Hong Kong’s share of South China seafreight in decline

October 9, 2006 by SwizStick  
Filed under QuickNews, Seafreight, Supply Chain Management

 Print This Post

Leave a comment

In 2002, the port was handling 69 percent of the vital revenue-generating direct exports of South China cargo. Last year Hong Kong’s market share was just over 50 percent.

This shouldn’t come as a surprise to anyone except perhaps the Hong Kong government, but Hong Kong’s days as the “Gateway to China” are long gone. As the mainland continues to liberalize trade and develop its ports, more shippers will continue to export directly from the mainland as opposed from Hong Kong. It’s also no surprise that many global multinational corporations have moved their offices from Hong Kong to China to be closer to the action, which also has contributed to the rise in shipping direct from China. However the main reason Hong Kong’s share of South China seafreight is dwindling is simple economics:

1. Proximity: Yantian, the port for Shenzhen, is closer to the major manufacturing areas of Southern China, particularly Dongguan.

2. Costs: Terminal and other related fees are lower in Yantian than Hong Kong.

3. Border delays: Truckers delivering containers from factories in Dongguan to Yantian only have to worry about waiting while dropping off at the terminal. But delivering to Hong Kong involves a border clearing process that can delay truckers at the border for hours. Once cleared they then have to navigate the congested roadways of densely populated Hong Kong and then deal with waiting time at the terminals in Hong Kong.

4. Increased service from Yantian: Carriers have added and increased services from Yantian, alleviating the need for Shenzhen area cargo to be routed through Hong Kong. This commentary from Cargonews Asia touches on most of these points and the Hong Kong government’s inability to fix the situation. But it doesn’t matter because, as the author rightly points out, the situation is unfixable, basic economic forces are driving shippers to export directly from Southern China, there simply isn’t as great a need to export through Hong Kong anymore. We touched on this subject in the past, which you can find here and here. We believe Hong Kong can and will be a major port for many years to come, but they will need to adapt to the changes being forced upon them by the rapid industrialization and liberalization of China’s economy. They can no longer afford to maintain an unsustainable status as the “Gateway to China” and will need to make some tough decisions and re-market themselves in order to remain competitive.

Shenzhen’s Yantian port booming

Shanghai port overtakes Hong Kong

Hong Kong air traffic and cargo volumes decline

Hong Kong economic growth plunges