Hong Kong - Port & Shipping News [Archive]

hkskyline

September 10th, 2004, 07:02 PM

Statistics on Vessels, Port Cargo and Containers for the Second Quarter
of 2004

The Census and Statistics Department today (September 10) released
statistics on vessels, port cargo and containers for the second quarter of
2004.

In the second quarter of 2004, total port cargo throughput increased by
8% over a year earlier to 55.3 million tonnes. Within this total, inward port
cargo increased by 10% to 34.6 million tonnes, while outward port cargo
rose by 6% to 20.7 million tonnes.

For the first half of 2004, total port cargo throughput increased by 10% to
110.8 million tonnes. Within this total, inward and outward port cargo
were up by 9% and 12% to 68.6 million tonnes and 42.2 million tonnes
respectively.

On a seasonally adjusted quarter-to-quarter comparison, total port cargo
throughput decreased by 8% in the second quarter of 2004. Within this
total, inward port cargo decreased by 6%, while outward port cargo
decreased by 10%. The seasonally adjusted series enables more
meaningful shorter-term comparison to be made for discerning possible
variations in trends.

Port cargo

Within port cargo, seaborne and river cargo went up by 10% and 4% over
a year earlier to 40.3 million tonnes and 15.0 million tonnes respectively in
the second quarter of 2004.

Within inward port cargo, imports increased by 3% over a year earlier to
21.2 million tonnes in the second quarter of 2004, while inward
transhipment surged by 21% to 13.4 million tonnes. For outward port
cargo, exports (including domestic exports and re-exports) and outward
transhipment rose by 8% and 4% to 8.6 million tonnes and 12.1 million
tonnes respectively.

Within port cargo, seaborne cargo went up by 10% in the first half of 2004
over a year earlier to 79.7 million tonnes, while river cargo also increased
by 10% to 31.1 million tonnes.

Within inward port cargo, imports rose by 4% in the first half of 2004 over
a year earlier to 42.8 million tonnes, while inward transhipment surged by
20% to 25.9 million tonnes. For outward port cargo, exports rose by 15%
to 17.5 million tonnes, while outward transhipment increased by 10% to
24.7 million tonnes.

Comparing the second quarter of 2004 with the second quarter of 2003,
double-digit increases were recorded in the tonnage of inward port cargo
loaded in Australia (+92%), Singapore (+39%), Malaysia (+37%), the
Republic of Korea (+20%) and the United States (+10%). Over the same
period, substantial increases were registered in the tonnage of outward
port cargo for discharge in Australia (+63%), the United States (+12%)
and Vietnam (+12%). On the other hand, a double-digit decrease was
recorded in the tonnage of outward port cargo discharged in Japan
(-17%).

Comparing the first half of 2004 with the same period in 2003,
double-digit increases were recorded in the tonnage of inward port cargo
loaded in Australia (+68%), Singapore (+34%), Malaysia (+28%), the
Republic of Korea (+24%) and the United States (+16%). Over the same
period, double-digit increases were registered in the tonnage of outward
port cargo for discharge in Australia (+52%), Vietnam (+51%), Taiwan
(+14%), Italy (+12%), the mainland of China (+11%) and Thailand
(+10%).

Containers

In the second quarter of 2004, the port of Hong Kong handled 5.4 million
TEUs of containers, representing an increase of 6% over a year earlier.
Within this total, laden containers and empty containers both rose by 6%
to 4.4 million TEUs and 1.0 million TEUs respectively. Among laden
containers, inward and outward containers were up by 11% and 2% in the
second quarter of 2004 over a year earlier to 2.1 million TEUs and 2.2
million TEUs respectively.

In the first half of 2004, the port of Hong Kong handled 10.6 million TEUs
of containers, representing an increase of 8% over the same period in
2003. Within this total, laden containers rose by 11% to 8.7 million TEUs,
while empty containers decreased by 1% to 1.9 million TEUs. Among
laden containers, inward and outward containers were up by 14% and 8%
over a year earlier to 4.2 million TEUs and 4.5 million TEUs respectively in
the first half of 2004.

On a seasonally adjusted quarter-to-quarter comparison, laden container
throughput decreased by 9% in the second quarter of 2004, comprising
decreases of 5% and 12% respectively for inward and outward laden
containers.

Seaborne laden containers went up by 7% in the second quarter of 2004
over a year earlier to 3.3 million TEUs, while river laden containers
increased by 5% to 1.0 million TEUs.

Within inward laden containers, imports increased by 8% to 1.0 million
TEUs, while inward transhipment surged by 15% to 1.2 million TEUs in
the second quarter of 2004 over the same period in 2003. For outward
laden containers, exports rose by 6% to 1.1 million TEUs, while outward
transhipment fell by 2% to 1.1 million TEUs.

Seaborne laden containers went up by 10% to 6.6 million TEUs in the first
half of 2004 over the same period in 2003, while river laden containers
increased by 14% to 2.1 million TEUs.

Within inward laden containers, imports and inward transhipment
amounted to 1.9 million TEUs and 2.3 million TEUs respectively in the first
half of 2004, representing increases of 10% and 18% over the same
period in 2003. For outward laden containers, exports amounted to 2.2
million TEUs in the first half of 2004, representing an increase of 10% over
the same period in 2003, while outward transhipment rose by 6% to 2.3
million TEUs.

The detailed container statistics are summarised in Table 6(text version) .

Port cargo and laden container statistics are compiled from a sample of
consignments listed in the cargo manifests supplied by shipping companies
or agents to the Census and Statistics Department.

Vessel arrivals

In the second quarter of 2004, the number of ocean vessel arrivals was up
by 1% over a year earlier to 8 810, with the total capacity increasing by
5% to 76.9 million net registered tons. Over the same period, the number
of river vessel arrivals was up by 9% to 47 590, with an increase of 11%
in capacity to 23.1 million net registered tons.

In the first half of 2004, the number of ocean vessel arrivals was up by 1%
over a year earlier to 17 650, with the total capacity increasing by 6% to
154.1 million net registered tons. Over the same period, the number of
river vessel arrivals was up by 5% to 93 250, with an increase of 7% in
capacity to 44.6 million net registered tons.

The statistics on vessel arrivals in Hong Kong are given in Table 7(text
version) .

Vessel statistics are compiled by the Marine Department primarily from
general declarations submitted by ship masters or authorised shipping
agents. Pleasure vessels and fishing vessels plying exclusively within the
river trade limits are excluded.

Ends/Friday, September 10, 2004

hkskyline

September 17th, 2004, 04:47 PM

SAR pushing ahead with new cargo terminal plan

Danny Chung
590 words
17 September 2004
The Standard
English
Copyright 2004 Sing Tao Group.

The government will probably go ahead with plans to build a new container terminal despite opposition from current port operators, who say existing capacity is enough to handle growth for at least a decade.

Yik Wai-king, senior information officer for ports and maritime logistics, said the Hong Kong Port Master Plan 2020 initial draft report was discussed by the Port Development Council early this week and that Secretary for Economic Development and Labour Stephen Ip wants the terminal to be built. ``It's just the question of timing,'' she said.

Chief Executive Tung Chee-hwa, in his policy address early this year, pushed for a terminal on Lantau Island. Preliminary estimates put the cost at more than HK$8 billion.

The news comes as mainland ports rapidly erode Hong Kong's lead in container handling. Last year, Shenzhen handled 50 per cent of Hong Kong's volume, at a little over 10 million 20-foot equivalent units (TEUs).

Cheaper mainland port charges are also luring international shippers, such as Japan's MOL, which said recently that it will seriously consider shifting business to Shenzhen.

The port master plan is a wide-ranging study on the competitiveness and future development of the port made in order to preserve Hong Kong's lead. The need for new terminals is part of the study, Yik said.

Yik said the council will consult industry groups like the Logistics Development Council before going before various Legco committees for more consultations.

The views collected would then go back to the Port Development Council before a final report is compiled and a decision made. There is no firm timetable for a final report.

Asked about the proposed capacity of the terminal, Lik said this would depend on the volume forecasts.

One of the sites targeted for the four-berth terminal is on the north coast of Lantau Island to the west of Hong Kong airport.

The most recent addition to Hong Kong's port is Container Terminal Nine which has a total of six berths. Two berths came on stream last year and another became operational last month.

The plan comes as debate rages on whether Hong Kong really needs to build another terminal.

Hopewell Holdings' chairman Gordon Wu, Li & Fung group managing director William Fung and Chinese Minister of Communications Zhang Chunxian have gone on record as supporting the project.

However, existing operators like Hutchison Port Holdings and the business think-tank the Better Hong Kong Foundation say there is no need.

Observers say that Hutchison's opposition may be more about self-interest, because a new terminal could draw shippers away from its terminals at Kwai Chung and Tsing Yi. ``We don't have a clear need for expanding the container port today because we have a lot of spare capacity sitting at Kwai Chung as we speak,'' an industry insider said.

Hutchison has said existing terminals could handle cargo growth until 2016. A report commissioned last year by the Better Hong Kong Foundation concluded there was enough handling capacity for the next 10 years.

Michael Chalmers, director at consultants Scott Wilson, in a seminar paper last April warned that ``there is a risk of oversupply in the short-term''.

However, it appears Container Terminal 10 will not be the last subject in the port debates. Outline zoning plans for northeastern Lantau Island show 233 hectares of future reclaimed land has been zoned for an unspecified container terminal near Disneyland.

Source: The Standard.

hkskyline

September 22nd, 2004, 04:56 PM

Hong Kong Shipping Register's future bright

The Marine Department is optimistic about the Hong Kong Shipping Register's future with about 40 vessels with one million gross tonnage (GT) already in the pipeline seeking registration in the next couple of months.

According to Director of Marine Tsui Shung-yiu the shipping register had about 740 ocean-going vessels of 24.07m GT on its book in July and hoped to cross the 25m GT mark this year.

"We are seeing more Chinese-owned ships and foreign shipowners coming to Hong Kong recently to enquire how to place their ships on the Hong Kong Shipping Register," he said today (September 21).

Due to the implementation of the International Ship and Port Facility Security (ISPS) Code on July 1 this year, many shipowners who had placed their vessels with "FOCs" (flag of convenience) were now looking at alternate registers, including the Hong Kong register because of its quality services, he said.

Mr Tsui said that having qualified for the tough US QUALSHIP 21 scheme - introduced to eliminate substandard shipping and to provide owners who maintain quality operations with incentives - in March this year, the Marine Department was taking pro-active action to maintain that position.

He said the department was conducting seminars for shipowners and operators on the importance of signing up with seamen's union before employing qualified seafarers for work on board their ships to avoid spats with unions involving compliance with the International Labour Organisation 98 Convention.

At the seminars, the department will also share both its experience and those of its counterparts overseas with shipowners and operators to enable them to avoid the pitfalls that led to ship detentions under the ISPS Code and also how to face the challenge of maintaining Hong Kong's QUALSHIP 21 status.

Mr Tsui said ISPS was generally working fine in Hong Kong and the security message had been spread out to the maritime industry.

"But the greatest challenge is for the port facilities and shipowners to follow closely to the provisions of their security plans on board their ships and at their port facilities."

An article about the Shipping Register and other local maritime stories are available in the 18th issue of Hong Kong Maritime News to be published later this week. The publication will be accessible through the Marine Department's website at http://www.mardep.gov.hk.

Ends/Tuesday, September 21, 2004

hkskyline

September 26th, 2004, 07:44 AM

Source : http://www.pbase.com/tsangko/port&page=all

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hkskyline

September 26th, 2004, 07:52 AM

Source : http://www.pbase.com/tsangko/kwai_chung_container_port&page=all

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hkskyline

September 27th, 2004, 04:15 AM

Source : http://www.pbase.com/bono/terminal8

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hkskyline

September 28th, 2004, 10:34 PM

Source : http://www.pbase.com/bono/kwaichung

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hkskyline

September 30th, 2004, 11:00 PM

Source : http://www.pbase.com/accl/hongkongdowntown

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hkskyline

October 3rd, 2004, 09:27 PM

Source : http://www.pbase.com/derekmak/kwai_chung_2

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hkskyline

October 7th, 2004, 12:35 AM

Ships in Hong Kong Harbour near Kwai Chung
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Container Port @ Kwai Chung
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hkskyline

October 7th, 2004, 10:06 PM

DJ HK PRESS: Sun Hung Kai's Raymond Kwok Bids For CSX Assets

6 October 2004
Dow Jones Chinese Financial Wire

HONG KONG (Dow Jones)--Sun Hung Kai Properties Ltd. (0017.HK) Vice Chairman Raymond Kwok is poised to make a backdoor bid for U.S. rail operator CSX Corp.'s (CSX) Hong Kong port assets, the South China Morning Post reports, citing sources.

Kwok plans to inject cash into a bid being put together by Australia's Macquarie Bank group, one of the seven firms to make the second round of the sale process, the report says. Kwok's earlier tender failed to make the shortlist.

An eighth firm, thought to be Philippine port operator International Container Terminal Services (ICT.PH), has been allowed back into the tender process at the request of one of the shortlisted firms with which it will form a joint bid, the report adds.

CSX is in the process of disposing its global port network - including stakes in Hong Kong container terminal 3 and 8 West at Kwai Chung - expected to attract a winning bid in excess of US$1 billion, the report says.

hkskyline

October 9th, 2004, 03:19 AM

Study finds new terminal not needed
Danny Chung, Hong Kong Standard

There is no need for a new container terminal until 2015 as current capacity is enough to handle projected throughput growth, according to a source familiar with the draft of the government-commissioned "Hong Kong Port Master Plan 2020'' report.

The study was ordered by the Port Development Council.

The government had earlier said it will probably go ahead with plans to build a new container terminal, although it did not set a timetable.

One of the biggest issues is the question of a container terminal 10 (CT10), which has been the subject of much public debate.

"I think it's pretty fair to say it's unlikely you need something before the first half of the next decade,'' said the source.

Hong Kong's bigger problem was the high cost of inland transport and cross-boundary trucking, he said.

"And unless we do something about those, discussing CT10 is pretty academic. "What can't be denied as you go past Kwai Chung is that we have spare capacity at the moment which we never had before.''

He said, for example, that the new ACT terminal at container terminal 8 west had eight gantry cranes not being used.

Industry watchers said the slower growth in Hong Kong's cargo traffic, partly due to competition from Chinese ports, also discouraged need for a new terminal.

Annual growth in TEUs (twenty-foot equivalent units) for mainland ports could reach 7 per cent in the period from 2002 to 2010, compared to 2.5 per cent in Hong Kong during the same period, local media reported on Monday, citing the draft report.

"Judging from current development, CT9 can still handle the traffic, but if the economy changes, it isn't surprising that CT10 will be built earlier,'' China Merchant Holdings deputy managing director To Wing-sing said. China Merchant runs port facilities in Kwai Chung.

