2024 RT Amination Banner.gif

China Daily

HongKong> Opinion> Content
Monday, February 18, 2019, 11:23
Our maritime industry offers much potential
By Edward Liu
Monday, February 18, 2019, 11:23 By Edward Liu

Edward Liu explains why it is vital for HK to be a base for developing global shipping and trading companies on the Chinese mainland 

In the World Economic Forum annual winter meeting held in Davos earlier this year, the International Monetary Fund predicted a global economic slowdown in 2019. A major risk faced by the economy is that the escalation of trade tensions may exceed the extent to which growth forecasts have been reflected. Hong Kong’s small open economy is naturally vulnerable to external shocks.  

Already, the city’s maritime industry, a barometer for global trade and even the global economy, is literally navigating in a rough sea. According to the statistics released by the Hong Kong Maritime and Port Board, container throughput in Hong Kong fell by 5.4 percent year-on-year to 19.64 million TEUs in 2018, the worst performance in two years. To make matters worse, the Chinese Academy of Sciences reckoned that among the world’s top 20 ports Hong Kong is the only one that registered negative growth in container throughput in 2018. Hong Kong’s port ranking is likely to fall two notches to seventh from the fifth in 2017, trailing behind Busan and Guangzhou. This will be the worst ranking after Hong Kong lost its No 1 position in global container throughput in 2004. Has the Hong Kong port industry, which has been labelled as “sunset industry”, been degraded? Can Hong Kong’s status as an international shipping center be preserved?

In fact, Hong Kong’s port terminal operators launched a “self-help” campaign at the beginning of this year. On Jan 8, Hong Kong’s three major operators of container terminals, including Hong Kong International Terminals Ltd, Modern Terminals Ltd and COSCO-HIT Terminals (Hong Kong) Ltd, announced the formation of the Hong Kong Seaport Alliance to manage and operate 23 berths across eight container terminals. Although the establishment of the alliance arouse suspicions about monopoly and led to an investigation by the Competition Commission, the industry generally approved the self-help action in light of the current critical situation. If the establishment of the alliance enables these formerly independent operators to realize the sharing of berth information and facilities, thereby enhancing efficiency in a more cost-effective manner, it will undoubtedly improve the productivity of container terminals and enhance the competitiveness of Hong Kong ports.

Aside from internal reasons, the decline in port throughput in Hong Kong is also attributed to the changes in the external environment. In particular, mainland policies including the greater opening of the mainland’s economy and the encouragement of direct imports in recent years, as well as the gradual relaxation of cabotage restrictions in some mainland ports further eroded Hong Kong’s position as a re-export hub. (Cabotage is having the right to operate sea, air, or other transport services within a particular area or territory.)

 Therefore, if the formation of the alliance is a cost-saving measure, then actively exploring other sources of demand would be a revenue-raising one.

A Hong Kong logistics and maritime delegation headed by Secretary for Transport and Housing and Chairman of the Hong Kong Logistics Development Council and Hong Kong Maritime and Port Board Frank Chan Fan visited Guangxi recently to promote Hong Kong as a premier regional logistics hub and an international maritime center. The delegation, of which I was a member, had an in-depth exchange of views with the representatives of Beibu Gulf International Port Group Co Ltd, which operates several port terminals in Guangxi. We learnt that Guangxi is actively participating in the construction of the “New International Land and Sea Channel”. China’s western inland has been beset by its geographical disadvantage of being distant from ports: It takes more than two weeks to transport goods to/from the nearest port. The new channel is an efficient and convenient route comprising railway, sea, highway and other modes of transport. It is run by Chongqing with western provinces such as Guangxi, Guizhou, Gansu, Qinghai and Xinjiang as key nodes of a major southward transport corridor that reaches ASEAN countries through the border ports of Guangxi and Yunnan.

ASEAN is Hong Kong’s second largest trading partner in merchandise trade and the fourth largest in services trade. In 2017, Hong Kong and ASEAN signed a free trade agreement. With the construction of the new channel, ports of Hong Kong and Guangxi should strengthen cooperation on developing larger and farther markets. In particular, the new channel’s rail-sea intermodal transportation is likely to bring more shipments to Guangxi’s Beibu Gulf port for port cargo exchange. The Beibu Gulf port has been a key sub-trade port of the Hong Kong port: The cargo throughput between the two places reached 170,000 TEU in 2017. As Beibu Gulf port’s cargo volume keeps rising, coupled with the existing daily liners between Guangxi and Hong Kong and Hong Kong’s liner services covering more than 400 destinations around the world, Hong Kong and Guangxi are bound to transform into a more integrated port logistics network. It allows goods from China’s western inland to be transferred from Guangxi via Hong Kong to Southeast Asia, the United States, Australia and New Zealand. It also enables overseas goods to be transported to the western inland via Hong Kong and Guangxi, enhancing Hong Kong’s position as an entrepot and increasing its throughput. 

Meanwhile, the development of the Guangdong-Hong Kong-Macao Greater Bay Area also offers a good opportunity for Hong Kong, Shenzhen and Guangzhou to work out plans to integrate their port resources and avoid vicious competition among them, with the aim of creating an efficient world-class port cluster.

Of course, an international shipping center is not solely measured by its port throughput. To consolidate its status as a diversified international shipping center, the SAR government should start to formulate an all-round development strategy with a global vision soon. For example, at the local level, traditional maritime and port business clients (such as commodity traders, ship-owners, managers and operators) are the foundation for the development of high value-added maritime services. Effective policy measures should be implemented so as to attract them to develop the industry in Hong Kong and expand the port industry cluster. At the regional level, we should seize the opportunities offered by the Belt and Road Initiative and the Bay Area development and co-opt mainland business clients to make Hong Kong the preferred location for high-end maritime service industry procurement. At the international level, Hong Kong should be clearly positioned to be a platform for the development of international shipping and trading companies on the Chinese mainland and the entry of foreign shipping and trading companies into the mainland market.

The author is a co-opted member of the Maritime and Port Development Committee, Hong Kong Maritime and Port Board and a member of the China Affairs Sub-Committee, Hong Kong  Shipowners Association


Share this story

CHINA DAILY
HONG KONG NEWS
OPEN
Please click in the upper right corner to open it in your browser !