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COMMENT: The development plan for Hong Kong Port, released December 2014, makes interesting reading for port planners and developers; my compliments to all stakeholders including the consultant BMT Asia Pacific, writes Peter de Langen.
The development plan emphasises Hong Kong’s continued role as a gateway to South China, but also acknowledges that its share of total volumes in this market will continue to decline. Further, it focuses on shifting South China cargo from road to barge, for cost reasons and to reduce the environmental impact of the port activities.
Next, it identifies a market segment (international transshipment) as driver of volume growth, and crucially without inflated forecasts: overall forecasted growth is around 1.5% per year. Finally, it concludes that additional terminal capacity is not an attractive development option. Note that Hong Kong economically-speaking is located in one of the most vibrant parts of the world. Ports in less privileged locations announce higher growth forecasts and start investing, usually public, money on that basis.
However, as an outsider, two issues caught my attention in the Hong Kong report. First, the development plan does not explicitly take an ‘evolutionary’ perspective which in my experience can help ‘frame’ the development plan: Hong Kong, like London, New York and most other world cities, became world cities because of the presence of a port. Hong Kong’s status as largest port serving South China fuelled the growth of trading activities, with very high mark-ups, generating great wealth in Hong Kong.
As a result of this, wages are now relatively high and land is scarce. The decline in market share of port throughput is simply part of the transformation process of the regional economy. The key challenge for Hong Kong is to continue to nurture the less visible port related activities in logistics and trade.
The second issue is the projected evolution of capacity of the existing facilities. The current capacity in the Kwai Tsing Container Basin is 21.7m and is projected to reach 23.4m in 2030. In my view, that seems unrealistically low. Larger ships, a higher share of international transshipment, a higher share of barge transport to South China, advances in supply chain planning, and the increasing role of inland ports as extended gates combined with the next generation of more productive terminal equipment and planning systems promote higher productivity.
What would the impact on capacity be if half of the terminals were modernised before 2030? Given the position of Hong Kong, an alternative view could be that the port should aim for significant productivity growth in the next 15 years, rather than accepting the status quo.