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            september 23, 2019

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China looks to restructure Pearl River Delta ports at Hong Kong's expense


Beijing is looking to restructure the three ports in the Pearl River Delta focusing on transshipment and imports into the mainland with Guangzhou concentrating on domestic cargo and Shenzhen on exports and imports.
Shippers and consumers in Hong Kong, however, are likely to face increased costs. "Transshipment has been a core of Hong Kong's maritime service," said Roberto Giannetta of the Hong Kong Liner Shipping Association.
"If we lose the transshipment business in Hong Kong, we will find costs going up," he told IHS Media.
The proposals are among five recommendations to bolster regional freight and transport sectors made by Hong Kong lawmaker Frankie Yick Chi-ming, also a director at the Wharf (Holdings), which owns 68 per cent of terminal operator Modern Terminals.
Shenzhen, Guangzhou, and Hong Kong - the third, fifth and seventh-busiest container ports in the world - had a combined throughput of 67.3 million TEU in 2018.
Shenzhen throughput was up 2.1 per cent last year from 2017, while Guangzhou rose 7.64 per cent, and Hong Kong was down 5.68 per cent.
"As economies are moving towards smart cities, smart production and smart supply chains, along with digitalisation, automation, and other similar technologies, the logistics industry will undergo substantial changes in the years to come," said Hong Kong Shippers' Council chairman Willy Lin Sun-mo.
Both the Hong Kong Liner Shipping Association (HKLSA), which represents international container carriers and agents, and the Hong Kong Container Terminal Operators Association (HKCTOA), have made similar recommendations to rationalise the activities of the three ports.
Beijing, which has yet to pass judgment on Mr Yick's report, seeks to end duplication of port resources by state bodies after consolidating ports in Liaoning, Zhejiang, and Jiangsu provinces in northern and eastern China.
Said Mr Yick: "I expect it to be a few months before there's a reply from Beijing. We want to achieve a clear delineation on the type of containerised cargo each of the three ports should handle to eliminate unfair and wasteful competition between the ports.
"In so doing, we'll create a level playing field with the hope of building a bigger pie to benefit all. We have to have a clear demarcation between the ports which plays to each of their strengths."
But HKLSA's Mr Giannetta was reminded of the cost of losing transshipment cargo. "If a ship is coming to Hong Kong to meet up with its partner ship, it is easy and cheap to add on Hong Kong local boxes, either import or export cargo," he said.
"Without ships coming to Hong Kong it will also be difficult to attract labour to the maritime sector. Vessel calls in Hong Kong are a cornerstone to further maritime cluster services," Mr Giannetta said.
The move to restructure follows the Chinese government's decision to establish the Greater Bay Area, centred on cities in the Pearl River Delta region, in an effort to create an economic powerhouse to rival California's Silicon Valley.

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