Hong Kong – The port that struggles to keep up

Port of Hong Kong was a crown jewel of China’s south coast for long time until Shanghai, Guangzhou or Shenzen ports developed enough to challenge the well-established port of Hong Kong. HK was the only major port in southern China able to provide the infrastructure and business environment what attracted the largest of carriers to use Hong Kong as an entry/exit point for majority of the Chinese cargo. Up to until 2004 Hong Kong was the busiest port in the world [1].

However, especially of late the relationship between Beijing and HK government has been problematic. 2014 Umbrella Movement was a showcase of this difficult ‘One country two systems’ relationship. Back when the Chinese economy was starting its rapid growth too much dependence of HK ports would have given Hong Kong great amount of leverage in the field of politics by effectively giving HK a chance to hold exports hostage. Stop exports of Chinese goods if it so wanted to pressure Beijing – too big of a risk. Beijing started extensive projects aimed to develop its ports in important main cities and industrial areas. For few years now Shanghai, Ningbo and Shenzhen are all already busier than Hong Kong who held the title of fifth busiest port in the world until 2017.

Now it appears to be the case that Hong Kong has fallen even further in the TEU throughput rankings. Port of Busan was hit hard by the collapse of Hanjin, but expansion to “New Port” area and good management have boosted throughput past Hong Kong Pushing Hong Kong to sixth place. And that is not all. Guangzhou has also passed the 20 mil TEU mark and overtaken Hong Kong pushing HK to the seventh place. Adding insult to injury is that Guangzhou is the city neighboring Hong Kong and of whose growth will most likely drive port of Hong Kong into even deeper trouble stealing more and more cargo from the industrial areas around the Guangzhou bay area. Why ship from Hong Kong when own port is even bigger? [1]

While the growth of ports in mainland China has resulted from the economic boom in China, Singapore and Busan (only non-Chinese ports in top 7) rely heavily on transshipments. Port of Singapore’s traffic is almost entirely transshipment containers (due to the best possible location) while Busan has near 50/50 ratio (50% import-export, 50% transshipment). Both ports also get strong support from respective governments who have acknowledged the benefits of having a big and healthy port under their jurisdiction. Economic growth though more jobs, more investment, increased business opportunities.

It almost feels like Hong Kong has been squeezed between the other major ports in a region without tools to fight back. Is it too close to Singapore and/or Guangzhou effectively forcing carriers to drop Hong Kong from the list of calls? The political standoff between Beijing and Hong Kong also plays a role as Chinese companies are encouraged to ship from mainland ports. Lack of transshipment and less Chinese freight put Hong Kong in an awkward limbo with reducing freight volumes.

On the other hand, Hong Kong is one of the major maritime hubs in the world (alongside with London, Singapore and Houston). If Hong Kong port volumes keep declining can it keep its status as a maritime hub or will rest of the maritime activities also move to Singapore? Is there anything left from the rich maritime history of Hong Kong in ten years?

[1]: South China Morning Post, Denise Tsang, 14 February 2019. Hong Kong’s port business drops out of top five in world for first time as Asian rivals Shanghai, Singapore, Ningbo, Shenzhen, Guangzhou and Busan leave city in their wake. Available at South China Morning Post

About Author

Tuomo Keltto

Tuomo Keltto is a logistics engineer who continued his studies in Seoul, South Korea. He studied at the Korean Government scholarship for a Master's degree in international trade and logistics. Now he is back in Finland and he works at Neste in Porvoo. - He has previously been in Steveco Hietanen for three summers as a temporary stevedore and as a foreman for one summer.