Column inches have been spent in feet on the decline of Hong Kong’s container port. Twelve consecutive months of declining growth recorded – so bad, in fact that the city is likely to relinquish fourth spot in the boxport rankings to Ningbo this year.
However, for me, this is not news. From a maritime hub perspective, I’d pick out something more troubling for Hong Kong’s future as an international shipping centre, something not necessarily dwelled on by others. The decision in May by Chinese state-owned giants Cosco and China Shipping to form their joint venture – China Ore Shipping – to control a series of very large ore carriers bought from Brazilian miner Vale. This should have raised as much alarm bells as the terminal decline over in Kwai Chung.
For much of the past decade Hong Kong ruled the roost when it came to iron ore fixtures, arguably the world’s most powerful centre for capesizes. Similarly, it was the preeminent port of call for mainland owners looking for a second home. While others migrated elsewhere, Hong Kong’s shipping stock swelled from an influx of Chinese owners keen to do business in the city’s laissez-faire business environment. The fact that China Ore Shipping – and a whole swathe of other Chinese owners – have decided lately to set up shop in Singapore should be a major cause for concern.
It’s all about mindset – and the time has come for Hong Kong to focus as a shipping services city, not a port-centric one.
The odds are simply stacked against Hong Kong when it comes to port economics – it is not on the doorstep of the factories, while its terminals are expensive and cramped. It is yesterday’s story – time to move on.
However, the city is by no means dead as a shipping hub. The register continues to fly high, among the top five in the world, and the city’s shipping lawyers and insurers are clearly busy.
The problem is the powers that be – though professing an affection for maritime not seen since reunification – are failing to grasp the bigger picture. If Hong Kong is to prosper it needs to look higher up shipping’s food chain, and for the government to really get involved. The city’s hard and soft infrastructure is fine. What isn’t is its attractiveness for the biggest conglomerates in the world to set up shop here. Singapore has won hands down because of its incentives scheme not to shipping firms (generous as they are), but to the shippers – the Cargills, BHPs of this world. For Hong Kong to claw back business it needs to make a super attractive offer to the heads of shipping’s food chain, the charterers, to choose the former British colony as home. Until this happens the city will sadly fade in maritime relevance.
Hong Kong need look no further than Kaohsiung – a 90-minute flight away for the perils of maritime hubris. Just over a decade ago it could claim to be a thriving maritime hub with the world’s third largest container port – it no longer ranks in the top ten, and without any real focus on shipping services it has disappeared from view.
This article first appeared in the summer issue of SinoShip magazine. Readers can access the full magazine for free online by clicking here.