"It is all tied to the Pearl River Delta's development.''

A government spokeswoman for the Hong Kong Port Development Council, Yik Wai-king, said on Monday that she would not be able to comment as the report was a draft which still needed to be revised for a final report.

She said the council was currently seeking comments on the draft report's contents from industry groups like the Logistics Development Council.

In addition, comments from the new Legislative Council would also have to be included.

6 October 2004 / 02:07 AM

hkskyline

October 13th, 2004, 01:18 AM

Source : http://www.pbase.com/jason_chan/kwai_chung_container_terminal

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crazyjoeda

October 13th, 2004, 12:08 PM

Hong Kong is crazy. Its just amazing, I have to get there soon.

hkskyline

October 16th, 2004, 09:10 AM

It’s all or nothing, CSX tells terminal bidders

By Sam Chambers in Hong Kong
6 October 2004
Lloyd's List

THE second round of bidding for the entire global portfolio of CSX World Terminals is underway with seven interested parties being contacted by lead bank, Citigroup.

CSX Corp, the parent, has stipulated it wants to offload all its terminals to just one bidder rather than trying to hive off individual parts of the operation, which stretches across four continents.

All binding offers will have to be submitted by mid-November with a single winner to be announced before the end of the year. Sources state that the bids received so far range in price from $1bn to $1.2bn.

“There has been a lot more interest, it has been very robust,” said a source. “People have been encouraged to bid on the entire company.

“It is highly unlikely that [CSX Corp] will sell separate pieces. The people who have tried to cherry-pick have been thrown out, by and large.”

Just one company, ICTSI from the Philippines, is thought to have not bid for all terminals.

Others queuing up for CSXWT are a who’s who of international operators including PSA International, Hutchison Port Holdings, Modern Terminals, China Merchants, NWS Holdings, Cosco Pacific and an unnamed seventh party.

Most are attracted by the stakes CSX has at terminals three and eight west in Kwai Chung, Hong Kong. Other attractive facilities include Tianjin in the north of China and the Greenfield project in Pusan, South Korea.

Whoever buys the terminals is unlikely to keep them all.

CSXWT was rocked earlier this year by the defection of its two mainline operators from its Hong Kong facility, which makes most of its revenues.

Headquartered in Charlotte in Virginia, CSX Corp has been selling off non-core assets over the past five years from Sealand to logistics firms, a barge company and a domestic shipping firm.

Citibank rethinks CSX terminal sale

Five companies so far have their eyes on deal, writes Sam Chambers in Hong Kong

16 September 2004
Lloyd's List

THE sale of CSX World Terminals being organised by Citibank is not going as well as planned.

The bank is rethinking its strategy for the sale, which has attracted interest primarily because of its Hong Kong facilities at container terminals three and eight in Kwai Chung.

Citibank is unsure how to approach the sale and they “seem to be scrambling,” said one source in Hong Kong who has been approached to buy the American rail operator’s container terminals.

Citibank is understood to be changing its strategy, away from shortlisting straight away and towards a second round. The revised plan is expected to generate more interest and provide more information on the terminals.

As it stands, according to what has been offered, interested parties can bid for individual terminals or the whole CSXWT portfolio, and they can either bid alone or in a consortium. CSX is keen for all the terminals to be hived off simultaneously.

During the first round Citibank stumbled by providing inadequate information on the pricing of the individual terminals, which stretch across four continents.

“The strategy was not getting enough serious players,” said the source.

Citibank, which refused to comment, is still looking to close the deal by the end of the year.

CSXWT was dealt a double catastrophic blow this year when its sole two main lines pulled out of its Hong Kong operation. CSXWT derived as much as 80% of its revenues through Hong Kong, where its berth three used to be hailed as the most productive on earth, with capability to shift 1.3m teu across just 305 m of quayside.

Five companies have thus far expressed an interest in CSX – Modern Terminals, Hutchison Port Holdings, PSA Corp, China Merchants and New World Holdings.

CSX has terminal interests in Yantai and Tianjin in China, Pusan in South Korea, Vostochny in the far east of Russia, the Dominican Republic, Venezuela, Adelaide and on the Rhine in Germany.

“The demise of CSX shows that, increasingly, to operate globally you have to be very big in the container terminal business,” one terminal operator commented.

hkskyline

October 19th, 2004, 12:32 AM

South China Morning Post
August 9, 2004

Cruise Ships @ Kwai Chung?
Terminal trouble for luxury liners; The massive passenger ships are forced to berth at Kwai Chung container port

Carrie Chan

One of the largest cruise liners in the world, the Diamond Princess, will have to berth at the Kwai Chung container terminal when it arrives in Hong Kong next year.

P&O Travel, agent for the 113,000-tonne ship, is seeking help from tourism authorities for the arrangement as the water at Ocean Terminal, the city's only berthing facility for passenger liners, is not deep enough to accommodate the huge vessel.

There are plans for the Diamond Princess, which can carry 2,600 people, to make three stops in Hong Kong from November to December 2005.

The Sapphire Princess, another 113,000-tonne vessel, will berth at Kwai Chung in April for the same reason.

And a 76,000-tonne cruiser liner, Aurora, carrying about 2,000 passengers, will have to go to the container port when it arrives in March because Ocean Terminal will be fully occupied, P&O Travel said.

The makeshift arrangements are being made while a decision is awaited on where Hong Kong's second cruise terminal will be, and who will build it.

The Tourism Commission recently told the Legislative Council that a second terminal, to be developed by private investors, would not be available until 2009 at the earliest. Proposals will be invited in the coming months.

The commission said Hong Kong should be developed as a home port rather than a port of call as the former would bring bigger economic benefits.

Michael Wu Siu-ieng, chairman of the Hong Kong Association of Travel Agents, admitted the number of international liners coming to Hong Kong was still small, raising questions of whether a second cruise terminal was necessary.

"But the small number is directly linked to the limited capacity of our current facilities. With a new terminal, new demand can be created," he said.

In 2002, only 34 international liners tied up at the Tsim Sha Tsui terminal, contributing 27,945 passengers.

A spokeswoman for Wharf Holdings, which owns Ocean Terminal, said most international cruises came to Hong Kong in November, December and March.

P&O managing director Richard Willis said he did not understand why it would take so many years to complete a second cruise terminal. He added that Shanghai and Qingtao were already working hard to develop themselves as important port cities in the run-up to the Olympic Games in Beijing in 2008.

A spokeswoman for the Tourism Commission said the government was prepared to work with cruise operators to secure berthing slots at the container terminals.

hkskyline

October 22nd, 2004, 07:57 PM

Source : http://www.pbase.com/derekmak/kwai_chung_3

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hkskyline

October 23rd, 2004, 08:05 PM

Container Port 6 from a Hong Kong transport forum :

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hkskyline

October 23rd, 2004, 11:37 PM

The largest multilevel industrial building (one discrete structure) in the world is the container freight station of Asia Terminals Ltd. at Hong Kong's Kwai Chung container port. It is 109.5 m (359 ft 3 in) high and has 15 levels.

Photos taken from a Hong Kong transport forum :
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hkskyline

October 24th, 2004, 12:16 AM

The Cheung Tsing Bridge is frequented by trucks accessing the container terminal. In fact, in the following photos from a Hong Kong transport forum, stacks of containers are seen stored underneath and around the bridge pillars on the Kowloon side.

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hkskyline

October 24th, 2004, 12:23 AM

More roads around the container port from a Hong Kong transport forum :
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hkskyline

October 24th, 2004, 03:03 AM

Journal of Commerce Online
October 21, 2004, Thursday

September jump for Hong Kong throughput

Hong Kong's container throughput rose 9.5 per cent to 1,986,000 TEUs in September compared to the same month last year, the Marine Department reported. Kwai Chung Container Terminal handled 1,229,000 TEUs, up 12.3 percent; while river trade and mid-stream operations handled a total of 757,000 TEUs, up 5.3 per cent year-over-year.

In the first nine months of the year, total container throughput amounted to 16.55 million TEUs, up 9.8 percent from a year ago.

Kwai Chung Container Terminal handled 9.86 million TEUs, an increase of 9.6 percent; while river trade and mid-stream volume rose 10.1 percent to 6.68 million TEUs.

bs_lover_boy

October 27th, 2004, 12:42 PM

More roads around the container port from a Hong Kong transport forum :
http://netalbum.netvigator.com/photos/2004/10/10/c3133323070765871097383698287.JPG

http://netalbum.netvigator.com/photos/2004/10/10/c3133323070766851097383700249.JPG

http://netalbum.netvigator.com/photos/2004/10/10/c3133323070762111097383703617.jpg

This is the "most" lanes of traffic in HK, the roads under the highway has 16 lanes and the highway has 8 lanes, which totals to 24 lanes of traffic.

hkskyline

October 29th, 2004, 10:10 PM

Tuesday October 26, 5:52 PM
DATA VIEW: China Slows Hong Kong Trade Growth In Sep

By Andrew Batson

HONG KONG (Dow Jones)--The growth in Hong Kong's trade volume slowed sharply in September, official data showed, reflecting the deceleration in mainland China's imports during the same month.

Hong Kong's merchandise exports rose 14% from a year earlier in September, following a 21% gain in August, the Census and Statistics Department said Tuesday. Similarly, imports of goods expanded 15% in September after an increase of 22% in August. The trade deficit for September widened to HK$6.5 billion from August's HK$3.2 billion.

"The big swing is in the exports, that basically reflects the slowdown in Chinese imports," said Prakash Sakpal, an economist for ING in Singapore. Growth in mainland China's imports eased to 22% in September from 36% in August due to a marked slowdown in purchases of machinery and raw materials as heavy investment cooled.

China has been trying to rein in its roaring economy with a series of measures to restrict credit and investment in certain industries. The slowdown in import growth was widely taken as a sign those measures are having an effect. But exporters haven't been targeted, and export growth eased only slightly in September to 33%, from 38% in August.

Nonetheless, "China re-exported less through Hong Kong," said ING's Sakpal, pointing to the slowdown in such trade, which makes up more than 90% of the territory's exports. While Hong Kong's export growth in coming months will also depend on the state of the U.S. economy, given conditions in the rest of region he said it "should stabilize at double-digit levels."

Because Hong Kong produces few goods of its own, its trade performance is more important for measuring the health of sectors like shipping, logistics and trade services, which are major pillars of the local economy.

But the impact of the trade slowdown had a mixed impact on Hong Kong's sea port and airport. Air cargo traffic through Hong Kong International Airport reached a new monthly record of 280,000 metric tons in September, with growth picking up to 19% on year from a 17% expansion in August.

Growth in sea container traffic through Hong Kong, however, slowed to 9.5% in September from 17% in August. Volume declined to 1.99 million 20-foot equivalent units, or TEUs, in September, from 2.01 million TEUs in August.

hkskyline

November 2nd, 2004, 04:37 AM

South China Morning Post
November 1, 2004

Uneasy berth; Hong Kong's dominance continues to be eroded
Annette Chiu and Tom Mitchell

FROM A LOGISTICS perspective, bottlenecks are bad news. They are also potentially lucrative in the extreme, which is why throughout history kings, empires, presidents and tycoons have plotted and warred to control them.

The Pearl River Delta manufactures approximately 40 per cent of China's exports, the vast majority of which flow through four ports - Hong Kong's Kwai Chung, Yantian in eastern Shenzhen and Shekou and Chiwan in west Shenzhen. Of these, Kwai Chung and Yantian are blessed with the deepest water.

Another would-be rival - the Nansha container port which Guangzhou is building at the mouth of the Pearl River Delta - will be severely constrained by the vast amounts of sediment deposited there, requiring constant and costly dredging of both the port and its access channels.

Nansha's first phase - four 50,000-ton berths - will be officially completed by next month, though ships from China's top two container shipping lines - Cosco and China Shipping Container Lines - have already made their maiden calls there this month. Construction of another four 100,000-tonne berths began earlier in the year and is scheduled for completion by 2008.

For the past year, the battle to service the exports flowing from the world's most formidable export machine has remained one between Hong Kong and Shenzhen, which has been slowly but surely chipping away at Hong Kong's once -dominant share of this trade.

It is in many ways an entirely natural and unstoppable erosion, as Shenzhen's closer proximity to the delta's factories is complemented by a shipping services schedule that is constantly improving. However, Yantian, Shekou and Chiwan's biggest advantage is that the factories using them do not have to navigate another bottleneck - namely the Hong Kong-Shenzhen border.

Over the past seven years, Hong Kong's share of ocean-going cargo in south China has dropped from 91 per cent to about 60 per cent in the first nine months this year.

Since the beginning of last year, four new berths have come into service at Yantian, easing congestion there. To the west at Shekou and Chiwan, four new berths began operations last year with another four set for next year.

Such capacity expansions made possible Shenzhen's 29 per cent jump in container throughput in the first nine months of this year, to 9.87 million teu (20-ft equivalent units).

Hong Kong, meanwhile, had 9.8 per cent growth in the same period to 16.55 million teus.

Of the various measures suggested to help Hong Kong maintain its lead, the most controversial has been a proposal to build Container Terminal 10 (CT10), most likely on the northwest shores of Lantau near the land-fall of the Hong Kong-Macau-Zhuhai bridge. CT10 would increase capacity and - in theory anyway - reduce Hong Kong's cost disadvantage against Shenzhen.

According to the Hong Kong Shippers' Council, terminal handling charges in moving a container from Hong Kong to the United States east coast are about HK $ 1,000 more than from Shenzhen. It also costs US$ 220 more to truck a 40-foot container from Dongguan to Hong Kong than to Yantian, according to a Better Hong Kong Foundation report.

With control of 12 of Hong Kong's 18 berths, 48 per cent of Yantian and a stake in Gaolan (a deep-water port west of Zhuhai perfectly positioned to service the west delta), Li Ka-shing's Hutchison Ports Holding has the most to lose from the construction of the bridge, CT10 and Nansha's successful development.

Shenzhen, meanwhile, has submitted plans to the central government for a Phase III-B development at Yantian and a new port at Dachan Bay, potentially adding another 12 berths.

hkskyline

November 2nd, 2004, 11:22 PM

Journal of Commerce
November 1, 2004, Monday

High costs carry a price;
Hong Kong, with its costly services, faces increasing threat as Southern China ports boost efficiency

BILL MONGELLUZZO

Civic boosters in Hong Kong like to point out that the city did not grow to become the commercial and transportation hub of Asia by being cheap. Hong Kong's port community may have to pay greater attention to the cost of its services, though, if it wants to maintain its position as the world's largest container port. Hong Kong continues to thrive as a port city because of the spectacular growth of South China. About 75 percent of the cargo that flows through the port originates in or is destined for the southern region of China.

