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Free market must decide Hong Kong port's future in container business

Free market must decide Hong Kong port's future in container business
The ports situation in South China is rapidly changing and while Hong Kong's role within it must evolve as well, the impetus must come from the private sector as it has always done in the city.

The importance of letting the free market decide the allocation of capital is a key element in its future success, emphasised Arcadis Asia head of transportation and logistics Jonathan Beard.

Speaking at an Asia Maritime briefing on the feeder trade, Beard said this situation is clearly illustrated by what has happened in cross-border transportation between Hong Kong and Shenzhen. The barging business has taken off because the cross-border trucking business has stagnated and this in turn was due to regulatory issues making it uncompetitive.

Looking ahead, Beard said now that all-water cross-border transshipment has gained prominence, there seems to be a scramble by the authorities to meet the demand through the allocation of extra land to cater for these needs and to build dedicated barging terminals. However, with the market changing so quickly, it may all be "too little, too late," he said, adding that all these plans really needed to have been put in place 15 years ago.

For example, the competitiveness of this trade has already been eroded with the development of ports such as Shekou and Chiwan to the west of Hong Kong. While transshipment to Yantian from Hong Kong was feasible some years ago, this is becoming less so, Beard pointed out.

In addition, if the mainland ports are allowed to properly do international transshipment, or in other words, if China lifts cabotage restrictions completely, they will be in a very competitive position. "Cabotage has been hugely beneficial to Hong Kong insofar as it doesn't face the disadvantages that the mainland ports do. If those restrictions were to be substantially lifted then Hong Kong's position in the ocean transshipment market would come under intense pressure," Beard said.

Some China ports such as Shanghai and Ningbo would have a huge advantage if they were to be able to enter this market also because they already have a large baseload of import and export cargo as gateway ports which means big mainline ships would be obliged to call and they would gain from the transhipment trade as well.

Hong Kong's future role as a major container port must therefore depend on all these factors and assessments must be made as to whether the terminals will remain a key part of the city's maritime industry or whether it moves towards higher value-added activities within the sector. However the ultimate decision must be a private sector-driven one, and not one where state bodies step in to provide support as it the practice in some other major transshipment hubs, Beard concluded.

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