Value for money port a transhipment hub (hktdc.com)


	An efficient container port and logistics strengths are crucial components of Hong Kong's growth as a transhipment hub in Asia

	Sean Kelly, Chief Executive of Modern Terminals, explains the key drivers behind the industry's future growth

	Sunny Ho, Hong Kong Shippers' Council Executive Director, outlines Hong Kong's free port advantages

An efficient container port and logistics strengths will be crucial components of Hong Kong's growth as a transhipment hub in Asia, industry executives say.

Although it is no longer the world's busiest, Hong Kong's container port remains one of the most effective. According to Sean Kelly, Chief Executive of Modern Terminals Limited (MTL), the volumes of barge and transhipment cargo being handled in Hong Kong and south China are growing at a healthy pace. Barge throughput at Kwai Chung has increased by an average of 15.6 per cent a year since 2000, while transhipments cargo rose by an annual 15 per cent.

"The equivalent figures for all of the south China ports were nearly 20 per cent and 16.7 per cent respectively," he said. "These segments will undoubtedly remain the key driving forces behind our future growth, and we must nurture them carefully."

However, Hong Kong terminal operators find it harder to tap into the potential of the region's most important cargo segment, the trucked exports from south China's the Pearl River Delta (PRD), because of the inefficiencies of cross-boundary trucking arrangements.

"These make it expensive to move cargo to Hong Kong by road from the eastern PRD, which has resulted in a declining volume in this sector," said Mr Kelly.

"Hong Kong can grow with the market in the future if cross-boundary trucking inefficiencies can be resolved, because of our competitive advantages as a hub port, a free port, and a business-friendly port, that provides value for money," he said.

Mr Kelly added that he is looking forward to the deregulation of cross-boundary trucking business that will open the network and level the playing field, facilitating the flow of cargo into Hong Kong via various customs checkpoints.

HK ideally positioned

Eric Ip, Managing Director of Hongkong International Terminals (HIT), said that to make up for the loss of trucked cargo from the Guangdong's hinterland to Shenzhen ports, Hong Kong port operators have been vigorously competing for transhipment cargoes from other Asian origins, including north China, to use Hong Kong as a transhipment hub.

"Supported by the shipping lines, the transhipment volume at Kwai Chung has increased by almost 50 per cent over the past three years," Mr Ip said. "A natural deep-water port located on major international shipping routes, Hong Kong is favourably positioned to capture international transhipment cargoes. It is a free port, which ranks highly in the region for customs efficiency."

In view of the continuous deployment of mega vessels and rising bunker fuel costs, global shipping lines need to expedite turnaround times and minimise operating costs.

"With our port's strategic location, smooth customs process and cost-effective terminal operations, it will continue to be a preferred transhipment hub in Asia and gateway of south China," said Mr Ip.

According to Sunny Ho, Executive Director of the Hong Kong Shippers' Council, a very distinct advantage comes from the fact that Hong Kong is a free port with no licensing requirements for importers and exporters, and no import tax, duties or quotas.

"This is in sharp contrast with the very complicated system in the mainland," said Mr Ho, adding that Hong Kong's port will continue to handle the bulk of PRD-bound cargoes.

There will be new trade restrictions to replace the old textile quota system in 2008. As a result, a substantial portion of the mainland's textiles and garment shipments will continue to be exported through Hong Kong, he said. Because of the complicated customs and trade systems in the mainland, many advanced logistics services cannot be performed in Hong Kong, but the city will remain a major consolidation and logistics centre for south China, Mr Ho said.

He also dismissed suggestions that Guangzhou's New Baiyun International Airport, which opened in August 2004, poses a serious threat to Hong Kong International Airport (HKIA).

World's busiest airport

HKIA, ranked the busiest airport for international air cargo since 1996, handled 3.58 million tonnes of freight in 2006, while Baiyun managed only 653,000 tonnes. Although air cargo made up just 1.3 percent of Hong Kong's total cargo throughput in 2006, it accounted for 34.5 per cent of its total external trade value at HK$1,745 billion (US$224 billion), which was up 11 percent over the 2005 figure.

"Baiyun is an up-and-coming facility but its cargo traffic growth rate is still in the single digits and it is long years away from posing any serious threat to HKIA," said a Hong Kong-based aviation analyst.

Liu Zijing, General Manager of the Guangdong Airport Management Corp, expects Baiyun airport to handle 2 million tonnes by 2010, and 4 million tonnes by 2020.

"By that time throughput at HKIA will have crossed the 6 million ton mark," the analyst said.

In its latest report, Business Monitor International (BMI) said airfreight capacity in Hong Kong will grow as a result of the expansion of the passenger business, driven by the proliferation of low-cost airlines. Although the number of dedicated freighters deployed by international airlines is increasing, about 60 per cent of the cargo is still carried in the bellies of passenger aircraft.