Until the mid-1990s, the Port of Hong Kong had a virtual monopoly on the South China trade, but over the past eight years, the Shenzhen ports of Yantian, Chiwan and Shekou have cut deeply into Hong Kong's market share.

The market share growth of the Shenzhen ports over the past three years has been especially dramatic. Whereas Hong Kong's container volume has increased about 7 percent a year since 1992, the Shenzhen ports have grown at more than 40 percent a year.

Although Hong Kong in 2003 retained its role as the world's largest container port with 20.4 million TEUs, Shenzhen the past thee years leapfrogged other Asian ports to become the fourth-largest port in the world with a volume of 10.6 million TEUs. Shenzhen in the first half of 2004 recorded a 32 percent increase in container volume over the same period last year.

Shippers point to one factor to explain Shenzhen's rapid growth at the expense of Hong Kong - cost. "Hong Kong is quite expensive," said Jon Monroe, a San Francisco logistics consultant who leads U.S. investors on missions to China several times a year.

Unlike the 1980s and early 1990s, when investors had no choice as to which port to use in the region, the Shenzhen ports offer Hong Kong stiff competition on price, and, increasingly, quality of service. When investors today scout the region for factory sites, they consider transportation costs. "Hong Kong's charges are artificial and unnecessary," Monroe said. Operators of container freight stations realize margins of as much as 60 percent, he said.

A study by McKinsey & Co. found that it costs $295 more to ship a 40-foot container from South China through Hong Kong than through Yantian. One-third of the difference is the higher terminal handling charges in Hong Kong, and two-thirds of the cost differential is due to the cross-border trucking costs and delays experienced at the China-Hong Kong border, the study found.

Furthermore, as South China continues to develop its inland infrastructure and expand the Shenzhen ports, international freight will move to the ports even more efficiently, so shippers will increasingly resist paying a premium for shipping through Hong Kong.

However, Hong Kong has not lost its traditional efficiencies that are tied to the commercial infrastructure developed there since the 19th century. Buyers of Chinese merchandise, especially Westerners, prefer the ease of opening letters of credit and processing trade documentation in Hong Kong.

For many shippers, the efficiencies and ease of doing their China business in Hong Kong and through its port outweigh the additional costs, said M.K. Wong, director of marketing at Orient Overseas Container Line. Shipping lines in the trans-Pacific and Asia-Europe trades deploy many of their newest and largest vessels to Hong Kong because demand continues to grow, he said.

The productivity of Hong Kong's marine terminals is legendary. Terminal operators handle the same volume of containers as U.S. ports on facilities that are one-sixth the size of the U.S. terminals.

The opening this year of Container Terminal 9, the largest single port project ever developed in Hong Kong, will ensure that the harbor has sufficient physical capacity for years to come. CT9, with six berths to be in operation by next year, will relieve pressure on the Kwai Chung terminal that handles more than 60 percent of the port's container traffic. The remainder of the containers are handled by mid-stream operators.

Hong Kong, in its 2020 plan, also raises the possibility of constructing another complex known as Container Terminal 10, which would be located near the international airport on Lantau Island.

In the more immediate future, Hong Kong and China have decided to build a bridge to link the western region of the Pearl River Delta with Hong Kong and Macau. That relatively undeveloped region is difficult to reach from Hong Kong, but it offers significant potential for the location of manufacturing plants.

While there has been economic competition and some tension between Hong Kong and the mainland since Hong Kong became a special administrative region of China, the government in Beijing wants the two areas to work together for their mutual prosperity. The government earlier this year announced its Closer Economic Partnership Agreement plan for the nine provinces of South China and Hong Kong and Macau.

This region of 650 million residents accounts for one-half of China's population and a significant percentage of its productive capacity. China and Hong Kong together account for about 62 percent of the eastbound trans-Pacific container volume moving to the U.S., for example, while South China alone accounts for about 37 percent of the eastbound trans-Pacific trade.

Given the geographic and historical ties between South China and Hong Kong, the government in Beijing wants the cross-border region to operate as a single unit in its trade with the outside world. Under the CEPA plan, the ports of Hong Kong and South China are to be "interactive," the government stated.

The regions are also linked in a practical sense. Hong Kong is still the largest investor in South China, so it is natural that investors would find reason to ship products from the region through Hong Kong as well as the Shenzhen ports, Wong said.

Hong Kong could grow even faster as a gateway to South China, however, if the transportation community and the governments improve the efficiency of trucking cargo over the border, and if Hong Kong's maritime community narrows the gap between its costs and the cost of shipping through the Shenzhen ports.

hkskyline

November 3rd, 2004, 05:06 AM

Lloyd's List
October 25, 2004

NWS profits fall after loss of leading terminal customers

Keith Wallis in Hong Kong

LOSS of a leading liner customers at CSX World Terminals in Hong Kong has led to NWS Ports Management, part of NWS Holdings, reporting a 7% fall in attributable operating profit to HK$ 369.9m (US$ 47.4m) in the year to June 30.

NWS Holdings, which changed its name from Pacific Ports Company, owns a 33.34% equity stake in the terminal company, which operates at Kwai Chung container port. CSX was badly affected by the loss of Maersk Sealand and Hanjin Shipping earlier this year to rival terminals at Kwai Chung.

NWS Holdings chairman Henry Cheng Kar-shun said CSX was "undertaking aggressive marketing measures to seek replacement customers and implementing cost saving measures".

He made no reference to the planned sell-off by CSX of its global container terminals businesses.

NWS Holdings is believed to have teamed up with APL, the liner shipping subsidiary of Neptune Orient Lines, to bid for the network.

Overall, NWS Holdings saw a 29% rise in net profit to almost HK$ 1.54bn on turnover of HK$ 12.55bn, while operating profit doubled from HK$ 945.7m to HK$ 1.9bn.

Mr Cheng said CSX World Terminals Hong Kong and ATL Logistics Centre reported a combined attributable operating profit of HK$ 314m, down 9% from a year earlier.

CSX World Terminals Hong Kong handled 1.11m teu, a 17% drop compared with the 1.34m teu handled the previous year, while the average occupancy rate in ATL Logistics Centre slipped from 95% to 93%.

NWS Holdings owns 55.67% in the 542,800 sq m logistics complex at container terminal 3.

NWS Holdings also has a 23.34% interest in Asia Container Terminals, which took over two berths from Modern Terminals.

ACT, whose other shareholders include CSX and Sun Hung Kai Properties, is unlikely to get its first customer until CSX disposes of its 29.5% stake in ACT.

Mr Cheng added the CSX Orient (Tianjin) Container Terminals, in which NWS holds 24.5%, saw attributable operating profit fall 6% as a result of higher fuel prices and maintenance costs.

hkskyline

November 9th, 2004, 04:27 AM

GLOBAL LOGISTICS: Hong Kong
Ken Mark. Canadian Transportation Logistics. Don Mills:
May 2004

The major challenge that Hong Kong faces is crafting a new business and logistical model as China develops into the dominant economy in Asia. Simply put, as China prospers and modernizes, more firms will go around rather than through Hong Kong to do business there. In the short term, Hong Kong must stress the benefits and advantages of its higher-cost business services to Chinese and overseas users. But over the long term, it must adapt those existing strengths and advantages while marketing them as value-adding, specialized services. "Hong Kong has to evolve from its previous near-monopoly as the entry point for doing business with China," says Tony Burger, Canada's consul general in Hong Kong, "to a position where it can compete effectively with other emerging cities within China."

At present, of the 30,000 trucks crossing the boundary from Guangdong province into Hong Kong every day, about one third are destined for Kwai Chung despite an estimated US$200 premium per container in handling charges compared to Chinese facilities. Yet users are willing to pay more for Hong Kong's higher productivity, security and convenience. And to participate in growth on the other side of the boundary, HIT is exporting its expertise by entering into joint-venture agreements with Chinese partners to develop and operate new container operations in Yantian near Shenzhen. In the long run, HIT's Hong Kong assets will remain profitable by focusing on specialized services.

What does the future hold in store for Hong Kong? Says Gary Chan, Regional Director-North, BDP Asia Pacific in Hong Kong for Philadelphia-based BDP International, "Until direct trade with China becomes dominant, Hong Kong will continue to be the comfort zone for China's burgeoning global trade partners, playing the crucial part of middleman for trade financing, communication with factories, sound legal contracts, inbound logistics and added service value."

The most trusted entry point into the Chinese market faces the spectre of being bypassed as China modernizes its own logistics infrastructure. Contributing editor Ken Mark spent a week in Hong Kong to discover how this vibrant logistics centre plans to keep that from happening.

Hong Kong has successfully rebounded from the SARS outbreak with its characteristic gung-ho, can-do attitude stronger than ever. It remains one of the world's most vibrant business, commercial and logistics centres. Despite its tiny size (1,100 sq. km] and small population (6.8 million), Hong Kong enjoys significant trade relations with Canada. We rank in the top 20 of its import sources and in the top 10 of its export markets, (see sidebar story). However, those numbers pale in comparison to the growth potential with neighboring China, the world's fastest growing economy.

The major challenge that Hong Kong faces is crafting a new business and logistical model as China develops into the dominant economy in Asia. Simply put, as China prospers and modernizes, more firms will go around rather than through Hong Kong to do business there. In the short term, Hong Kong must stress the benefits and advantages of its higher-cost business services to Chinese and overseas users. But over the long term, it must adapt those existing strengths and advantages while marketing them as value-adding, specialized services. "Hong Kong has to evolve from its previous near-monopoly as the entry point for doing business with China," says Tony Burger, Canada's consul general in Hong Kong, "to a position where it can compete effectively with other emerging cities within China."

In more concrete terms, according to Sammy Chey, corporate manager Far East, PBB Global Logistics in Fort Erie Ont., Hong Kong's role as a re-export point from China and as a trans-shipment point is fading. The full impact of WTO (World Trade Organization) rules which China joined in 2000 will become more transparent after 2006.

But the first order of business is to make the boundary between Hong Kong and China irrelevant. For now, Chinese and foreign firms willingly pay premium prices to tap into Hong Kong's vast pool of financial, business and supply-chain expertise and use its ultra-efficient transportation infrastructure. But those advantages will diminish as China catches up.

Hong Kong's most obvious logistics shortcoming is boundary congestion - trucks can take up to three hours to cross. But there are massive plans to modernize the transportation infrastructure, simplify red tape and introduce innovative business solutions.

Ultimately, Hong Kong may wind up playing second fiddle to Shanghai as China's financial and transportation centre. But thanks to geography, it will never fade away completely because it is adjacent to the Pearl River Delta - home to more than 40 million people and extensive manufacturing facilities that make it southern China's production dynamo.

How successful that strategy will be remains unclear. But history is on Hong Kong's side. After losing millions of factory jobs to China and elsewhere, Hong Kong successfully transformed itself into a thriving service economy with more than 80% of its GDP and employment coming from that sector.

The following vignettes highlight the depth and breadth of the expertise, not to mention the optimism and determination, of executives and officials as they begin helping Hong Kong carve out its future niche in the Asia-Pacific economy.

Except for rail, Hong Kong's cargo-moving transportation infrastructure is unmatched in the world. It is the world's busiest container port handling 19.1 million TEUs in 2002. Of that total, the nine terminals and 22 berths at the Kwai Chung container port handled 62%. The rest is Pearl River traffic that continues to increase. Growth at Kwai Chung, however, has stalled - in 2003 it was more or less flat. Across the boundary in China, newer facilities - closer to manufacturing facilities - enjoy 40% annual increases albeit from a much lower base. John Meredith, group managing director, Hutchison Port Holdings, the operators of Hong Kong International Terminals (HIT), remains unfazed by the competition. "I would not mind handling less cargo," he says, "as long as we could do it more profitably by lowering our costs and level of investment. What's really important is not how much tonnage you handle, but how much money you make doing it."

At present, of the 30,000 trucks crossing the boundary from Guangdong province into Hong Kong every day, about one third are destined for Kwai Chung despite an estimated US$200 premium per container in handling charges compared to Chinese facilities. Yet users are willing to pay more for Hong Kong's higher productivity, security and convenience. And to participate in growth on the other side of the boundary, HIT is exporting its expertise by entering into joint-venture agreements with Chinese partners to develop and operate new container operations in Yantian near Shenzhen. In the long run, HIT's Hong Kong assets will remain profitable by focusing on specialized services.

The story and the strategy is echoed by HACIS, the operators of Super Terminal One at Hong Kong International Airport (HKIA), number one in the world in terms of air cargo volume. Its SuperTerminal One is the world's busiest air cargo facility. For 2003, the estimated total is about 2.0 million tonnes up from 1.9 million tonnes in 2002 or about 77% of Hong Kong's total. Another facility, Asia Airfreight Terminal handles the rest. Despite the current rosy picture, HACIS is aggressively protecting and augmenting its market share against emerging competitors within China.

To do so, HACIS must remove boundary-crossing bottlenecks. Besides traffic congestion, problems with customs documents and their transmission add to the delays. For example, cargo arriving from a 13-hour flight from Europe can sit for several days at HKIA waiting for paperwork to clear Chinese customs. To break the logjam, HACIS introduced its SuperLink China Direct service that whisks shipments quickly through customs, consolidates cargo for various consignees and delivers it in bonded trucks for next-day delivery in China. In addition, since all shipment-related data is now digitized, cargo can be tracked and traced electronically.

In October 2003, HACIS launched a supplementary southbound service routed through its new Futian Free Trade Zone consolidation warehouse in suburban Shenzhen. Phase I focuses on bulk cargo and Phase II will address pre-pack cargo. To speed up customs procedures, goods are pre-cleared at the facility before they are packed. Most important, the service side-steps traffic congestion by using Passage # 1, an exclusive, limited-access crossing point for free trade zone tenants.

Such time-saving, value-added services will help maintain Super Terminal One's and HKIA's competitiveness as modern Chinese air cargo terminals and airports start coming on stream.

SuperTerminal One ranks as one of the modern logistics wonders of the world. It is six storeys - 400 metres high - with 3600 slots (60 × 60) with 274,000 sq. m. of floor space. There is also a two-storey, 74,000 sq. m. Express Centre dedicated to integrated couriers. As each item is unloaded from a plane, it is placed in a yellow bin and given a unique tracking number. Since the storage system is totally automated - robotic cranes transport the bins without human intervention and Customs officials have complete independent control over the entire system enabling them to call for the inspection of any shipment at any time - there is no need to segregate import and export goods. On November 30, 2003, SuperTerminal 1 set a one-day record of handling 7,700 tonnes of cargo.

