Kwai Tsing dock workers strike

Hutchison Port shares drop amid news of HIT's HK$100 million revenue loss

PUBLISHED : Thursday, 18 April, 2013, 12:00am
UPDATED : Thursday, 18 April, 2013, 4:07am

Shares in Hutchison Port Holdings Trust dropped yesterday to US$0.81 - the lowest since the Kwai Tsing dock strike began.

Investors pushed the price 3.57 per cent below Tuesday's closing price after research showed that the industrial action could have cost the port operator HK$100 million in revenue.

The company, whose shares are listed on the Singapore Exchange, owns Hongkong International Terminals (HIT) which runs the strike-hit docks.

HIT announced earlier that its handling capacity was now back to 80 per cent, up from 50 per cent in the early days of the industrial action.

A Citi Research report said the reduced capacity would have dragged its revenue down by some HK$100 million because some containers had been diverted to Yantian in Shenzhen.

Wage increases could approach 10 per cent this year, up from the previous 5 per cent annual rate, it estimated.

"More importantly, we believe that the notable flexibility that HIT enjoys regarding its current subcontractor labour structure could also be in jeopardy, particularly in the current volume environment and what we believe to be structural longer-term headwinds for export growth out of South China or Hong Kong," the report said.

A spokeswoman for HIT said its daily "financial losses have reduced significantly" after a court ordered the protesters to leave the terminal areas earlier this month.

"As at the date of the injunction court hearing on April 5 … our daily financial loss was HK$2.4 million a day," she said.

On the brighter side for freight forwarders and retailers, another study showed that the strike's impact on other businesses was lessened because delays had been shortened.

Paul Tsui Hon-yan, chairman of the Association of Freight Forwarding and Logistics, said shipping companies told the association last Wednesday that delays ranged from zero to six days, down from one to 10 days in the beginning of that week.

"There is now no delay for exported goods," he said. The improvement could be a result of a drop in the volume being handled at the port. HIT may have asked vessels to unload in Shenzhen before coming to Hong Kong to load goods for exports, he suggested.

Meanwhile, fewer than 5 per cent of container vessels had skipped Hong Kong for Yantian, he estimated. Most had adjusted their itineraries, stopping at other ports before returning to Hong Kong, he said.

Tsui was confident the strike would not divert container traffic from the city in the long run.

Coils Lam Wai-chun, owner of snack shop chain 759 Store, said he was experiencing just a week's delay in stock deliveries, down from two weeks at the start of the strike. His inventory had returned to a normal, he said.

"At the start, HIT failed to tell us the whereabouts of the ships. Now there is still a delay, but the company can inform us exactly how long it will be," he said.

Other companies said they had diverted shipments to other ports or used airfreight for urgent deliveries.