How the mighty are falling. Here's another one from the Far East shipping files: Hong Kong ranks regularly among the world's top three busiest container ports in terms of twenty-foot equivalent units (TEUs) handled. Yet, its previously unassailable status is coming under attack due to a
number of factors. First, rising labor costs in the Pearl River Delta mean it is being less used to handle shipments of manufactured goods from that part of China. Second, "industrial action" hit Hong Kong for the first time in many years earlier in 2013...
Like Shenzhen, Hong Kong’s throughput has been pinched by the decline of South China manufacturing, as high labour costs impel factory owners to shift operations to China’s interior or elsewhere in Asia. Hong Kong narrowly missed losing its third place position against Shenzhen, which marginally increased volumes in 2012 by 1.6%.
The biggest operator in the port, Hutchison International Terminals, was hit by the first major industrial action in Hong Kong in 20 years that began on March 28, 2013. The strike involved 450 port workers, including crane operators and stevedores, and lasted for 40 days. The strike caused a 20% drop in throughput at the Hong Kong operations of HPH Trust — a Singapore-listed Hutchison spin-off that comprises many of Hutchison’s Hong Kong assets.
As a result, many major port operators are divesting themselves of Hong Kong. Indeed, the years it served as the world's gateway to China are numbered since, well, the former crown colony was reabsorbed by the mainland in
1997 and became a special administrative region (SAR). The handover happened a long time ago, and there is certainly no lack of mainland ports companies can now use--no need to use HK as an intermediary with the Reds in charge here as well:
Dropping volumes in Hong Kong was a factor in divestments by major port operators. In March 2013, HPH Trust bought Asia Container Terminals Holdings for $503m from joint owners Dubai-based DP World and Singapore-based PSA. Simultaneously, DP World sold 75% of its interest in Hong Kong’s Kwai Chung Terminal berth 3 and in ATL Logistics Centre Hong Kong for $463m to Goodman Hong Kong Logistics Fund.
While Hong Kong still retains an edge for operational efficiency, it also faces continuous erosion of demand, as more operators make direct calls to mainland ports. The competitiveness of Shenzhen ports has been boosted by easing of customs requirements for ocean to ocean transhipment.
Hong Kong retains its place as the world's freest economy, but certain parts of its portfolio no longer dominate its unique selling proposition as others have caught up. I hate to say it, but the port business may truly be a "
sunset industry" for HK as some have presaged.
