Hong Kong's container port currently has eight container terminals consisting of 18 berths, with an average of 11.5 million TEUs (20-ft equivalent units) throughput capacity per year. The port's impressive efficiency and capacity has won Hong Kong the title as the busiest container port in the world for five consecutive years.

It was all looking peachy green and glorious for Hong Kong's sea transport industry until recent years, when an increasing number of Hong Kong manufacturers and traders started shipping their products through Shenzhen's port- a nearby shipping gateway sharing similar geographical advantages to Hong Kong.

It has been reported that shipping goods via Shenzhen's port instead of Hong Kong's can save manufacturers up to 30 per cent of cargo-handling charges, making Shenzhen a more economical choice when it comes to cargo shipping. The significant savings in cargo handling charges have "endowed" Shenzhen with an upside competitive edge not far behind from Hong Kong, creating a heated race between the two ports.

Shenzhen is chasing up
Does the claim that Shenzhen is catching up with Hong Kong over sea transport bear any truth? Some sources suggested the following emerging trends as seen from recent developments:

• Shenzhen's port is now handling one seventh of China's overall foreign trade volume, suggesting its increasingly crucial role in the country's economic growth.
• A 17.45 per cent jump in overall container throughput was reported for Shenzhen's ports in January 2004. Official has also predicted an annual throughput of 13 million TEUs for the 2004 financial year.
• It is estimated that the Shenzhen port has handled a total of some 16 million TEUs since its first day of operation, and the figure has been increasing at a rate of 45 percent for the past five years.
• Comparable to the single digit growth of Hong Kong's annual throughput, insiders are claiming that the Shenzhen has already attained a double-digit growth rate.
  

On top of its apparently remarkable growth, Shenzhen port is also looking to further expand its port facilities in order to cope with the increasing shipping demands. A new report presented by the China-based Economic Information & Agency reveals that after 20 years of development, the Shenzhen port has indeed matured a great deal to the point where most of its operation procedures have caught up with international standards. Having said so, both Chinese and foreign investors are looking to push further the port's competitiveness by introducing new schemes to improve their port facilities. It has been reported that 47 billion Rmb will be invested in the future for upgrading and adding new infrastructure to the port. A number of new berths are in the pipeline as part of phase III development at Yiantian port, while setting up five deep-water ports at the Shekou area. The project is believed to bring in as much as 1.3 million standard cargos, helping Shenzhen port achieve a container throughput of 1,200 million TEUs per year.

The stiff competition between the Hong Kong and Shenzhen port is, in a nutshell, caused by the significant price difference in handling charges. It is obvious that the very impeccable competitive edge of Hong Kong's port lies in its superb operation efficiency by running business in a cost-effective manner using better management. However, Hong Kong's current terminal charge is USD$97 higher per TEU than that of Shenzhen, and legislators are now calling for the lowering of Hong Kong's terminal handling charges, reputedly the highest in the world.

An insider who is onboard with the calling is Ms Miriam Kin-yee Lau, the transportation functional constituency member of the HKSAR Legislative Council, " I have urged for many years the need for Hong Kong to improve its competitiveness, both in terms of reducing the price differential between Hong Kong and Shenzhen, and in value-adding of our facilities. Only by doing so can we face up to the challenges ahead of us."

Hong Kong's future edge
The trend of manufacturers' choosing Shenzhen port over Hong Kong's has got many of the insiders concerned about Hong Kong shipping industry's outlook. In response to this, as well as to give Hong Kong port an additional competitive edge, some measures have already been introduced to strengthen Hong Kong's status as one of the most important trading platforms in the world.

Just a few years ago, the Hong Kong SAR government has decided to introduce a scheme which would reduce merchant shipping registration fee and annual tonnage charge by 50%. Other initiatives on the list are: To simplify the ship survey process, to improve ship registration system, as well as to implement plans to cut taxes in order to ease the burden on Hong Kong shipping companies. These measures all aim at not only building up Hong Kong's register tonnage, but also luring shipping companies to set up operations in Hong Kong to manage their ships.

On top of that, the newly built CT9(Container Terminal No.9), which will add another 4 berths for container vessels and two feeder berths for coastal vessels and barges, is expected to further boost Hong Kong's port cargo handling capacity and productivity. This new terminal will be able to handle an extra 4 million standard cargos.

Other than CT9, experts have also suggested that the Hong Kong SAR government and related investors( be they local or foreign) should further explore the possibility of building a Container Terminal No. 10 in Hong Kong to further upgrade its capacity to better compete with the Shenzhen port.

Lights on the horizon
Despite the challenge from Shenzhen, Hong Kong authorities remain optimistic about Hong Kong port's future and the city's shipping industry. Under the CEPA (Closer Economic Partnership Arrangement) - a recently enacted trade pack between Hong Kong and Mainland China, Hong Kong shipping services are now permitted to set up wholly-owned enterprises in the Mainland to provide international shipping service and management. This will render Hong Kong shipping companies a greater flexibility when entering the Mainland market. It guarantees them another source of revenue while expanding their business scope.

Another good news to brighten up Hong Kong's sea transport industry would be the rapidly developing Pearl River Delta region. As Mr Erik B. Christensen, of The Wharf (Holdings) Limited has recently pointed out, "There will be a massive amount of land made available for industrial development around the Peal River Delta region in the future. We will see the escalating setup of many new factories in the area, and materials will be needed for these factories to operate."

Mr Xiong Wenshiu, director-general of the Nansha Development Zone Economic Development Bureau, was also satisfied with Hong Kong's port status, "As the world manufacturing base emerges in the Pearl River Delta region, logistics industry will have even more opportunities to grow and expand". This strong expansion of the Southern China cargo base is expected to provide long-term port traffic for Hong Kong.

The bottom line
Despite the sluggish operating environment, shipping authorities in Hong Kong are still forecasting a positive growth for the year. Some veterans in the field also suggest that whether Shenzhen's container throughput will eventually outdo Hong Kong's "depends largely on the respective port facilities, and whether Hong Kong will eventually plan to develop container terminal No. 10", as echoed by Mr Ricky Wong, Chairman of the Hong Kong Container Tractor Owner Association.

Mr. Wong's remark was supported by Mr Sunny Ho, Executive Director of the Hong Kong Shippers' Council, who believes that the Hong Kong Government should explore the possibility of building a new terminal as the proposition would be much welcomed by various private organisations and investors in the industry.

Given the increased competition between the terminals, cargo handling charges will no doubt be lowered. An alternative perspective was sounded in the recent report "Master Plan 2020" released by The GHK (an independent consultancy firm), which pointed out that "Hong Kong port's chances of surviving boils down to one inevitable conclusion: road haulage costs are the problem and they need to be reduced, and THCs (terminal handling charges) need to be placed on par with Shenzhen ports." Most of all, it is also critical that Hong Kong port keeps up its reliable and efficient service - an asset that has put Hong Kong's port on the map.