Nevertheless, Hong Kong is not about to rest on its laurels. The government continues to announce a steady stream of ambitious infrastructure projects that will forge closer transportation and logistics links with the Pearl River Delta (PRD). For example, there are plans to double the number of customs and immigration booths at Lok Ma Chau, the busiest crossing point that handles almost 23,000 trucks each day.

Another proposal already moving ahead is the Hong Kong-Shenzhen West corridor - a bridge linking Shekou with Deep Bay. It will open up the PRD's western region which currently lacks a direct Hong Kong link. One of the project's innovations will be the co-location of Chinese and Hong Kong customs and immigration facilities in a single centralized location. Here at home, such a concept remains a distant dream for streamlining Canada-U.S. border crossings.

A more ambitious plan is the construction of a 50-km-long bridge system linking Hong Kong with Macao further opening up the movement of goods. The two cities are currently connected only by a hydrofoil passenger ferry service.

Also on the agenda is a leading-edge solution for sending and sharing business data between and among supply chain and other business partners. The DigitalTrade & Transportation Network (DTTN) currently under discussion is a pioneering effort seeking to unify the existing hodgepodge of different IT systems of transportation, logistics, trade, finance and other business firms into a virtual network. "We see it as a way to bridge the communications gap," says Raymond Cluing, chief assistant secretary for economic development & labour for the Hong Kong government, "by integrating the disparate IT systems of all the various companies and organizations. It will boost Hong Kong's competitiveness because it will help small- and medium-sized firms optimize their assets by making it easier for them to make fuller use of their IT systems." Once established, DTTN will be the one of the first such networks in the world.

What does the future hold in store for Hong Kong? Says Gary Chan, Regional Director-North, BDP Asia Pacific in Hong Kong for Philadelphia-based BDP International, "Until direct trade with China becomes dominant, Hong Kong will continue to be the comfort zone for China's burgeoning global trade partners, playing the crucial part of middleman for trade financing, communication with factories, sound legal contracts, inbound logistics and added service value."

Canada-Hong Kong Trade

In 2002, two-way trade between Canada-Hong Kong reached $2.2 billion a decline of 12%, due mostly to continuing trade liberalization and China's accession to the WTO that has diminished its role as a commercial centre for China. Yet, Hong Kong remains a major gateway to its giant neighbor since it is still China's largest port.

That year, Canada ranked 19th among Hong Kong's source of imports and 10th in terms of Hong Kong's export destinations. Canada exported $1.2 billion worth of goods to Hong Kong, of which an estimated 40% ended up in China.

Following its return to Chinese sovereignty in 1997, Hong Kong became a Special Administrative Region (SAR) but remains a separate customs territory with a separate membership in the World Trade Organization and the Asia-Pacific Economic Cooperation (APEC) forum. More important, it also maintains its own financial system and formulates its own monetary and financial policies including the authority to issue Hong Kong currency, pegged to the U.S. dollar.

As a SAR under Chinese sovereignty, Hong Kong functions under China's "one country-two systems" banner, hence the dividing line between them is considered a boundary not a border.

The city is home to the largest Canadian business community in Asia, with over 150 local or regional Canadian corporate offices located there.

hkskyline

November 10th, 2004, 06:44 AM

Business Daily Update
November 9, 2004

HK'S LANTAU ISLAND IDEAL FOR PORT FACILITIES

The Hong Kong Special Administrative Region (SAR) government's proposed Lantau Island development plan will soon be up for public consultation. The
island, which makes up 14 per cent of Hong Kong's territory, is at the present highly underdeveloped. It will be the major experimental ground for the balance between economic and social development on the one hand and environmental conservation on the other - the basic tenets of sustainable development. It is underdeveloped because it used to be an isolated island with very little flat land, until the North Lantau Highway, with a magnificent suspension bridge,was built. The proposed Route 10, scheduled for
completion in 2007, will provide a second link to Hong Kong's Yuen Long. There is a third link to Macao and Guangdong Province's Zhuhai under consideration. These external links together provide the overall limit to the population - about 43,000 people, and more than one-third of them in Discovery Bay - and the scope and scale of their activities on the island.

In the new proposal, the north shore of the island, previously earmarked for port development, was re-oriented for tourism in the light of the slowdown of port cargo forecasts and the rising potential for tourism/recreation. The downplaying of port development was clearly shortsighted, and switching the land use to another theme park lowers the value of precious land resources in the area. Logistics clearly offers more added value for Hong Kong, more quality
employment and more extensive linkage to other sectors of the economy.

Once a low-value-added and land-extensive theme park is built, the situation is irreversible. At the moment, the logistics output of the Pearl River Delta is growing at a rate of 10.5 per cent each year, doubling itself every six years, and this high growth rate is expected to continue for at least the next decade. On the other hand, Hong Kong's container throughput is only growing at 4.5 per cent.

Instead of being pessimistic about the future, we should at least explore the reasons for such a gap and do something about it. Hong Kong's terminal charges are by far the highest in the world, and they need not have been this high. It is in the interest of Hong Kong and southern China as a whole to lower them. Even if we take a laissez-faire attitude on the terminal charges, should we look further, the future of the Hong Kong port is not bleak at all. In fact, its importance is going to revive in the next five to seven years, because when phase III of the Yantian Port is completed, there is no other place in the
entire Pearl River Delta except Hong Kong for further deep sea port development. Any port in a river estuary is bound to be plagued by sedimentation. Yantian is a good site as it is not in the estuary. Hong Kong is
also good, because nature has arranged sea currents to do the sweeping job for us, 24 hours a day, and 365 days a year. When Yantian is fully developed to its capacity, all the additional logistics throughput of the Pearl River Delta, and indeed those of the entire Pan-Pearl River Delta region, will rush to Hong Kong, and at a growth rate much higher than 10.5 per cent. If we have the foresight to allot land on Lantau Island to accommodate this development, we will be able to restore the glory of the old Hong Kong port and take it to another new height.

hkskyline

November 13th, 2004, 02:22 AM

Managing ships for investors ; just not adventurous anymore
13 November 2004
South China Morning Post

Watching container ships loading and unloading around the harbour, it's hard to believe most pause here for only six hours before moving on to the next port.

Tight turnaround schedules are just one of the challenges facing Anglo-Eastern Group, which has 95 ships operating under its management from Hong Kong. Keen observers can spot the vessels flying the company's small but distinctive blue flag.

That Hong Kong-based Anglo-Eastern is today one of the world's top five shipping management companies with 10 offices worldwide, owes much to evolving with the times.

Its eventful history began in 1966 when it was started by British entrepreneur Peter Nash.

After two decades running what became one of Hong Kong's leading ship brokerages, the late Nash added ship owning and management to its activities.

A chain of events in the 1980s saw the firm pass into the hands of Belgian shippers CMB. They bought into Anglo-Eastern's ship management arm in 1985 "because it was doing very well and Peter Nash was so successful and good at making money", said Anglo-Eastern chief executive Peter Cremers.

The Belgians were Asia novices, he added, and were fortunate that Nash, a legendary figure in shipping, showed them the ropes and helped them make Japanese and Hong Kong business contacts. After a management buyout in the late 1990s, the Belgian team has kept control ever since.

The basic premise of ship management was simple: a ship needed an owner, then work and a charter, Mr Cremers said. "Then its operation must be managed, from a supply of officers to maintenance and making sure she operates within the legal requirements."

Shipping has changed dramatically in the past two decades, especially regarding pollution and security rules, he added. Environmental disasters at sea such as the Exxon Valdez tanker have led to tighter operating restrictions.

"What's different is the way the world expects ships to be run, it gets harder every day just to operate within the new laws," he said. "The obligations of the ship's officers have become a major headache."

Crew are not even allowed off the ship to go into port. In Europe a tanker will discharge its cargo at sea, 25 miles from Rotterdam, Mr Cremers said. "The adventure has gone out of shipping."

This had made recruitment difficult, and now most of Anglo-Eastern's 8,000 seafaring staff are from India, with some Chinese, Filipino and eastern Europeans. "In India a seafaring career is still held in high regard," Mr Cremers said. Anglo-Eastern employs 145 people in Hong Kong and has 160 ships under management worldwide.

Ironically, the stricter legal requirements and tougher economic conditions have left modern shipowners with little choice but to employ managers such as Anglo-Eastern.

Today's owners are likely to be a pension fund or a bank. "They don't know how it's run, they are only investors. Even traditional shipowners who know how to make money with their ships want to use managers," said Mr Cremers.

"This company does everything for a ship owner at a cost plus fee. The commercial added value is retained by the owner, but the day-to-day business of making it work is done by us."

Anglo-Eastern was also on hand to assist those owners who needed to diversify; the ones who knew tankers but nothing about containers, for example, he added.

Anglo-Eastern manages gas and oil tankers, containers, dry cargo and ships of any size. "So an owner can buy our operational and technical expertise to help with whatever he needs."

At the time of the management buyout, Mr Cremers and his colleagues were managing 40 ships for a handful of clients.

Now they have 20 clients, including several with only five or six ships. A total of 30 are Japanese owned. Their three biggest clients are Canadian company Fednav, with 22 ships - ice-breakers which ply the Great Lakes in Canada. "Then there is CP [Canadian Pacific Ships] for whom we manage containers, and Dockwise, a Dutch company which specialises in heavy lift."

Their competition was more from the world's leading ship management centres in Cyprus, Singapore, Glasgow and Hong Kong than from individual companies, Mr Cremers said. Worldwide there were about 10 serious ship management companies, he added.

These days Anglo-Eastern takes a somewhat different view to the other players. "We have split the world into fleets of certain kinds of ships rather than by owners," Mr Cremers said. They manage dry cargo from Hong Kong and oil tankers from Singapore. "If an owner gives us a container ship it joins the 45 container ships in Hong Kong. The ship is managed by a team that knows that particular type of ship like no other."

In Glasgow, Anglo-Eastern specialises in liquefied gas and heavy lift.

So after decades of giving shipowners what they need, does Mr Cremers still enjoy the business? He shakes his head. "Because of the new regulations and restrictions it's no fun anymore. For me, the glamour has gone from shipping."

hkskyline

November 13th, 2004, 05:27 AM

November 15, 2004
Hong Kong debates tenth terminal
Lloyd's List
Sam Chambers in Hong Kong

ON ANY given day, passing the packed Kwai Chung Container Terminals in Hong Kong, observers will have noted more than just a few quay cranes inoperative. This comes as the port nailed surprise double digit growth for many months this year.

Now that Hong Kong's largest container terminal, its brand new ninth one, is up and running on Tsing Yi island, debate has turned to whether or not a tenth terminal is needed.

Chief executive Tung Chee-hwa is in favour of the development as early as 2011 - likely to be away from Kwai Chung and on the territory's largest island, Lantau, near the proposed bridge linking Macau and Zhuhai on the western side of the Pearl River Delta.

The government has spent US$ 1m on a MasterPlan 2020 report on the future of the port, the world's busiest container hub, the details of which have yet to be released. Opinion is divided on the need for further terminal development.

The 5.5m teu CT9 with six berths, jointly operated by Modern Terminals and Hongkong International Terminals, is currently only operating at 70% capacity.

CT8 West meanwhile, run by the consortium Asia Container Terminals, has currently no business, and CSX World Terminals' Terminal Three is scrabbling around for business following the defection of its two main customers, Maersk Sealand and Hanjin.

All this comes on top of the simple fact that growth out of the port of Shenzhen shows no sign of slowing.

This unused berth space comes at a time when more and more Shenzhen berths are coming onstream. In the last 20 months Yantian has opened four new berths, while four more have opened at Chiwan and Shekou, with another four to open soon.

In the first nine months of this year Shenzhen's throughput jumped 29% to 9.87m teu. Shippers prefer Shenzhen for its cost and because lines are moving nearer to the clients' preferred cargo base.

Shenzhen has also submitted plans to the central government for a Phase III-B development at Yantian and a new port at Dachan Bay, where Modern Terminals will have an interest, potentially adding another 12 berths.

Moreover, near Guangzhou, the port of Nansha is taking off with both Cosco and China Shipping calling there this autumn.

To fill the berths, the terminal operators in Hong Kong have reduced fees for river trade and transshipment with the surprise result that the former jumped 52% in the first half to 1.03m teu and the latter will likely hit 3.2m teu this year, up 60% year on year.

That will give Kwai Chung, which accounts for about 63% of the port's throughput, growth of 9.6% in the first nine months.

Three quarters of Hong Kong's throughput is connected to the South China region. While Hong Kong has grown at an average of 7% since 1992, with 20.4m teu shifted last year, the three terminals in Shenzhen - Yantian, Shekou, and Chiwan - have zoomed up at 40% a year moving 10.6m teu last year.

The Pearl River delta accounts for 40% of China's manufactured exports. Over the past seven years, Hong Kong's share of ocean-going cargo in south China has dropped from 91% to about 60% in the first nine months this year.

This is unsurprising when looking at the costs of moving boxes through the ports. According to an in depth report compiled by McKinsey and Co, it costs $ 295 more to move a feu from south China than through Yantian, one third of which is larger terminal charges and the rest is the higher trucking costs.

Reducing costs to capture cargo is not, many believe, a recipe for further container terminal development.

hkskyline

November 13th, 2004, 08:23 AM

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hkskyline

November 13th, 2004, 10:14 AM

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Defining logistics industry parameters

Raymond Fan, Deputy Secretary for Economic Development and Labour (Economic Development) - Ports, Maritime and Logistics Development, speaking under his hat as Logistics Development Council (LOGSCOUNCIL) Secretary, said of the Council's mandate: "We want people to understand why Hong Kong is the preferred logistics hub. "

It's been a year-and-a-half since Fan returned to Hong Kong from a government posting in New York, and plunging into the thick of things in Hong Kong's logistics development and the formulation of policies and setting up of management bodies. Today, Fan is not only steering the LDC, but is also Secretary of the Maritime Industry Council and Port Development Council-the two bodies that replaced the Port & Maritime Board which he headed when he first arrived back in Hong Kong.

But before going into detail on the tasks of the LOGSCOUNCIL working groups, Fan took the time to bring attention to the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the Mainland and its unparalleled benefits for Hong Kong's logistics industry.

Last July, LOGSCOUNCIL Chairman Stephen Ip, Secretary for Economic Development and Labour said: "LOGSCOUNCIL welcomes CEPA as it will bring enormous business opportunities to Hong Kong, facilitate our economic recovery, boost investment between the Mainland and Hong Kong, and help improve the local employment situation."

Ip pointed out: "With effect from 1 January 2004, Hong Kong companies providing logistics, storage and warehousing, freight forwarding, road freight transport and maritime transport services will be allowed under CEPA to set up wholly-owned enterprises to operate business in these sectors in the Mainland. These offers will allow Hong Kong companies greater flexibility and business opportunities in the Mainland. To ensure that we can reap the full benefits of the CEPA offers, we are soliciting the views of the industry through LOGSCOUNCIL, and will take them into account in discussing the implementation details with the Mainland authorities."

