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Hong Kong port now dropping behind Ningbo after Shenzhen sprints ahead

Monday, 20 July 2015 | 11:00
Hong Kong’s container port throughput has been overtaken by Ningbo in the first half of this year, only two years after the city was knocked down by Shenzhen from the third spot in the world’s top ports.

Hong Kong handled 10.1 million twenty-foot equivalent units (teu) in the January-June period, down 9.7 per cent from the year-ago level, according to government data released on Friday. Ningbo-Zhoushan, where two neighbouring cities in Zhejiang province have united their coastal front to form a port complex, recorded throughput up 9.1 per cent year-on-year to 10.5 million teu.

Waning port traffic has been a chronic issue for Hong Kong. Land constraints and high costs are the main drivers that have sent business scurrying away. A diminishing manufacturing base in the Pearl River Delta has also cast a cloud for all regional ports, including Shenzhen and Guangzhou. But the tumble this year for Hong Kong is precipitated by some other factors.

The traffic composition in Hong Kong has undergone drastic changes over the last decade. With the opening up of the mainland economy and its ports, Hong Kong’s role has shifted from serving the China hinterland to being a mere transshipment hub, where a container is discharged here and loaded on another ship. Last year, transshipment cargoes accounted for 72 per cent of total traffic, compared to only a quarter in the early 2000s.

“Transshipment cargo is very footloose and will be routed through the absolutely cheapest [transport] corridors,” said Andy Lane, a partner at CTI Consultancy.

Han Ning, deputy China manager at UK consulting firm Drewry, added that, unlike import or export cargoes, transshipment volumes are two-way. Once transshipments are gone, they are reflected as a loss for both the way in and the way out.

The majority of the world’s 20 container shipping lines since this year started operational blocs on east-west trades. The grouping resulted in a sweeping restructuring of networks and reduction of transshipping routes.

Hong Kong has so far lost the battle for the region’s transshipping hub in shipping lines’ overhaul. The number of weekly port calls in Europe and US routes was reduced to 45 this year from 52 last year, according to data from consultancy Alphaliner.

Several international and regional shipping lines told the South China Morning Post that since this year they have either re-routed services out of Hong Kong or opened new routes that does not include the city.

The last straw, the carriers say, was the terminal operators’ demand for a tariff hike. “When the service quality is not improved, yet the charges are higher, of course the only option left to us is to leave,” said the South China manager of an Asian carrier.

For some other carriers, it was the severe congestion last year that triggered their exodus. Last summer, the main Kwai Tsing port suffered the worst congestion in years, even without a labour strike. The gridlock caused many carriers to skip calls and cost some millions more a month in operational expenses.

“The congestion issue is over. Now the port has plenty of space. The problem now is whether the port can still attract carriers to come back,” the manager said.

Hong Kong terminal operators, comprised mainly of Li Ka-shing’s Hutchison Port Holdings, Modern Terminals, a Wharf Holdings subsidiary, and state-owned shipping giant Cosco, have lobbied the government to release back-up land parcels in the exiting port’s proximity. The yard area per berth in Hong Kong is only half the international average. In other words, Hong Kong has been handling the same amount of throughput based on half of the land used by most other ports in the world.

Last month, the government started a public consultation on the release of some 18 hectares of land to the terminals, who had asked for 70 hectares.

But the move, said a local manager of a European shipping line, may be too little and too late.

“It is better than nothing. But it is not going to stem the traffic loss. The situation may have already been beyond salvage,” he said.
Source: South China Morning Post
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