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“The good thing about being in the shipping business is that you can pack up, get on a ship and leave anytime you want.” Thus spoke T.Y.Chao, legendary founder of Hong Kong’s Wah Kwong Shipping to his son George. T.Y. certainly knew what he was speaking of, having brought his young family from the chaos of 1949 Shanghai to start a new life in Hong Kong aboard the steamship Kwok Sing in which he held a 50% share. Uprooting family and business ties when the going gets tough is never an easy decision, so if you have even a small degree of scale, surely the best option is to have operations in more than just one centre? This column has previously looked at the benefits of not having ‘all your eggs in one basket’ when it comes to operating a fleet of ships, does the same argument apply to having more than one option when it comes to the location of your corporate presence? As always, there is no one size fits all solution. Despite the vast marketing budgets and other government incentives on offer from cities that aspire to be global maritime centres, the simple fact remains that most shipowners choose to be based in wherever they call home. Unsurprisingly, that’s usually close to the sea and if a handful of shipowners choose the same location, the chances are that a few brokers, lawyers and other service providers will set up close by and you quickly have a ‘maritime cluster’. Remote working and the virtual office are not a long term alternative to a physical presence Shipping service providers have to follow the money and tend to be based where the clients are, whether owners or charterers. The need for scale and an increasingly demanding client base has meant expansion into new markets - 30 years ago, a broking presence in China was pretty much unheard of, now it’s essential. The difficulty comes when circumstances change and you need to consolidate your business for whatever reason. Back in the mid-1980s, American banks in particular quickly pulled out of ship finance in Hong Kong when the going got tough. Memories of established relationship managers being replaced by work out specialists who were parachuted in to sort out problem loans still linger and even four decades later, those who abandoned the market then struggle to get accepted back. The past two years have confirmed something many of us already believed - remote working and the virtual office are not a long term alternative to a physical presence, especially if your business requires regular visits to ships. Those branch offices and subsidiaries around the world have more than earned their keep in maintaining a presence in places cut off from global travel. Yet again, Hong Kong is in the eye of the storm. The city has long traded on its geographical position of being a mere four hours from anywhere in Asia, making it particularly suitable for owners and managers needing to access ships and dockyards throughout the region. Quarantine rules now mean you can add two weeks to that flight time and the relevance of Hong Kong as a global centre is coming into question, especially as the rest of the world normalises. With no end to the city’s Covid-induced isolation in sight, many are breathing a sigh of relief that their satellite offices elsewhere have allowed them to keep their businesses running. If this situation continues, it is quite likely that the ‘mothership’ in Hong Kong will become less relevant and business will be permanently lost. Having been the cradle of many great shipping companies for almost a century, that hardly bears thinking about.

Location, location, location

Just as shipowners can spread their risk with some diversity in their fleets, so too can they benefit from a geographical spread of their operating bases.

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