But what should be emphasised about CEPA's offerings on Hong Kong logistics and transportation companies is that, aside from the fact that Hong Kong companies would get a two-year headway, ahead of WTO market liberalisation, under CEPA Hong Kong companies get the advantage of setting up wholly owned companies. WTO rules allow only joint ventures and not until 2007 will wholly owned companies be allowed. "CEPA will allow Hong Kong companies access to the Mainland market earlier than the others who will get that chance with China's accession to the WTO. But what is such a great opportunity for Hong Kong is the fact that under CEPA, the Hong Kong logistics services provider can go in and form a wholly owned company, compared to a joint venture partnership allowed after WTO entry. Bona fide Hong Kong companies will be able to go into the Mainland and form wholly owned logistics, freight forwarding, transportation service provider companies," Fan points out. "There are 18 service sectors under CEPA and four are actually under us-logistics services, freight forwarding, storage and warehousing, transportation (freight)-subdivided into land and sea (maritime)."

Fan explains the mechanics of getting CEPA eligibility. "Hong Kong companies are getting a lot more under CEPA. Once the Hong Kong company satisfies the conditions set out in CEPA, the company will receive the HKSS certificate, or Hong Kong Service Suppliers Certificate. The details are being worked out now, but basically the necessary chop or HKSS certificate will be issued by the Trade & Industry department."

Similarly, Hong Kong-based multinational companies, if they qualify under CEPA as a Hong Kong service supplier, will be able to obtain a certificate that will allow the company to open and operate a wholly-owned logistics company in China.

LOGSCOUNCIL

The Logistics Development Council or LOGSCOUNCIL was set up in December 2001, with five Project Groups under it to develop and implement work programmes in their respective priority areas to facilitate Hong Kong's logistics development.

"The LOGSCOUNCIL is doing a great job to showcase Hong Kong as a preferred logistics hub. Our task is to make people understand why Hong Kong is the preferred logistics hub. Logistics is expanding very quickly, air cargo is strong and the port is not doing too badly despite competition from neighbouring ports," said Fan.

"The LDC is working on a number of initiatives. The P-Group on physical infrastructure is working on cross boundary issues mostly. One of the factors affecting Hong Kong's competitiveness is cost. And an important component of the cost differential is trucking cost, necessary to bring down cargo from the north to Hong Kong, passing through the boundary and on to Kwai Chung. The smoother the clearance at the boundary and shorter the time, the lower the cost," said Fan.

Significant improvements have been achieved in ensuring a seamless freight flow across the boundary, with 97% of northbound freight vehicles and 84% of the southbound ones able to cross the boundary within one hour. Major cross boundary transport infrastructure projects are at different stages of planning and construction.

"The P Group has been working cross boundary issues mostly. In April, when we surveyed cross boundary activities, we found that 90% of trucks that go through the boundary points each day can now pass through within one hour compared to about three to fours hours previously. And this is what has been achieved through cooperation between the Hong Kong side and the Mainland side. Major improvements have been made on cross boundary clearance. But that is not enough. Currently, about 13,000 truck crossings are handled daily at the Lok Ma Chau boundary. So what we want to do there is increase capacity with more kiosks, 24-hour operations, and so on. The major restraint is that there only one bridge, so we're building another one next to it that we are calling the second Lok Ma Chau Bridge. While it will have the same capacity as the current one, it will, however, be dedicated to freight only. By this time next year, in 12 months' time, second bridge will be operational," said Fan. The building of the bridge will be a cooperation between both sides of the border.

Meanwhile, there is the even grander project called the Shenzhen Western Corridor which is scheduled to be built by end 2005. Its capacity of handling up to 80,000 crossings a day is double the current capacity of some 33,000 or 34,000 crossings daily via Lok Ma Chau, Sha Tau Kok and Man Kam To cross boundary points.

"The travel volume at Hong Kong's boundary crossings is actually 1.4 times that of US-Canada borders daily. We have the busiest crossing points in the world. The Shenzhen Western Corridor will be able to handle 80,000 of these at its six lanes-three up and three down-5km-long bridge," Fan points out. "Moreover, the corridor would operate on a new system called 'co-location' which means having the two sides' border control points in ONE location, under one building, on the Shenzhen side where they have more land," said Fan. The present system, at Lok Ma Chau, for example, you exit Hong Kong immigration, go over the bridge and enter China through their immigration and Customs checkpoints. "In co-location, we see the two clearances in one place, in one building."

The Hong Kong-Shenzhen Western Corridor has been called a landmark in the Pearl River Delta, a symbol of partnership between the two regions. In August, the Secretary for the Environment, Transport and Works, Dr Sarah Liao, officiated at the contract signing ceremony with Gammon-Skanska-MBEC Joint Venture for construction of the 3.2-km Hong Kong section of the corridor.

The Shenzhen-Western Corridor will be the fourth cross-boundary road between Hong Kong and Shenzhen. The Hong Kong section is costing HK$2.2bn. It has been estimated that the net economic benefit of the Corridor will be HK$175bn over the 20 year planning horizon from 2000 to 2020.

The two bridges will span the future navigation channels for marine access to inner Deep Bay and the Shenzhen River. Construction of the Hong Kong Section, together with local road connections, is targeted for completion by the end of 2005.

The 5-km long corridor with dual three-lane expressway will span Deep Bay on elevated structures. Just over 3km of the corridor are in Hong Kong waters. The remaining 1.8-km will be built by the Shenzhen government.

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Kwai Chung container terminals handled 8.99mn TEU in Jan-Sept 2003, while the entire port's throughput for Jan-Jul 03 was 11.5mn TEU. In 2002, the Hong Kong port was the busiest in the world, handling a total of 19.14mn TEU.

Logistics Park

The P-Group has also been discussing the planning parameters for the development of a Value Added Logistics Park. The Port & Maritime Boardhad commissioned the McClier Team to define a Competitive Strategy and Master Plan to strengthen Hong Kong's role as the preferred international and regional transportation and logistics hub. The study led to a plan that defined both initiative target projects to be implemented over a five-year period as well as projects to be implemented over a shorter phase to gain immediate benefit from the overall strategy. One of these projects was the establishment of Value Added Logistics Parks.

"We were looking for a location in north Lantau that would be available for the private sector to develop. After we first looked at this north Lantau site about a year ago, there was a plan that involved building a third big bridge-that is, the Hong Kong-Macau-Zhuhai Bridge," explains Fan. "When we were initially looking at the north Lantau site for the logistics park, there was no linkage. For example, if the route of the cargo was from Shenzhen to the container port, you would have to make a side trip to north Lantau to do some value addition to the cargo. It didn't seem very viable, except for the fact that the north Lantau site is right next to the airport. So it would predominantly be helping the airside."

But this has now changed, with the added concept of a Hong Kong-Macau-Zhuhai bridge. "With the bridge ending in Lantau, the value added logistics park site would certainly be on the route. There's no need to detour and return for the cargo on the way to the container terminal. So now we're working out the planning parameters, with the industry. We will find out what type of facilities and services they expect at the logistics park," said Fan. The piece of land being earmarked for the logistics park is water at the moment and still has to go through feasibility studies, including environmental, and it would take a few years. "But land is so scarce in Hong Kong that it has to be earmarked or else it would disappear," he explained.

DTTN

Another McClier Report recommendation was the creation of a "Digital Trade and Transportation Network" (DTTN) to reduce inefficiencies arising from the "digital gap" and to facilitate data sharing among the trade and logistics industry stakeholders. The DTTN implementation was subsequently identified as one of the top priority initiatives of the Government. PMB's Port, Maritime and Logistics Development Unit (PMLDU) commissioned a study to determine and recommend the options for developing the DTTN program that would enhance and facilitate data sharing and exchange amongst the existing and new communities in the supply chain industry.

From the study, a functional and technical blueprint of the DTTN was developed, and recommends the standards and protocols to be supported by the DTTN, estimates the baseline cost to develop and operate the DTTN, and determines options for the ownership, management and governance structures of the DTTN. Based on these, the E-Group received three proposals from the industry last April, from which they eventually chose one company, Tradelink, that was the most compliant to the requirements of setting up a digital network.

"We did a DTTN study and drew up a blueprint based on it. There were some guiding principles established but one thing we found out was that, if we wanted to build from scratch, it would take too long and would be too expensive. So Government and industry came to an understanding that we should find a way to jumpstart the system. We asked existing service providers in the industry to look at the blueprint and invited proposals. We received three by end of April. After studying the proposals, the E-Group identified the one nearest to the blueprint we had drawn up, which is Tradelink. And then the LOGSCOUNCIL endorsed the choice and with the agreement of LEGCO, we had the go-ahead to embark on serious discussions with that proponent to take the subject further. We want to see results in a year or two. After the discussions, we need to start developing the system that will be non-exclusive and transparent," explained Fan.

"One important thing about this system is that it would NOT be compulsory. It would be there for people to use only if needed, unlike some systems used in ports in other parts of the world. DTTN will serve as a platform, an environment, that we hope would cover all the logistical bases. It is technically possible but institutionally challenging. Everyone would have their own ideas on how the system should work, and so on, but we're making good progress," Fan described. He said the Government will have no financial input on DTTN and will leave it up to the private sector to develop.

S-Group

The S-Group is dedicated primarily to making SMEs better embrace the concept of logistics. "Some 95% of logistics enterprises in Hong Kong are SMEs. We look into areas where we could offer them support, like upgrading their IT. But more importantly, we want to lift up their logistics knowledge. With this aim, the S-Group has been concentrating on designing courses for training SMEs. There are many training courses out there but some may be too general, and some may be just introductory," explained Fan.

"The S-Group feels strongly that more specific, tailormade courses should be devised in order to broaden SME's knowledge of the business. SMEs represented on the LOGSCOUNCIL were invited to give their input, on which the S-Group based the design of the curriculum. The Polytechnic University was asked to provide a course for executives in SMEs, and the Hong Kong Productivity Council designed and runs a course on warehousing for frontline staff. These are two pilot courses that we hope would prove to be effective and we will continue to work on designing more training courses for SMEs," said Fan.

H-Group

The H-Group on Human Resources looks at logistics manpower requirements, and primarily aims at raising the standards of logistics professionals and awareness among academic institutes. "On professionalism, the H-Group sets up meetings with CEOs and works alongside the Hong Kong Logistics Association and Chartered Institute for Transport and Logistics. The CITL belongs to a worldwide organisation that grants professional accreditation and organises examinations for professional levels that are accredited internationally," described Fan.

Another H-Group project is reaching out to universities and secondary schools where it is felt logistics should have a broader base. "Logistics related degrees are being offered at universities now. But we want logistics to be more than just limited study in secondary schools. We want to expand that and to introduce the concept of logistics to principals and senior teachers so that they would start including it in the curriculum," Fan said.

"The H-Group organises roadshows to schools, attracting about 200-300 students. A CEO in the logistics field comes along to tell them of his company's business and basically inform students of what logistics is all about. And we're not just aiming at students. We're aiming at raising awareness on the subject with parents. Parents sometimes do not really understand what logistics is and they may view it simplistically as being transportation and the movement of goods, like manual labour," said Fan.

"We want them to know what a viable career can be made in the logistics field. The industry provides a range of jobs from the very fundamental ones like moving boxes to high-tech IT designers for logistical systems."

"Courses are offered at the University of Science and Technology, Polytechnic University, and so on. But message is you do not have to specialise on a logistics degree to be in the industry. Logistics is a kind of collection of economic activities, and even if you studied accounting or law, for instance, there are jobs and careers to be made in logistics." The logistics and transportation sector altogether provides 200,000 jobs. "And they are always on the lookout for people. The industry is expanding, that's why the H-Group is going out there and letting people know that it's a good career to go into early on in the game."

Promotions

The M-Group deals in marketing and promotions, and their task is three-fold: international promotions to go out and let people know why Hong Kong is a great logistics hub; local promotions; and thirdly, to spread the word in Mainland China.

"Next May, we are putting together here, with the help of the Informa Group, the first ever logistics conference called 'Hong Kong Logistics' to showcase Hong Kong internationally as the preferred logistics hub," said Fan.

"We are also aiming at the Mainland where there is a great need for logistics. We want to inform them that Hong Kong's logistics service providers are top-rate. One of the projects we are involved in is the Hong Kong Trade Development Council's Hong Kong Logistics Services Expo in Guangzhou. The first one was held in December last year and it was extremely successful, so we are collaborating again for the second show which is on March 3-5, 2004 at the Chinese Export Commodities Fairground, Guangzhou."

It's been a busy year-and-a-half for logistics in Hong Kong. "We have the busiest airport. We have a very, very strong port moving sea cargo. I think that is proof enough that we are the 'preferred' logistics hub," said Fan.

by Gina-Giron-Urquiola

hkskyline

November 13th, 2004, 07:59 PM

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hkskyline

November 14th, 2004, 05:37 AM

Hong Kong port: Dealing with the issues

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Shippers Today, Vol.27 #3, May/Jun 2004
Gina Giron-Urquiola

The Hong Kong port has been around for over a hundred years, established as an entrepot for China.

"We've been in the logistics business for decades," says one of the original founders of the port at Kwai Chung, John Meredith, Group Managing Director of Hutchison Port Holdings. But even if he's been in the business for over 30 years and has successfully taken Hong Kong port-entrepreneurial skills to 15 countries globally, Meredith claims he cannot tell you if Hong Kong is going the way that other, formerly busy ports like London, San Francisco or Venice have gone. "I don't even know what the traffic for [HIT] would be like next month, or even for this month."

"I used to work in London and the port has been there since 1066. It isn't going to change, I was told," said Meredith. But now all the cargo is going out half way up the coast, through Felixstowe, and the former London port is mostly real estate. "There's a shorter distance for the cargo to travel today, than trucking it down to London. The same with San Francisco. The Mayor was desperate to get the containers back to San Francisco port, but they're now all going to Los Angeles. Venice was a huge trading port at one time, too."

Ten years ago, shippers had no choice but to ship through Hong Kong. Now there are more options, between the Shenzhen ports and the Hong Kong port. "A lot of costs have come down substantially. Take haulage costs; ten years ago, it cost more than $3,000 for a container to be brought from Dongguan to Hong Kong. Today, it will only cost $2,300, and if you choose to ship through a Shenzhen port, the haulage would be only $1,100 to $1,300," says Sunny Ho, Executive Director, Hong Kong Shippers' Council.

