Arrival of OOCL’s massive cargo container vessel in Hong Kong heralds China’s growing power in shipping

One of the world’s biggest cargo container ships docked in Hong Kong for the first time on Thursday, reaffirming the growing influence of the mega ships that are increasingly dominating trade routes between Asia and Europe.

The berthing of the OOCL Hong Kong, the third largest cargo vessel on the planet, at the Kwai Tsing Port comes as China continues its ascent to become one of the largest owners and builders of ships worldwide.

The OOCL Hong Kong is owned by Hong Kong-based Orient Overseas Container Line (OOCL), which was bought by China’s state-owned shipping giant Cosco a year ago.

The arrival of the vessel, on its way from Germany to Shanghai and Xiamen, is seen as a symbolically important one for Hong Kong too. The city has played an important role as a gateway to China for decades, but has seen its share of re-exports of Chinese-made goods by sea decline steadily in recent years as more products are shipped directly from ports in China.

“Hong Kong, despite being small in size, has been in the league of the world’s top 10 ports for the past 30 years or so,” Angela Lee, Hong Kong’s deputy secretary for transport and housing said. “Coupled with our sound fundamentals built over the years, including our free port status, strong international connectivity, trusted common law system, and a level playing field for business, I am confident that our port would be able to further leverage on new opportunities … and continue to thrive as a regional transshipment hub.”

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The OOCL Hong Kong was the world’s largest container ship when she was first launched in 2017, measuring about 400 metres in length and nearly 60 metres wide. It was the first ship large enough to carry the equivalent of 21,000 twenty-foot-long shipping containers, or TEU.

The vessel, however, has since been surpassed in size by two ships owned by Switzerland’s Mediterranean Shipping Company (MSC) – the MSC Gülsün and the MSC Mina. Both of the MSC vessels were launched earlier this year.

“Two years after her first sailing, the OOCL Hong Kong is now going to make regular calls to Hong Kong in our Asia-Europe service,” OOCL said.

OOCL Hong Kong was the first of six mega container ships put into service by OOCL before it was bought by Cosco in July 2018 for US$6.3 billion.

The visit comes less than a year after China overtook Japan as the second largest ship-owning nation in terms of gross tonnage, according to Clarksons, a provider of research and shipping services. The largest owner of vessels in the world is Greece.

Hellenic Shipping News, a trade publication, reported in September that Clarksons estimated China owned 7,744 ships totalling 170 million gross tonnes at the end of August 2018, behind the 222 million gross tonnes that comprised the Greek fleet. Gross tonnage is a measure of a ship’s volume.

VesselsValue, a London consultancy that provides valuation of the world’s shipping fleets, said that in the first half of 2019, the value of China’s fleet surpassed that of Japan and was quickly closing in on Greece. China’s fleet was valued at US$98.8 billion in July, behind Greece’s US$103.9 billion.

“Gains in reputation, availability of finance and international business outlook, coupled with the manufacturing pedigree of the nation, have facilitated this [China’s] rise,” said Charlie Hockless, head of Singapore for VesselsValue.

“Arguably, the Chinese fleet valuation ought to be higher … if it wasn’t for the current historical low values seen across the board in the offshore sector, the Chinese owned fleet would certainly be challenging or even surpassing the value of the Greek owned fleet.”

Shipping lines have been adding bigger and bigger container ships to their fleets in recent years as they try to lower their costs and achieve better economies of scale.

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Cosco has already launched seven enormous container cargo ships totalling 1.25 million gross tonnes this year alone.

Many of those giant vessels are plying the shipping lanes between Asia and Europe, rather than to the United States, where many of the ports are not deep enough to handle their massive girth.

They are also doing so as the world’s supply chains are in flux amid a trade war that has raged between the US and China for the past year. American manufacturers are exploring new manufacturing partnerships in other parts of Asia, particularly in Southeast Asia.

Of the 45 largest container cargo ships on the water today, all but one currently sail along routes between Shanghai and ports along China’s northeast coast to Rotterdam and other ports in northern Europe.

The OOCL Hong Kong left Germany’s only deep water port in Wilhelmshaven, transiting the Suez Canal and the Malacca Strait before arriving in Hong Kong. She will continue to Shanghai and Xiamen before returning to Wilhelmshaven.

On Tuesday, the MSC Gülsün, the world’s largest container ship at 23,756 TEU, docked in Shenzhen for a day on its way to Europe.

MSC plans to launch 11 vessels that can carry more than 23,000 TEUs – the first two are the MSC Gülsün and its sister ship MSC Mina, according to Giles Broom, global public relations manager for MSC.

The docking of the OOCL Hong Kong could provide a symbolic boost for the port. The value of goods imported into Hong Kong from China and elsewhere and then exported by ocean have fallen by 19 per cent since 2012 to HK$612.3 billion last year, according to data from Hong Kong’s Census and Statistics Department.

“The arrival of the OOCL Hong Kong highlights the Hong Kong Seaport Alliance’s ability to handle the world’s largest container ships while emphasising Hong Kong’s critical role as a transportation and logistics hub in the region,” said Peter J. Levesque, group managing director of Modern Terminals, one of the city’s main port operators.