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Sea Transport Industry in Hong Kong

Overview

  • Endowed with a deep-water, silt-free natural harbour strategically located along a major sea route and with the Chinese mainland providing a huge cargo base, Hong Kong has become a sea transport hub in Asia.
  • Advanced port facilities and efficient port services are complemented by excellent trade, financial and other services which underpin Hong Kong's status as the 10th largest trading entity in the world. In 2012, 22.8% of Hong Kong total exports (by value) were transported by sea. 
  • Hong Kong Port was the world's third busiest container port in 2012, having handled 23.1 million TEUs, following Shanghai (32.5 million TEUs) and Singapore (31.6 million TEUs).
  • Hong Kong's port is renowned for its efficiency. All container terminals are privately owned and operated. Productivity enhancement through new cargo management techniques has raised their handling efficiency.
  • According to the World Bank’s 2012 Logistics Performance Index (LPI), Hong Kong scored 4.12, ranking 2nd in the world, following Singapore. In terms of the performance in international shipment, Hong Kong ranked 1st among 155 economies.

Industry Data

Total port cargo throughput
(million tonnes)

2012

% of total

2013*

% of total

Total

269.3

100%

62.5

100%

  Ocean-going

188.9

70.1%

42.4

67.8%

    Exports and imports

71.8

38.0%

15.3

36.1%

    Transhipments

117.1

62.0%

27.1

63.9%

  River trade

80.4

29.9%

20.1

32.2%

    Exports and imports

39.4

49.0%

10.8

53.7%

    Transhipments

41.0

51.0%

9.3

46.3%

Source: Hong Kong Shipping Statistics, Census and Statistics Department
*January - March

Total container traffic
(million TEUs)

2011

2012

2013*

12/11
Change

Total

24.4

23.1

5.3

-5.2%

  Kwai Tsing Terminals

17.4

17.5

4.1

+0.3%

    Ocean vessel

15.1

15.2

3.5

+0.9%

    River cargo vessel

2.4

2.3

0.6

-3.0%

  Mid-stream operation and other berths

7.0

5.6

1.2

-19.0%

    Ocean vessel

2.3

1.5

0.3

-36.6%

    River cargo vessel

4.6

4.2

0.9

-10.1%

Source: Summary Statistics on Port Traffic in Hong Kong, Hong Kong Port Development Council
*Jan-March

Range of Services

The sea transport sector is of vital importance in supporting Hong Kong's status as the world's 10th largest trading entity. During 2012, Hong Kong handled 269.3 million tonnes of seaborne and river cargo. About 70% of seaborne cargo was transported by ocean-going vessels. Of the seaborne cargo handled in the aforesaid year, 117.1 million tonnes (62%) were transhipment cargo. The Chinese mainland was the biggest source and destination of Hong Kong's transhipment cargo.

Hong Kong handled 23.1 million TEUs of containers in 2012, down 5.2% from 2011. Of the total, 75.8% were handled by container terminals at Kwai Tsing terminals, with the rest handled mid-stream by Hong Kong's mooring buoys and by river trade facilities. In the first five months of 2013, total containerised throughout reached 8.84 million TEUs, down 9.1% from the year-earlier period.

The moorings also handle most of Hong Kong's break bulk cargo. Bulk shipping takes care of bulky, unpacked goods such as oil, gas, grain, minerals and timber.

Liner shipping

Sea cargo to and from Hong Kong is carried both by liners and bulk vessels. Liner shipping is operated under a scheduled timetable with pre-announced rates and destinations. Many key routes are under liner conferences (agreements by the main shipping lines on tariffs and sailings). Hong Kong is a major hub with about 410 container liner services per week connecting to more than 520 destinations worldwide.

The larger container lines have invested in advanced systems to provide cargo tracking information and improve efficiency. They often form alliances or merge with other transport providers to develop door-to-door multi-modal services. Many liners are also forming alliances amongst themselves to increase efficiency and reduce cost in a very competitive environment. Vessel sharing has enabled the liners to offer a more flexible service in terms of global coverage, higher frequency of departures and a greater choice of routes.

Port Facilities

Hong Kong's port facilities are financed, built, owned and operated by private firms.

Container Terminals

Hong Kong has nine existing container terminals with a total of 24 berths at Kwai Chung and Tsing Yi Island, operated by several private consortia. Through various productivity enhancement measures, their combined throughput capacity is some 20 million TEUs per year. The Hong Kong government has launched a feasibility study on the construction of Container Terminal 10 at Southwestern Tsing Yi, while taking into considerations of the environmental impact and economic situation.

River Trade Terminal

The Pearl River links Hong Kong with many manufacturing centres in Southern China, which has become the main cargo base for the territory. River trade grew fast in the last two decades, rising from 9.3 million tonnes in 1990 to 80.4 million tonnes in 2012. To cater for increasing river trade, a dedicated terminal, the River Trade Terminal (RTT), was established in 1996 and became operational in November 1998. RTT is located in the west of Tuen Mun.