"There has also been substantial improvement in overall efficiency. Ten years ago, a truck would have to cue up for 10 to 18 hours at the boundary. But now, according to a government survey, 90% of the trucks crossing the boundary daily can go through within one hour. There are further improvements in the offing, such as the new, parallel bridge at Lok Ma Chau, dedicated to freight, that is scheduled to be completed this year. And by end-2005, there will be the Shenzhen Western Corridor with the capacity of handling 80,000 crossings daily, nearly triple the current combined capacity of 33,000 through Lok Ma Chau, Sha Tau Kok and Man Kam To cross boundary points."

"Hong Kong is fortunate enough already to maintain its current throughput"

"So we can see that in the future, productivity will be further enhanced and hence, there'll be further room for cost cutting," says Ho. "Shippers would naturally go for the cheapest services. But when talking about shipping out from the Pearl River Delta (PRD) where most of the production is, it is not all cost that we are looking at but reliability as well, along with other factors like legal and financial services. These are important in cargo handling, such as whether we get the bill of lading immediately after the ship has sailed or which terminals offer the best flexibility and conveniences. We can see that in the future there will be continued competition between the Shenzhen ports and the Hong Kong port. All of which gives shippers more options."

Alfred Lo of P&O Nedlloyd, says: "Hong Kong is fortunate enough already to maintain its current throughput. Particularly if you consider that there is hardly any manufacturing done here. All goods are made in the Pearl River Delta.

"In the past, all the cargo had to go through Hong Kong, despite high costs, cargo congestion, border crossing problems, mainly because there were much more ship calls here than in southern China. And then there were the problems over there of Customs and missing ship calls and having to wait for a week for the next sailing. But things have changed. Customers in Europe and in America understand now that shipping out their goods from Shenzhen is not all that bad. They realise that they don't necessarily have to go through Hong Kong," says Lo.

Embattled port

Erik Bogh Christensen, Managing Director of Modern Terminals, says: "In the past two years we [Hong Kong port] have been struggling with competitiveness against the Shenzhen ports. The over-riding factor is the cost of trucking the goods to Hong Kong. We are a little bit further away from the factories but that's not really the main issue because we are not that far away from some manufacturing places in the PRD. The issue is that the containers moving into Hong Kong by truck can only move through inefficient border crossings. Moreover, Hong Kong truckers have very different cost structure than local (Mainland) truckers and although they are better, more efficient and safer, they cost more. So the [Hong Kong trucking] industry is up against the local, rather primitive trucking across the border. This just basically means it is cheaper for shippers to move cargo out by truck out of the factories in the PRD to either Shekou or Yantian. And this is really our single largest disadvantage for Hong Kong. The cost difference to truck it to Hong Kong is actually US$200 per 40ft container, quite big," says EBC.

"The other disadvantage is the difference between the THC charged by shipping lines in Hong Kong and in the Shenzhen ports which is about US$100. But this is a commercial issue and there are other factors. Now shipping lines have found that they can manage to get a good THC in Hong Kong and have managed to get a consensus not to discount on that. Shipping lines have an additional income in THC over what they pay to the terminals. Originally, it was much cheaper for shipping lines to go to terminals in Shenzhen than to Hong Kong but the difference has narrowed or has been eliminated. So this is not as big a disadvantage as trucking.

"On the other hand, barging is different. The transport differential is very minimal and that is the reason why barge traffic into Hong Kong is increasing very nicely,"says Christensen.

"We have to find ways to regulate these costs. I think it can be done because if it can be made very efficient maybe truckers can make up to three trips per day. The unit cost will go down, but that means having to drive during the night and that could affect the drivers' physical well being. The trucking industry is a very fragmented industry. They are made up of many small companies. They are allowed to go into China but they have to buy the number plate which is very expensive, plus the fuel is much more expensive in Hong Kong," says Christensen.

Alan Lee, Chairman of the Hong Kong Container Terminal Operators Association and former head of the CSX Hong Kong terminal, agrees that connectivity between the vast manufacturing arena in the PRD and the Hong Kong port needs improvement. "We are trying to make crossborder more fluid. Truckers can only get about 1.2 containers average carriage per day, and we are really talking about at least 3. To do that requires a lot of work between the Chinese authority and Hong Kong authority."

Shippers would opt to take cargo from, say, Dongguan to Yantian instead of Hong Kong for two reasons, comments Lee. "One is the THC difference and the other is crossborder trucking cost differentials. THC difference is about US$100 for a 40" container and for trucking, the difference is about US$200 average. So that is about $300 difference on the cost of trucking that same container from Dongguan to Yantian versus from Dongguan to Hong Kong. That is why the growth of container throughput at Shenzhen was about 40% last year, while at Hong Kong it was about one-and-a-half percent. "

To try and reduce the differentials, says Lee, the shippers, consignees, shipping companies, trucking companies must work together with the Chinese authority. "The other side is very aware of this problem but there may be some resentment. Because by making the crossborder more fluid, that means more cargo would be coming to Hong Kong and less cargo going to Yantian, Chiwan and Shekou. I'm sure the Shenzhen authority would take issue with that and would not like to see that happen. But it is something that the two authorities, from Hong Kong and from Shenzhen, have to talk about. But Hong Kong will always be facing competition because Shenzhen is where the cargo is," says Lee.

"Of course, the shipper will look at the cost of shipping out the goods. But on the other hand, you don't get the facilities that we have in Hong Kong for reliability of the vessels, and for quicker Customs clearance which is one thing they don't have in China. In Hong Kong, if you miss one vessel on Tuesday, you get it the next day whereas in China, it may not be so flexible. The shipping lines actually prefer to operate in Hong Kong. Some find it cheaper to operate here than in China and they collect higher THC here. There are other cost factors like the pilotage which is not so expensive in Hong Kong. Actually, I've been told by shipping lines that it costs them more to operate the same vessel in China versus Hong Kong," says Lee.

Stanley Shen of OOCL says it would cost shipping companies more in China when there is congestion at any of the Shenzhen ports and there could be up to an 8-hour wait for berthing.

Alfred Lo of P&O Nedlloyd, says: "Over the last year, 2003, and this year, I can honestly say that Shenzhen ports have been operating smoothly, no congestion problems. Maybe in 2002, there were some problems at YICT. But it never was a problem for us. Occasionally there may be typhoons, but just like Hong Kong. YICT has increased capacity quite a lot, with the opening of more berths."

Lo says that customers in the US and Europe are now realizing there are less problems to get their goods out of Yantian or Shekou ports, and more favourable even since the ports are closer to the cargo source.

"So now many shipping lines have been increasing their calls, particularly for Europe and America, and the gap on the frequency of calls between Hong Kong and Shenzhen has been narrowing increasingly. There are now more frequencies over at Shenzhen ports and there has been considerable improvement in Customs. And if your cargo misses a ship call, then the wait would only be one or two days for the next one, not a week as in the past. So with these improvements, the shipper will question if it is worth paying the additional trucking costs for bringing the goods to Hong Kong," Lo says.

According to the Government-commissioned Master Plan 2020, trucking costs and high THC in Hong Kong are the two problems that must be resolved in ordered to see containers return in numbers to the Hong Kong port.

Alan Lee believes that equalizing the THC in Shenzhen and Hong Kong may bring more cargo back to Hong Kong. "There's a difference of $100 between the THC collected from shippers in Hong Kong and in Shenzhen. This is not collected by the terminals but by the shipping lines that are collecting a higher THC in Hong Kong versus in Shenzhen. In order to make Hong Kong more competitive, so that we have more cargo coming to Hong Kong, the THC in Hong Kong must be reduced or the increased in China. I'm not saying that by making them equal ensures cargo coming to Hong Kong but at least you reduce one hurdle. A reduction in Hong Kong would be big savings for shippers. But changing the THC in China is not market driven where you have the Ministry of Communications to answer to, and raising it means putting the money into the shipping lines' pocket. "

Shen of OOCL, says: "Twenty years ago, freight rates were at the $4,000 level for a 40ft container. Since then, there have been fluctuations and THC has served a cushion for the decline in freight rates."

"When we talk about the competitiveness of the Hong Kong port, it's not the competitiveness of the shipping lines we refer to," says Meredith. "They will charge whatever they want to and Hong Kong can do absolutely nothing about it. If the shipping lines want to go up to China and because the cargo moves from out there, then they can do whatever they want."

Lo says, "The higher THC in Hong Kong is because the terminals here still charge much higher than the terminals in Shenzhen. And it's a fact that there's still a huge difference between the THC in Hong Kong and ports across the border like Shekou and Chiwan. So I cannot imagine people in the shipping business not finding Shenzhen calls more economical." P&O Nedlloyd calls 16 times a week to Yantian and Shekou.

"But we also cannot deny the fact that even if THC in Hong Kong has been high, maybe even the highest in the world, Hong Kong's exports have likewise been very, very good. Just take a look at trade figures five years ago," says Lo.

"The good news is that the total production market is growing very nicely," says Christensen of MTL, referring to the continuous upward growth of manufacturing activities in the PRD. "The cake is growing everyday. It's been two or three years now that we've been struggling with lower throughput growth at the Hong Kong port but our costs have come down. The deflation in the Hong Kong economy during the last seven years has helped us, with property costs down, salaries realigned, and organizations made more efficient. While we have these infrastructure disadvantages at present, there are plans for infrastructure that alleviate the pressure in the future, such as the Western Corridor. The Hong Kong government, together with the shipping industry, is doing a lot and the market is growing nicely. We may have 2-3 years where we are hanging in there and we won't be seeing much growth but looking over a 10-year period, it is not going to be a problem then."

It is useless to talk about CT10 now, because we are just finishing CT9 which is an additional 4mn TEU, increasing the capacity we have now by 25%...

Building new container terminals

If the improvements in infrastructure bring the cargo back to the Hong Kong port, then it stands to reason that planning for new container terminals should also be started.

"Building more terminals, more berths will mean cheaper operations, less congestion," says Lee of the HKCTOA. "But I think we have to be very careful not to build a white elephant-that's not really to the best benefit of Hong Kong. We've got 24 berths today when you counter CT9. Last year, the container terminals handled only 12mn TEU and if there is say, a 1 or 2% increase this year, that would be 13mn TEUs meaning each berth will average only a little bit over 500,000 TEU, which is below capacity. Each berth can easily handle 800,000 TEU. Actually, each berth over the last three years could handle 1.1 or 1.2mn TEU. So now we need to increase throughput by 6% per year until 2012 so you could have 19.2mn TEU. If growth is 10%, then we'll need new facilities earlier than 2012. "

Meredith of HPH cautions that even though Hong Kong has upgraded the port in terms of growth requirement, there are lessons to be learned from other economies. "If we're building new terminals in the future on the basis of transshipment, well, all the transshipment are being handled up in China. You don't build facilities and expect the goods to come. First the factories are set up which produce the goods then the goods would need a way to get out so the port follows suit."

Capacity in Hong Kong at moment is more than sufficient, says Meredith. "You can spread your cargo to fill any capacity-instead of going up four-high [stacking boxes], you go up three-high. That way you fill the yard and make it look busy. Theoretically, capacity in Hong Kong at the moment is about 2mn containers but we're handling over 5mn. It's still the same yard area but we put in more systems and technology."

Capacity figures can be misleading and for this reason, sys Meredith, the Hutchison website does not list down capacity figures. There are some statisticians who are still using theoretical capacity of 300,000 containers per berth in Hong Kong. "We allot over a million per berth in Hong Kong, as well as in Yantian."

Chistensen says, "It is useless to talk about CT10 now, because we are just finishing CT9 which is an additional 4mn TEU, increasing the capacity we have now by 25%. So capacity is not an issue but connectivity to the PRD is. And when the problems have been resolved and 10 years is a good time, what the government is now doing is looking at where it would be a good place to build new container terminals if and when needed. Obviously, we would like to have it here [Tsing Yi] because you have the cluster effect with relation to CT9. The cluster effect is very important as it will attract business. What we know now, realistically, is that we don't need it on this side of 2012. But for some reason which we may not see at present, there could be 7% growth per annum in the coming years, then maybe we'll need it by 2010. I sort of agree with having CT10 in the 2012 to 2015 window. Looks reasonable. But we'll know better, have a good feel for it around 2008."

hkskyline

November 17th, 2004, 09:34 AM

Lloyd's List
November 16, 2004
Hutchison leading suitor in quest for CSX terminals
Sam Chambers in Hong Kong

THE deadline for bids for the global port portfolio of CSX World Terminals passed yesterday with Hutchison Port Holdings widely felt to be the leading candidate among seven suitors to take the American rail giant's terminal concessions.

CSX appointed Citigroup to oversee the sale of its box terminals following the defection of Hanjin and Maersk Sealand earlier this year from its premier facility at Terminal Three in Hong Kong's Kwai Chung Container Terminals.

The other parties looking to muscle in are Singapore's PSA Corp - which would dearly love to gain a foothold in its main rival, Hutchison's own backyard - Modern Terminals, Cosco Pacific, China Merchants, Macquarie Bank and property venture NWS Holdings. CSX ideally wants to offload all its terminals across four continents in one go to a single bidder, and is pushing for a billion dollars plus.

In the event that three bidders come in at around $ 900m each, it is likely that there will be a rebid to pump up the tender, Lloyd's List understands. A winner is scheduled to be announced before the end of the year. Horsetrading among parties for individual facilities may already be taking place.

The physical value of the CSX terminals is only worth about $ 500m, says one source connected to the deal, but it is the strategic value of Hong Kong that will see this figure double. Not only does CSX have a berth at Terminal Three but is also the lead shareholder in two terminals at CT8 West.

scorpion

November 17th, 2004, 10:48 AM

HERE's the irony, from today's SCMP:

Container cargo volumes surge 22%

Hong Kong port’s main terminal operators reported cargo container volumes had surged 22% year on year, boosted by peak season shipping boom and pricing strategies, according to the South China Morning Post.

:eek2:

hkskyline

November 17th, 2004, 10:16 PM

South China Morning Post
November 17, 2004

Five left in fight for CSX assets Strategic battle for US company's HK operations may see winning bid skyrocket above book value
Russell Barling

At least five firms stayed in the running yesterday to acquire the global port assets of the United States rail giant CSX Corp, which includes stakes in three berths in Hong Kong, according to industry sources.

Executives close to the deal confirmed that Hutchison Whampoa, Singapore's PSA Corp, the Wharf Group, China Merchants and NWS Holdings all submitted bids for the ports network, directly or through subsidiaries, by deadline - the close of business US east coast time yesterday.

As all the parties were bound by CSX to non-disclosure contracts, none would officially comment. But, privately, several expressed concern that the battle for the Hong Kong assets would inflate the winning bid for the global network far beyond its book value.

