HONG KONG: Container throughput at Hong Kong in April tumbled 11.7 percent year-over-year, the second month of double-digit declines, data from the government’s Port Development Council showed.
Hong Kong handled 1.7 million 20-foot containers during April, the 10th straight month the port has recorded falling throughput.
In the first four months of the year, Hong Kong handled more than 600,000 fewer containers than during the same period last year, a decline of almost 9 percent year-over-year.
The Kwai Tsing container terminals had a throughput of 1.37 million TEUs during April, down 10.5 percent year over year. Mid-stream and river trade containers reached 330,000 TEUs, which was a sharp 16.5 percent drop, according to the Port Development Council.
It is a disturbing trend for a port that not too long ago was the world’s busiest. But the winds of change have blown through Hong Kong with typhoon force. Once the first choice of shippers in the Pearl River Delta as the exit point for direct exports, the port cargo is now more than 70 percent transshipment containers. Neighbouring Shenzhen terminals are closer to the factories and cheaper.
The Cosco-HIT joint venture with Hongkong International Terminals saw throughput slide 6.6 percent in April as it handled 10,000 fewer TEUs that during the same month last year.
Shenzhen is also suffering from China’s slowing exports. Yantian International Container Terminals throughput was flat in April while Cosco Pacific’s PRD volumes fell 2.1 percent during the month.
But the worry is that the sustained volume declines in Hong Kong reflect a structural change. The terminals’ 16.2 percent drop in March volumes was a negative percentage that hasn’t been seen in years. And with more than 70 percent of the containers passing through Hong Kong classed as transshipment cargo, the boxes are counted twice, making the drop in actual containers even more significant.
This shift in the cargo mix from direct exports to transshipment is challenging the terminals’ ability to move huge numbers of containers around the port. Serving large shipping alliances requires thousands of inter-terminal moves to reposition containers, and the port cannot cope during peak times, resulting in chronic congestion.
Container terminals have been asking the government to help in providing more yard space that will allow the port to increase its handling ability and improve port productivity, a critical factor in the servicing of the 18,000 TEU-plus vessels. These giant ships create surges in volumes with every port call and place immense pressure on the terminals.
The reaction from the Hong Kong government has been sedate, but despite the government sponsored studies, industry reports and consultancy papers, the port’s future is no clearer than it was 11 years ago when the first master plan was published.
Last year, the Transport and Housing Bureau commissioned its “Study on the Strategic Development Plan for Hong Kong Port 2030”. Compiled by consultants BMT Asia-Pacific, it found that weak volumes would continue for many years, negating the need for a 10th terminal. The bureau said CT10 was “not viable financially or economically.”
Still, it took more than 10 years for the government to reach that conclusion, during which time the need for additional container yard space at Hong Kong port has grown exponentially. Critical levels of congestion were experienced during the last quarter of 2014, challenges that the industry believes could be addressed through government action.
The Hong Kong Container Terminal Operators’ Association (HKCTOA) raised the issue last year in a white paper, which urged the Hong Kong government to to create a Kwai Tsing Port Zone. HKCTOA chairman Jessie Chung said the needs of the port had evolved with the changing cargo mix.
“There has been a long-term structural change in the throughput handled in the port of Hong Kong, with a lot higher volumes of barge traffic and transshipment between ocean going vessels, while the truck segment has been shrinking,” Chung said.
“Our priority recommendation to the government is an optimal use of the existing land sites adjacent to the port areas capable of increasing container storage capacity and also constructing additional barge berths,” she said.
The problems and most achievable solutions have been clearly identified and pressure is mounting on the Hong Kong government to do more than compile port studies. Decision-making, however, is not one of the government’s strong points, even though logistics has long been considered one of the pillars of the city’s economy.