchain technology, Hong Kong is well positioned to become a next generation port that will provide greater efficiency and value to customers.

Container ports also provide valuable employment to their communities. Hong Kong’s port provides over 6,000 direct jobs and supports another 175,000 indirectly. The port is a key contributor to trading and logistics, one of the four key pillars of Hong Kong’s economy.

It is therefore our responsibility to ensure the long-term viability and success of the port, by creating a new operating model that takes a more holistic approach across Kwai Tsing, and applies the latest technology and business process design to increase the port’s regional competitiveness.

Throughout history, civilisations and commerce have been connected by the sea, and Hong Kong’s connection to ocean shipping has played a vital role in supporting international commerce and improving lives. Critics of the port say we should walk away from our history and from our obligations to the community. This would be a colossal mistake and one in which there would be no turning back.

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Market share at the Hong Kong port has declined over the past several years due, in large part, to growing competition from the mainland. While we can’t control the threat from regional competition, we can control the steps we take and opportunities we exploit to counter these competitive threats.

The development of the Greater Bay Area, for example, could provide an opportunity for the Hong Kong port with its international status under “one country, two systems” to play a valuable role in augmenting a system of ports across the bay area economic zone.

There has also been much discussion over the past two years about a possible mixed use of port areas in Hong Kong, and studies are now under way to determine the technical and economic feasibility of these concepts. Building housing above the container terminal is an innovative proposal that needs to be carefully considered and quantified from all sides, to determine the magnitude of the opportunity against the cost and practicality of implementation.

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In line with the vision for a smart city, we have an opportunity and obligation to create a new value proposition for Hong Kong’s port, one that will increase our competitiveness in the region and allow the port to thrive in the decades ahead. By rethinking traditional operating models and applying new technology, the port can generate greater efficiency and improve its service offering to ocean carriers.

To make this happen, we need a renewed sense of urgency, a willingness to break down barriers, and the courage to think differently. The opportunity for the future of Hong Kong’s port is compelling and the time for action is now. A smart city would do well to embrace a smarter port.

Peter Levesque is the group managing director of Modern Terminals Limited and the 2014, 2015 chairman of the American Chamber of Commerce. He has lived and worked in Hong Kong since 1996