"Stripped down to a pure valuation, the assets on the block are probably worth US$ 400 million to US$ 500 million. But then you have to factor in the strategic value of the Hong Kong assets," said an executive who has appraised the assets. "If you're PSA Corp, how much would you pay to get a meaningful foothold in the Hong Kong market? And if you're Hutch, how much would you pay to keep PSA out?"

Hutchison and PSA Corp, the world's two biggest terminal operating firms, are seen as the frontrunners for the assets. It is thought Cosco Pacific and Macquarie Bank chose not to pursue a bid after being short-listed.

None of the firms which submitted a binding offer yesterday would say how much they bid. Non-binding offers - "meaningless numbers designed to get you to the data room", according to one executive - were said to be in the US$ 900 million to US$ 1.2 billion range.

At US$ 1.2 billion, a bid would represent 17.9 times this year's projected US$ 67 million earnings before interest, tax depreciation and amortisation (ebitda) for CSX World Terminals (CSXWT), a figure our appraiser viewed as "optimistic".

"That is the information Citigroup CSX's lead banker is providing," he said. "It is not an ebitda number that would hold up under accepted accounting practises."

CSXWT (Hong Kong), which generates more than 70 per cent of the group's terminal-related profit, lost half of its business this year when South Korea's Hanjin Shipping was lured away by Hutchison.

The contract for its No2 customer, Mfrsk Sealand, runs out at the end of the year. The loss of these two contracts would cost it an estimated US$ 49 million in earnings over the next two years.

Neither CSXWT nor Citigroup would comment yesterday.

However, previous media reports of a price tag of near US$ 1 billion had executives shaking their heads yesterday.

"I refuse to believe that anyone would double the value of assets for the sake of a high-stakes gamble," an executive whose firm remains in contention said. " The deal has to stand on its own merits. If that's not the case, we won't be in."

Another executive whose firm is in a similar position said: "We have tried to take advantage of the opportunity the disposal presents. But the bottom line is we have to be responsible to our shareholders."

The CSX assets include its effective 17 per cent stake in the Kwai Chung-based Asia Container Terminals (ACT), which owns and manages the two berths at CT8 West with NWS Holdings, Sun Hung Kai Properties and Hongkong Land.

PSA Corp last week upped the stakes in the perceived turf war with Hutchison by offering to pay Hongkong Land $ 600 million for its 28.5 per cent of ACT.

CSX's truncated 300-metre berth at CT3 is also on the block, as is its minority share in Asia Terminals, the massive warehousing and distribution complex attached to CT3 that the appraiser described as a "cash machine".

The two must be sold as a unit under the conditions of the tender.

Firms were also required to bid for the entire CSX network, prompting many to form partnerships. NWS Holdings has tied up with an unnamed shipping line, while Wharf subsidiary Modern Terminals is understood to have linked with APM Terminals, a subsidiary of Denmark's massive AP Moller-Mfrsk Group.

AP Moller sources in Copenhagen and The Hague, as well as local Wharf executives, declined to comment yesterday.

Of the assets on the block outside Hong Kong, terminals in Tianjin, Yantai, a greenfield site in Busan and CSX's venture in Venezuela are seen as the most valuable.

CSX included a contract to develop a greenfield site at Qingdao's new Qianwan port complex in the portfolio, but the appraiser said that was of little value.

"I might pay CSX's costs or throw them US$ 1 million," he said. "But I'm not going to listen to any figure based on earnings from a projected throughput of four million boxes ."

hkskyline

November 18th, 2004, 05:34 AM

Hong Kong Needs 10th Container Terminal By 2015 - Study
17 November 2004

HONG KONG (Dow Jones)--Hong Kong will need a new container terminal by 2015 to meet growing cargo demand or rival ports in southern China will draw even more business away from the city, a study commissioned by the Hong Kong government says.

The report by consultancy GHK (Hong Kong) forecast container traffic passing through the city will nearly double to 40.2 million 20-foot equivalent units, or TEUs, in 2020 from 20.4 million TEUs in 2003.

Based on this, GHK recommends a new container terminal with three berths be built by 2015, with another three berths completed by 2020.

Currently, Hong Kong's Kwai Chung Port has nine container terminals operating 22 berths.

The report suggests two possible sites to construct the 10th terminal: Tsing Yi Island, adjacent to Kwai Chung, and Lantau Island, which potentially offers a higher rate of return on the capital invested.

GHK said that regardless of whether a new port is built, Hong Kong - the world's busiest port - will face increased competition from rival ports in southern China, which currently charge shippers much less.

For instance, handling charges for a standard container shipped through Hong Kong are US$333 higher than in mainland China ports.

Over 90% of all cargo handled in Hong Kong originates from mainland China. To cut transporting the cargo to Hong Kong in the short run, the study recommends measures to raise efficiency in trucking movements, and for Hong Kong and Chinese authorities to review licensing and registration fees.

An implementation program for the city's port policy will be finalized following a public consultation conducted by Hong Kong's legislature by the end of February 2005.

hkskyline

November 19th, 2004, 01:21 AM

SHKP deal shuts out Singapore port hopes
Developer's bid for stake in terminals operator thwarts PSA's aggressive move for maritime foothold in Hong Kong
Russell Barling and Nichole Chan
19 November 2004
South China Morning Post

Hong Kong Inc has rallied to stave off Singapore's aggressive bid to secure its first foothold in the port, with Sun Hung Kai Properties set to double its stake in Asia Container Terminals (ACT).

Hong Kong's biggest property developer trumped PSA International's $685 million offer for Hongkong Land Holdings' 28.5 per cent stake in ACT in a move expected to give the blue-chip company a majority share in the consortium that owns Container Terminal 8 in Kwai Chung.

"[Sun Hung Kai's] bid has definitely been selected, but the contract signing is pending," an ACT shareholder source said yesterday.

A statement announcing a deal was expected "in a few days", said another source close to the deal.

Sun Hung Kai appears to be on the verge of paying an extraordinary premium to stop Singapore's state-owned port operator from establishing itself in Hong Kong.

Sun Hung Kai is believed to have marginally increased the bid put forward by PSA. It will also assume Hongkong Land's share of ACT's $3 billion debt, putting the full price at $1.5 billion.

In November 2001, CSX World Terminals (Hong Kong) paid $242.3 million for convertible shares in ACT which increased its stake by 19.5 per cent. That acquisition valued ACT's 50-year concession at CT8 West at $1.24 billion.

Sun Hung Kai is now apparently willing to pay $1.5 billion for just 28.5 per cent of ACT, which has yet to sign its first customer.

It is estimated that Hongkong Land, an arm of the Jardine Matheson Group, will reap a profit of $200 million to $300 million from the deal.

PSA, the world's No2 port operator by volume, was thought to be willing to pay a high premium for the stake because it would have given the expansion-minded firm a strategic position in the world's biggest container port.

"It would have given them a nice foothold into the China market," one transport analyst said. "I'm sure they'll be very disappointed."

PSA declined to comment yesterday.

Sun Hung Kai was aided in its efforts to trump PSA's bid by ACT's contract, which stipulates existing shareholders have the right of first refusal. Outsiders are blocked if a fellow shareholder matches or betters their offer.

PSA is still in the running for a piece of Hong Kong's port as one of five bidders for CSX Corp's global port assets, which include an effective 17 per cent stake in ACT, 57 per cent in the company that runs CT3 and a minority stake in Asia Terminals, the world's biggest consolidation and distribution centre.

A decision on the CSX disposal is expected by the end of next month.

Sung Hung Kai's earlier attempt to be shortlisted for the CSX assets fell through when it was unwilling to bid for the entire portfolio, as stipulated by sale arranger Citigroup. "They had no interest going outside of Hong Kong," a source close to the bidding said yesterday.

hkskyline

November 19th, 2004, 06:58 AM

Sun Hung Kai seen winning bid for HK terminal stake-paper

HONG KONG, Nov 19 (Reuters) - Hong Kong developer Sun Hung Kai Properties (0016.HK) is set to double its stake in Asia Container Terminals (ACT), which owns Container Terminal 8 in Hong Kong's Kwai Chung, the South China Morning Post reported on Friday.

The paper, quoting a shareholder source with ACT, said Sun Hung Kai Properties' bid for Hongkong Land's 28.5 percent stake in ACT had been selected, pending signing of a contract.

An announcement is expected in a few days.

Sun Hung Kai Properties officials were not immediately available for comment.

It is estimated that Hongkong Land will reap a profit of HK$200 million (US$25.64 million) to HK$300 million from the deal.

The Hong Kong property group had trumped Singapore port operator PSA International's HK$685 million offer of the Hongkong Land's stake in ACT, the paper said, but it did not give a precise figure.

PSA is owned by state-investment agency Temasek Holdings Pte. Ltd..

Shares of Sun Hung Kai Properties were unchanged at HK$78 in early Friday trade, after gaining nearly 15 percent in the last three months.

hkskyline

November 21st, 2004, 08:03 AM

Hong Kong Harbor Operators Vie For CSX Assets
18 November 2004
(From THE ASIAN WALL STREET JOURNAL)
By Kate Linebaugh and Bruce Stanley

Hong Kong -- PORT OPERATORS and shipping companies are jostling to buy into Hong Kong's container terminals, demonstrating the value of the world's busiest port even in the face of rising competition from China.

Up for sale is a cluster of CSX Corp.'s port assets, from Venezuela to Australia to Shanghai, the crown jewels of which are stakes in two of Hong Kong's nine container terminals. Jockeying over the sale by the U.S. rail company has fanned regional rivalries among the world's biggest port operators and exposed one of this city's deepest insecurities: that its century-old role as the gateway to China is fading.

China's economic might and rapid reform program threaten Hong Kong on a number of fronts, from its position as Asia's financial capital, with the region's second-largest stock market, to its role as aviation hub, with an airport that handles more international cargo than any other in the world. As mainland ports near neighboring Shenzhen and further up the Chinese coast get bigger and more efficient, the dominance of Hong Kong's port is also under threat.

According to some bankers, CSX is seeking more than US$1 billion for its port assets, which include three Hong Kong berths. That price seems high to some people who have looked at the businesses, yet it appears that several contenders submitted final bids by this week's deadline.

Speculation that the winning bid will be hefty indicates that even as Hong Kong's port loses business to rivals in China, the city's natural deep harbor is still a big draw -- especially for potential buyers like Singapore's PSA Corp., which has long angled to
expand into China's southern industrial heartland, where rival Hutchison Whampoa Ltd. is dominant.

'The fact that so many people are bidding at high levels tells you that Hong Kong's not dead yet,' says Jonathan Beard, managing director at GHK (Hong Kong), a consultancy that prepared a study for the government on the outlook for Hong Kong's port.

The port -- one of the world's biggest, with 24 berths controlled by five operators -- is a cornerstone of Hong Kong, accounting for 4% of its economy and about 110,000 jobs. It has been steadily losing market share to rivals in southern China. Last year, Hong Kong handled 62% of the area's direct-ocean-cargo shipments compared with 96% in 1996, according to GHK's study, which predicts the decline in market share could continue over the next 15 years. Hong Kong's cargo throughput has grown by an annual average of 5.6% during the past five years, while Shenzhen's Yantian port has rocketed ahead at 46% per year.

That's partly because Hong Kong's rates are 12% higher than those for ports near Shenzhen. About two-thirds of the cost difference goes to the truckers who move
the goods. Even so, some exporters say the efficiency of Hong Kong's port and the number of ships that pass through -- nearly double that in Yantian -- keep it attractive.

'Although we are increasingly using Yantian in specific cases, at this point in time, Hong Kong still in general has the advantages of efficiency and economies of scale,' says Vincent Li, managing director of Extra Trading Co., a Hong Kong company that exports housewares and gifts to the U.S.

Preliminary government data show that container traffic at the main Hong Kong terminals increased by more than one-fifth in October from a year earlier, suggesting that 2004 will prove stronger than previous years. It is these numbers and the high profitability that are drawing bidders, analysts say.

'It's not a bad port from a cash-generation point of view, but it's not a growth port, longer term,' says Danie Schutte, an analyst at investment bank CLSA Asia-Pacific Markets.

PSA, which operates Singapore's port, confirmed it has bid. Hutchison, the world's largest port operator, widely expected to have bid, declined to comment. NWS
Holdings Ltd., a Hong Kong-based conglomerate, has also put in a bid with a major international shipping line, according to people close to the deal.

The Hong Kong assets, however, have lost a bit of their luster. CSX earlier this year lost one of its biggest clients, Hanjin Shipping. It risks losing another main customer, A.P. Moller-Maersk Group, when the contract comes up for renewal in December. This
appears to have caused some potential buyers to not compete with CSX's assets. Cosco Pacific Ltd., linked to China's biggest shipping company, didn't submit a final bid.

Some analysts say PSA, which manages the world's largest trans-shipment hub in Singapore and has invested in ports in 11 countries, might have bid aggressively for CSX's assets. They say that PSA, owned by the Singapore government's investment company Temasek Holdings Pte. Ltd., has deep pockets and -- unlike Hutchison -- doesn't have minority shareholders who might challenge what it spends in Hong Kong.

If Hutchison were to buy CSX's assets, its motivation would be mostly defensive -- to keep the Hong Kong facilities out of the hands of PSA, analysts say. Still, there are limits to what Hutchison should pay for CSX's Hong Kong operation. 'If they can't get it
at a decent price,' CLSA's Mr. Schutte says, 'I would prefer for them to walk away.'

hkskyline

November 22nd, 2004, 06:21 AM

Hongkong Land Sells Asia Container Stake
Dow Jones Newswires
22 November 2004
The Asian Wall Street Journal

HONG KONG -- Hongkong Land Holdings Ltd. said it has agreed to sell its entire 28.5% stake in Asia Container Terminals Ltd., one of Hong Kong's port operators, to Sun Hung Kai Properties Ltd.

"The price is at a premium above cost," said a Hongkong Land spokeswoman, who declined to disclose the value of the deal. After the transaction, Sun Hung Kai Properties will become the largest shareholder of Asia Container Terminals, with a 57% stake.

Sun Hung Kai properties declined to disclose the acquisition price.

Hongkong Land's spokeswoman confirmed that it received and accepted an offer placed by Singapore-based PSA International. But Sun Hung Kai Properties exercised its first right of refusal, outbidding PSA and buying
Hongkong Land's entire stake, the spokeswoman said.

PSA also is bidding for another stake in Asia Container. CSX World Terminals, an Asia Container shareholder that is the ports arm of U.S. railway operator CSX Corp., is disposing of its shares.