Service Providers

Shipowners own ships to obtain an income. In the liner shipping market, ship owners rent ships to a shipping line. In the bulk shipping market, ships are rented on a time or voyage basis to a ship charterer or ship operator.

As at January 2012, the Hong Kong fleet of ships over 1,000 gross tonnes consisted of 766 ships and the total tonnage reached 42.2 million deadweight tonnes with an average age of 9.4 years.

As at end-June 2013, 2,283 vessels were on the Hong Kong Shipping Register (HKSR), boasting a total of more than 83 million gross registered tonnes, making HKSAR the 4th largest shipping register in the world following Panama, Liberia and Marshall Island. According to the Hong Kong Shipowners Association, the total tonnages of ships owned or managed by its members exceed 133 million deadweight tonnes, or 8.7% of the world’s total fleets.

Shipping lines tend to own and/or lease a group of ships which they deploy on pre-determined liner routes. Ship operators rent ships from owners and use them to carry bulk cargoes from port to port. The aim of the operators is to reduce the number of wasted voyages and this requires careful selection of the ship, routes and cargo.

Shipping lines use shipping agents to sell their freight space in a particular port. The shipping broker acts to match the supply of bulk vessels from operators/owners with the demand for bulk cargo shipments by the charterers.

Employment & Establishment in 2011

 

Establishment
(% changes)

Persons engaged
(% changes)

Ship agents/managers and local representative offices of oversea shipping companies

246
(+0.4%)

7,777
(+1.6%)

Ship owners/operators of sea-going vessels

152
(+12.6%)

4,737
(+6.2%)

Container terminal and marine cargo terminal operators

7
(-)

3,498
(-2.4%)

Ship owners and operators of vessels moving between Hong Kong and the ports in Pearl River Delta

75
(-1.3%)

1,769
(-12.6%)

Inland water freight transport

126
(-15.4%)

1,036
(-15.0%)

Mid-stream operation and container back-up activities

270
(-18.4%)

4,176
(-14.2 %)

Air or sea cargo forwarding services

2,798
(-0.03%)

35,591
(-4.3%)

Source: Key Statistics on Business Performance and Operating Characteristics of the Transportation, Storage and Courier Services Sector in 2011, Census and Statistics Department

Business Receipts and Other Incomes of Selected Industry Groups (HK$ billion)

 

2010

2011

11/10 change

Ship agents/managers and local representative office of oversea shipping companies

5.9

5.8

-1.7%

Ship owners/operators of sea-going vessels

93.7

91.3

-2.6%

Container terminal and marine cargo terminal operators

9.5

9.8

+3.2%

Ship owners and operators of vessels moving between Hong Kong and the ports in Pearl River Delta

7.0

7.9

+12.9%

Inland water freight transport

1.4

1.2

-14.3%

Mid-stream operation and container back-up activities

4.7

4.3

-8.5%

Air or sea cargo forwarding services

149.8

129.4

-13.6%

Source: Key Statistics on Business Performance and Operating Characteristics of the Transportation, Storage and Courier Services Sector in 2011, Census and Statistics Department

Exports

According to the latest available statistics, Hong Kong earned HK$136.8 billion from exporting sea transport services in 2011 (accounting for 19.4% of total service exports in 2011), up 7.1% from 2010. Unlike air transport, passenger revenues constituted an insignificant part of the export of sea transport services.

(HK$ billion)

2009

2010

2011

11/10
Change

Exports of Sea Transport Services

99.9

127.7

136.8

+7.1%

Passenger

1.1

1.5

2.0

+33.3%

Freight

58.6

78.3

78.2

-0.1%

Ship Chartering

4.3

4.1

3.9

-4.9%

Others*

35.9

43.9

52.7

+20.0%

Share of total services exports

19.9

20.4

19.4

-1.0%

Sources: Report on Hong Kong Trade in Services Statistics for 2011, Census and Statistics Department
* “Others” include: Supporting and auxiliary services to water transport (e.g. container terminal services; ship broking, surveying, consulting, repair and maintenance services; chandling; stevedoring services; cargo inspection, sampling and weighing services; port and waterway operation services; towing and pushing services; pilotage and berthing services; vessel salvage services; and other water transport supporting and auxiliary services).

More countries are seeking to privatise their port operation and/or develop new ports to be run on a commercial basis. An exportable sea transport service from Hong Kong is thus the development and management of ports on the Chinese mainland and the wider region. Hong Kong port operators are already active in this field. Modern Terminals, a Hong Kong terminal operator, invest and operate several container terminals in Shenzhen, and has expanded its business to the Yangtze River Delta since 2004. Hutchison Port Holdings (HPH) Group, another Hong Kong terminal operator, has a network of operations that comprises 320 berths in 52 ports around the world, handling 76.8 million TEUs worldwide in 2012.

