However, while its natural harbour, volume of cargo and sheer number of services make it a natural transhipment hub for the East-West, North-South and intra-Asia trades, it faces a number of challenges, not least the likelihood that it will have to compete more fiercely with rivals for China’s export cargoes in the future.
Hong Kong Marine Department statistics show the port handled 24.4m teu in 2011, up 3% from 23.7m in 2010.
However, the picture deteriorated as the year progressed even through the usual peak season in the fourth quarter. The number of loaded containers fell 5% in the third quarter compared with the previous quarter, for example, while exports fell 8% year-over-year.
In November, the port suffered a contraction of -4.6% compared with 2010, while volume growth was just 1.4% year-on-year in December, a surprise considering that Lunar Chinese New Year, which usually prompts another peak before factories close, started at the beginning of February this year, earlier than usual.
Apart from Hong Kong, southern China’s exports are also the mainstay traffic of two other container ports among the world’s top ten largest by throughput – Shenzhen and Guangzhou. The growth of all three ports in the last 20 years has been fuelled by the tremendous economic boom that has taken place in Mainland China, particularly the transformation of the area on Hong Kong’s doorstep into the ‘factory of the world’.
But China is undergoing an internal restructuring of its economy that is changing how it trades with the rest of the world. As manufacturing moves away from the south, Shenzhen, Guangzhou and Hong Kong ports might not be generously sharing an ever-growing pie; instead they could be fighting for cargo in a far more competitive market.
In any such competition the mainland ports would seem to have a comparative advantage, in part because Hong Kong has traditionally been the most expensive port in the region, but also because China’s government is funding new rail lines, transport infrastructure and value-added capacity, all of it designed to deliver cargo from the inland to Guangzhou and Shenzhen.
Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics (Haffa), is currently pushing for more action from administrators to improve Hong Kong’s performance as a regional distribution hub to prevent the loss of cargo and liner services on which all successful transhipment hub depend.
“We’re in talks with them now. We need government support and better infrastructure,” he explains.
A DP World spokesperson says Hong Kong and the South China ports all need to enhance connectivity to other parts of China to compensate for the loss of ‘local’ manufacturing. However, she is adamant that Hong Kong’s strengths will ensure it maintains its place among the world’s great ports for some time to come.
“Hong Kong is a major transhipment hub because of its open custom regime, great geographical location and strong local cargo base from South China,” she says. “Today, most carriers still use Hong Kong as the major transhipment hub in their network planning for Central Asia.”
This year, the International Monetary Fund predicts a slowing of Chinese economic growth to 8.2%, from 9.2% in 2011 and 10.4% in 2010. However, this came with the caveat that China is vulnerable to the “clear and present danger emanating from Europe”. The IMF warned that if things deteriorated in Europe this could see China’s growth halve to around 4%.
Given that the economic downturn would hit exporters in the south harder than elsewhere, 2012 could be a hard year for Hong Kong and its neighbourly rivals.