Hong Kong hands port crown to Singapore

Singapore has overtaken Hong Kong to become the world's busiest container port once again. Hong Kong handled 5.28 million TEUs (20-foot equivalent units) in the first three months of this year (2005), up just 1.4% over the same period last year. Singapore handled 5.52 million TEUs, up about 14% year-on-year and 240,000 TEUs more than Hong Kong's total.

State-run PSA Corp, the dominant operator in Singapore, handled 5.31 million TEUs, up 13%, while the multi-purpose Jurong Port handled 212,000 boxes, 58% more than in the same period of 2004. Since 1987, Hong Kong has been the No 1 container port, except in 1990, 1991 and 1998 - when Singapore held the title.

Hong Kong's share of containerized cargo shipments from southern China has fallen in recent years because of higher costs and growing competition from Shenzhen terminals across the border, where it costs about US$300 less to process an export container. Singapore, mainly a transshipment port, has benefited as exporters from Indonesia, Thailand and other Southeast Asian countries ship their goods through its terminals to Asia, Europe and the United States.

"Growth in intra-Asia trade has been very strong because of China's booming economy," says Geoffrey Cheung, an analyst at the Daiwa Institute in Hong Kong. "Because of its strategic location in the Malacca Strait, Singapore captures a lot of the growing trade in Southeast Asia and the Indian subcontinent."

Ironically, Hong Kong port's growth rate is slowing at a time when global cargo volumes are rising on the back of growing demand from the US and Europe for China-made toys, clothing, shoes, electronic goods and furniture. The end of global textile and garment quotas from January 1 is likely to reduce Hong Kong's volumes by up to 250,000 TEUs this year(2005) because major importers in the US and Europe have told their suppliers to ship goods from the lower-cost Shenzhen terminals. Textile-related shipments account for about 20% of Hong Kong's exports and imports.

Also, China's export growth is expected to slow to about 15% this year(2005), from nearly 33% last year, reducing the growth rate of container traffic to and from the southern Guangdong province. The province, the main cargo catchment area for Hong Kong and Shenzhen ports, accounts for about one-third of China's foreign trade.

Ironically, Singapore has taken the top spot just as PSA Corp raised its banner in Hong Kong by acquiring minority stakes in two smaller terminals at the Kwai Chung container port. After paying HK$3 billion (US$385 million) to Hong Kong property developer NWS Holdings, PSA has become a partner of Dubai Ports International in the one-berth CT3 and two-berth CT8 West terminal. PSA has been getting more business because it became more responsive on pricing after losing two key customers - Denmark's Maersk Sealand and Taiwan's Evergreen Marine - to the fast-growing neighboring Malaysian port of Tanjung Pelepas. Maersk Sealand is the world's largest container carrier while Evergreen Marine, Taiwan's largest shipping line, is ranked No 4 in the world.

Hong Kong's relegation to the No 2 spot will be a big disappointment to the government, which has been promoting the city as South China's preferred port and logistics hub. At the urging of the Hong Kong Shippers' Council, the government has been pushing plans to build Container Terminal 10 (CT10), although terminal operators say there is enough capacity at Kwai Chung to absorb growth until 2015. A government-commissioned study - Hong Kong Port Master Plan 2020 - has identified two possible sites for CT10, one at Lantau island and one at Tsing Yi island. But no decision has been made yet.

Kwai Chung operators are unfazed with Hong Kong losing the crown because they are more concerned with their profit margins, which are among the highest in the world. "Nothing lasts forever. Singapore this year(2005), maybe Shanghai after a few years. It does not make much difference to us," says Erik Bogh Christensen, managing director of Modern Terminals, the second-largest operator at Kwai Chung, with five berths. "I don't care if Hong Kong is number one or number 10, so long as it is number one to its stakeholders, which it is," adds John Meredith, Group Managing Director of HPH.

Source: Asia Times online

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