Recent Developments and Market Outlook

South China ports have been developing quickly in the past years. Shenzhen was the world’s fourth busiest port in 2012, handling 22.9 million TEUs (up 1.6%), while Guangzhou remained the seventh, handling 14.5 million TEUs (up 2.1%). Shanghai was the busiest seaport on the Chinese mainland in 2012, handling 32.5 million TEUs.

According to the World Bank’s Logistics Performance Index (LPI), Hong Kong scored 4.12 to rank 2nd in the world, following Singapore. In terms of international shipment performance, Hong Kong ranked 1st among 155 economies.

With an aim to cut emissions of air pollutants near the port areas, 17 Hong Kong major freight liners have signed up the Fair Wind Charters (FWC), a voluntary commitment to switch from high-sulphur bunker oil to 0.5% sulphur diesel when berthing in Hong Kong. FWC is the world’s first shipping-industry led fuel switching initiative.

In Budget 2013-14, the Hong Kong government has launched a study on the Strategic Development Plan with an aim to renew the forecasts of port cargo growth and explore the potential of existing port facilities to meet the future development.

To strengthen safety within Hong Kong waters, the government gazetted the Pilotage (Amendment) Bill 2013, which makes pilotage compulsory for all ships visiting Hong Kong with a gross tonnage of 3,000 or more. Apart from this, the bill suggested to allow a pilot to retain the same class of licence until the statutory age limit of 68 rather than 65 in order to make good use of pilots’ experience and expertise in piloting mega-size vessels and in training junior pilots.

Kai Tak Cruise Terminal, entering service in June 2013. With rooftop and tourism-related facilities for visitors and locals, providing embarking and disembarking services for cruise passengers. The terminal’s capacity of customs, immigration and health quarantine operation clearance can serve 3,000 passengers per hour.

In December 2008, “Three links” (meaning direct transportation, postal, and trade links between the Chinese mainland and Taiwan) was officially restored after almost 60 years. The mainland has opened 63 seaports, including Tianjin, Shanghai, Guangzhou, Shekou (Shenzhen), Yantian (Shenzhen), and Taiwan opened 11, such as Taichung, Kaohsiung, and Keelung for direct transportation.

The Hong Kong-Zhuhai-Macau Bridge (HKZMB), a large-scale cross-border infrastructure linking the three places, is expected to be completed in 2016. Cargo movement between Hong Kong and western Pearl River Delta will be further enhanced.

The Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Chinese mainland

According to China's WTO commitment and the Regulations on the Administration of Foreign Investment in International Marine Shipping (issued by MOFCOM and became effective in June 2004), foreign joint-ventures are allowed to provide the following services:

  • Maritime cargo-handling services
  • Customs clearance services for maritime transport
  • Container station and depot services
  • International shipping
  • International shipping agency
  • International ship management
  • International marine shipping freight loading and unloading
  • International marine shipping container terminal and yard business

The shareholding of foreign investors should not exceed 49%.

By contrast, the CEPA provisions allow Hong Kong services suppliers (HKSS) to have greater flexibility to access the market, as they are allowed to form wholly owned units in providing certain types of maritime services, including:

  • International ship management services
  • Containers station and depot services
  • Non-vessel operating common carrying services
  • Port cargo loading and unloading services
  • Ship survey services for ships registered in Hong Kong
  • International ocean container leasing, buying and selling as well as trading of container parts
  • Ship maintenance and repair services; and for tugs that they operate between Hong Kong and mainland ports
  • Regular business services such as shipping undertaking, issuance of bills of lading, settlement of freight rates and signing of service contracts

For a Hong Kong company providing maritime transport services, 50% or more of the ships owned by it, calculated in terms of tonnage, should be registered in Hong Kong.#

HKSS can set up joint venture enterprises on the mainland to provide third-party international shipping agency services. The shareholding of Hong Kong service suppliers should not exceed 51%. This lowers the barrier of the third-party international shipping agency services for Hong Kong service suppliers, as compared to other foreign joint-ventures outside CEPA.

Business scope has been further expanded for HKSS since January 2009, as they are allowed to set up wholly owned enterprises and branches in Guangdong on a pilot basis to provide shipping agency services to vessel operators for routes between Guangdong Province and Hong Kong and Macau.

Under CEPA Supplement VI, HKSS can set up wholly owned shipping companies in the Mainland, providing regular business services (shipping undertaking, issuance of bills of lading and settlement of freight rates, etc.) for shipping transport between Hong Kong and the Class B ports in Guangdong, operated by HKSS using chartered Mainland vessels.


# The requirement that "50%, or more of the ships owned by it, calculated in terms of tonnage, should be registered in Hong Kong" as set out in Annex 5 of the CEPA legal text (see www.tid.gov.hk for further details), is not applicable to HKSS which provide towing services.

 


Content provided by Picture: Jacqueline Yuen