Asia Container's founding shareholders are Hongkong Land Holdings, Sun Hung Kai Properties, CSX World Terminals and NWS Holdings Ltd. Hongkong Land Holdings is a Singapore- and London-listed property unit of conglomerate Jardine Matheson Holdings Ltd.

hkskyline

November 23rd, 2004, 06:44 AM

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A new approach to handling charges
Willy Lin, Chairman

The Better Hong Kong Foundation released a study report last month on the competitiveness of the Hong Kong port. The report, prepared by Mckinsey & Co, correctly points out that the high boundary-crossing trucking costs, together with the high Terminal Handling Charge (THC) in Hong Kong, are the two most critical factors affecting the competitiveness of the port. I understand that the Port Master Plan 2020 which the Government is going to release later this year, would draw similar conclusions. I am glad that the industry has at last reached a consensus on the crucial factors that are eroding the competitiveness of the Hong Kong port.

I certainly support the proposed reforms mentioned in the McKinsey report. In essence, it mentions separate controls for boundary-crossing tractor, chassis, container and driver, and deleting/reducing the boundary crossing truck license fee. The traditional "four up- four down" requirement is obsolete and causes a lot of inefficiencies. Of course, it requires a lot of changes in the practices and systems of Mainland Customs, as well as additional resources in implementing the changes. The reforms, together with all other initiatives of the Government and the industries, such as boundary crossing infrastructure improvements, freight villages and bonded pipelines, relaxation of container truck driver licensing requirements, electronic document exchange, etc, would definitely enhance productivity and lower cost for carriage of cargo to Hong Kong.

However, unless a solution is found for the problem of high THC, the cost differential would continue to lead shippers to seek alternative routing for cargo. Despite container terminal operators in Hong Kong having repeatedly said that they had substantially lowered their charges in the past few years, carriers refuse to adjust the THC levels they charge shippers. The Council has been calling for transparency of THC because carriers insist that THC is a cost recovery exercise. Regrettably, progress on transparency has been very minimal. Only the Transpacific Stabilisation Agreement has provided the Council with a simple component list-other shipping conferences have not taken any positive moves. The TSA component list, however, lacks the essential costing figures to justify the current high levels of THC and a mechanism for level adjustment is also lacking.

We believe a new approach is needed to resolve this long-standing issue. Perhaps Hong Kong shippers and container terminal operators should consider a mechanism that allows shippers to pay directly to container terminal operators. There may be a separate charge for shipping lines which, of course, have to justify the charge. After all, shipping lines should, in principle, make their main revenue from ocean freight, and not from surcharges.

Moreover, there actually exists a similar threat of cargo losses for Hong Kong on the air side. One should never underestimate the potential competition from the new Baiyun Airport. According to a recent survey by GHK, commissioned by the Hong Kong Airport Authority, Hong Kong airport suffers from the disadvantages of substantially higher land transportation cost from cargo sources in South China, and terminal and handling fees. Although these disadvantages are at present offset by lower air freight charges from Hong Kong, this situation could easily change. Of course, to a certain extent, air freight charges are factored by successful cargo consolidation of which Hong Kong doubtlessly reigns supreme. Yet it also depends on how keen the operators are to develop a new market. Carriers and freight forwarders might offer very competitive rates to quickly build up critical mass. There is always the danger for air cargo to follow the same pattern in cargo diversion as sea cargo.

In order to ensure a sustainable growth for Hong Kong's air freight industry, the high terminal and handling costs, among others, must be reviewed. GHK's report indicates that terminal costs at Baiyun Airport is as low as RMB 0.50 per kg, which compares sharply with Hong Kong's current level of HK$1.72 per kg. One must remember that terminal and handling costs were more than 30% lower when we were using Kai Tak Airport. The franchise period for cargo terminal operators, the competition among them, etc, are factors that must be closely examined in exploring possibilities for lowering the charge. Indeed, the option of shippers paying directly to terminal operators should be considered if it would lead to lower charge levels for shippers.

There certainly has to be some urgency in quickly and substantially lowering operating costs in Hong Kong should we wish to sustain the competitiveness of Hong Kong's sea and air freight industries. Whilst the industry has still been enjoying very good results these past two years, there are a lot of obvious potential threats. The abolition of the quota system for textiles and garments in 2005 is going to cause a lot of cargo to be shipped directly from the Mainland. More container terminal capacity continues to come on-stream at Shenzhen ports. There is the least doubt that Baiyun Airport and Shenzhen Airport's share of South China cargo would increase sharply in the next few years. It is imperative for Hong Kong to lower operating costs here. Paying handling charges directly to terminal operators is an option that the industry should explore seriously.

hkskyline

November 23rd, 2004, 06:59 AM

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hkskyline

November 23rd, 2004, 07:05 AM

OnePort aims at colossal trucking problems with new suite of services

OnePort (www.OnePort.com) CEO, Dr Saimond Ip, was brought in as the 'strategist' for the e-commerce company set up by the terminals. His background serves him well, having been with McKinsey & Co for six years, advising multinational and local logistics technology companies on strategic and operational issues. He was also chairman of an e-commerce HKSE listed company and founder of three other technology companies, and of course, he's got his PhD in Management Information Systems from Cambridge University.

Dr Ip joined OnePort in June and was overseeing his first products launch in August, of a range of electronic services that included electronic terminal receipt, electronic trucking assignment, and track-and-trace for export containers. The products seem simple enough, but are aimed at the colossal trucking problem that plagues cross boundary cargo transport and threatens the Hong Kong port's overall competitiveness.

"I have been working with the Hong Kong Pearl River Delta Foundation for the past three years," of which he was Executive Director from May 2002-2004 with Mr Po Chung as chairman. The foundation is a private think tank set up with the objective of promoting the policy of bringing the PRD and Hong Kong closer together. "The foundation has always been set up as a two-year project. The objective was to get the two governments to set up a more permanent institution to carry on the initiatives of the foundation. The objective is to promote economic policies that would bring Hong Kong and the Pearl River Delta closer together. I was actively involved in designing and lobbying of economic policies on cross boundary issues.

"Partly due to our efforts, the two governments now have a new framework called the Greater Pearl River Delta Business Council. Mr Victor Fung is Chairman of the Council and most of the trustees of the foundation are now members of the Council, including Mr C C Tung of OOIL, Mr Victor Lo and Mr Po Chung. From a private, small initiative, we are now an established joint government initiative."

It is in relation to his broader work at the Council that Dr. Ip is able to relate the OnePort initiatives that have just been launched. "This time last year, OnePort had launched the Empty Collection Appointment (ECA) which allows truckers to get container and seal numbers through the Internet or by cellphone. This saves as much as three days for the need to pick up empty containers in order to satisfy the US Customs advance notification rule before the cargo is loaded onboard the vessel."

OnePort's ECA customer base has grown to 800 trucking companies and 11 shipping lines. "Demand for ECA is increasing by some 50% each month. In July, we processed more than 2,000 ECA transactions. Some truckers make hundreds of appointments each month. The ECA service eliminates extra lift charges, extra haulage, and extra storage for truckers and shippers."

The second issue to be addressed by the launch of products in August this year is also related to trucking. A recent Better Hong Kong Foundation-commissioned study on "Restoring Hong Kong's Competitiveness as a Sea-trade Logistics Hub" and conducted by McKinsey, highlights the trucking inefficiencies that are undermining the Hong Kong port's competitiveness. According to the study, "Hong Kong's cross boundary trucking industry has entered a downward spiral and a new operating model is needed." The study says that many initiatives have been launched to counteract the severe decline of the crossboundary trucking industry but most of these have been focusing on improving waiting time for trucks at the Hong Kong Shenzhen boundary crossing.

The study went on to outline some of the root causes of Hong Kong's high trucking costs and one of these was the higher operating costs in Hong Kong which covers a wide range of factors such as parking, insurance, maintenance, a reflection of Hong Kong's structural cost base.

The new "Electronic Terminal Receipt" service OnePort launched in August addresses a cog in the wheel that sets off a chain of procedures that could be made more efficient. Each year Hong Kong's container terminals issue millions of terminal receipts to truck drivers for export containers. The truck drivers have to make a special trip to drop off the receipt which is then picked up by courier to bring to the freight forwarder and counters of shipping lines. It has not been unknown that a truck driver altogether forgets to drop off this innocuous little receipt before returning across the border, thus bogging down the whole process. OnePort's electronic terminal receipt speeds up the process and saves the industry millions of man-hours handling these papers. Terminal operators will send electronic terminal receipts to all the related parties and they can verify the information online. Truck drivers will not need another trip to drop off the paper-based terminal receipts. Over twenty trucking companies and freight forwarders have already signed up. Ricky Wong, Chairman of the Hong Kong Container Tractor Owner Association, said, "Our members are always under time pressure to send paper-based terminal receipts to their customers. Electronic terminal receipts take away that pressure."

OnePort's new suite of services is aimed at easing the traffic build-up at Kwai Chung by electronically streamlining the trucking processes there....

Another newly launched service is "Electronic Trucking Assignment" which enables online the process of faxing job orders to trucking companies. Shippers and freight forwarders used to fax job orders to trucking companies who take these papers to the container terminals and then wait for the data to be typed in at the gatehouse. OnePort's electronic trucking assignment allows the entire process to be completed online, allowing a trucker to use his Tractor ID card to go straight into the terminal. The two major terminal operators Hongkong International Terminals and Modern Terminals Limited support the launch of these electronic services, and believe that the electronic trucking assignment will enable the terminals to speed up the gatehouse operation and to reduce the overall time a tractor spends in the terminal.

The third service is meant for the shipper and is called Track-and-Trace. Once a shipper or freight-forwarder sends an electronic booking confirmation to a terminal, its status could be checked through track and trace at OnePort's website. Track-and-trace is essential to the freight forwarding business as more and more freight forwarders offer customers track and trace for their shipments via internet or customer messaging. OnePort enables them to provide more timely information to their customers. APL Logistics and several others have signed up to use the service.

"OnePort provides value-added information and related services to strengthen the competitive position of Hong Kong as a logistics sub," explains Dr. Ip. "Its primary focus is to improve the efficiency of container movements through the port of Hong Kong." Hence, the initiatives of OnePort will eventually be of community-wide use. The share-holders of OnePort include HIT, Modern Terminals, COSCO-HIT and Tradelink.

"We have agreement with Tradelink on linking up with their services in future. They are strong on electronic services for the trading industry. We focus on shipping, logistics and the supply chain. Tradelink is now moving toward the area of electronic manifest as used by shipping lines. We will eventually hook up with them for value added services. OnePort started with a suite of services called Equipment Exchange. We will leverage on our information link with the different parties. When we have launched these services, we would get into the value added services like E-man and other services Tradelink has to offer," said Dr. Ip.

For information on OnePort products, contact Philip Ho, marketing manager, OnePort Ltd, at tel 31018258.

hkskyline

November 23rd, 2004, 03:23 PM

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Inland Gate
Integrated feeder and terminal services in the PRD

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Inland Gate service locations

With the cross boundary and trucking issues continuing to be problems to the export of containers through the Hong Kong port, forward-looking Modern Terminals (www.ModernTerminals.com) took the initiative in 2000 to find ways to exploit the more efficient barging system to Kwai Chung.

"A lot of cargo comes down from the PRD by barges so we decided to address the efficiency and competitiveness of the barge trade. We set up a small department consisting of operations staff of Modern Terminals to look into it, and to try and capture more business for Modern Terminals from the PRD region," said Jessie Chung, Assistant General Manager for Marketing and Logistics at MTL.

"As of today, we have 11 ports and 20 feeder terminals established in the Inland Gate service, powered by numerous allied feeder operators," said Hung Hin Chau, Logistics Manager for Modern Terminals. "The unique network of dedicated daily feeder services that we continue to expand, extends our terminal gates, both figuratively and literally, to the PRD. It forms a fast, efficient, cost-effective and reliable service to deliver our customers' import and export containers to their nominated mother vessels in Hong Kong, or to their final destinations in the PRD's major manufacturing and trading centres."

The name Inland Gate was expanded to cover trucking as well. "Inland Gate is a generic concept that means we move our gate virtually from Kwai Chung terminal all the way up to the PRDÐbe it a feeder terminal or an inland depot, be it in Shenzhen or Dongguan, we still call it a "gate" of Modern Terminals. We move our gate from Kwai Chung to southern China. So if that gate is located in feeder terminals in PRD tributaries, then it's Inland Gate barge services. And if the gate is located in an inland depot in Shenzhen and Dongguan, then it would be trucking services down to Modern Terminals. But originally it was purely barge services. We still focus on barges at the moment." said Chung.

Chung explains that Modern Terminals has been developing barge services for something like ten years now. "It has become quite mature and we have built up a good network of connecting many feeder terminals in the PRD with Modern Terminals. Originally, we only covered Guangdong province, but lately we've expanded it to Guangxi, still within PRD region. So Inland Gate now goes from the extreme western part of Guangdong province to Modern Terminals in Kwai Chung."

"We have been doing Inland Gate for three years and have been testing it out. We have established the feasibility of the project and based on this, we believe it is very good and should be adopted eventually by the port community. The first step would be to collaborate with other container terminals, that is, with HIT. We have formed a joint terminal task force to see if this concept, these services, could cover all terminals in Kwai Chung."

The Inland Gate project now covers more than 90% of the locations in the PRD. "Now it's time for us to expand the customer base. There are drawbacks and not everyone uses Inland Gate because it comprises separate agreements. Some are reluctant to give up the barge operators they have been dealing with for many years because of various reasons, such as price or familiarity with the operator, even if they are aware that Inland Gate services are feasible, saves time and resources. Moreover, it is a fairly new concept and there is still the inevitable 'wait-and-see' attitude about the kind of value or benefits the service would give them. Our people are in the depots at the PRD, making themselves available for tailormade services required by the shippers,"explains Chung.

"Inland Gate is purely a value-added service to help bring more cargo through Kwai Chung. We have two modes of operations. One is to appoint a batch contractor, to deliver the service, to deliver the boxes for our shipping line customers. In that sense, the shipping line simply deals with the terminal and does not really know which barge operator he uses, it is left up to us to appoint one of our partners. The shipping line pays strictly for the cost of the barging alone. We simply pass on the barge operator's charges to the shipping line. Inland Gate is a free service and we get nothing out of it," says Chung.

"The second option is that we form alliances with the barge operators that service the shipping line and we give them Inland Gate services such as real-time information once the boxes enter the feeder terminals. We connect our system with the feeder terminal and the barge operators. And most importantly, we try to provide priority berthing for these barge operators that service the shipping lines calling at Modern Terminals. By doing this, by collaborating with a few large companies of barge operators, we hope that they would concentrate more boxes with these operators and we can better consolidate the services. This would also provide better berthing time at the terminal in Kwai Chung. In this option, we provide them the services of Inland Gate for free. In the first option, we could provide a contractor for the shipping line, if that is what they choose. We make sure they have real-time information, priority berthing, and we deal with any barge operator problems directly.

"So basically the concept of Inland Gate is once you enter a depot that is in our network, you are within the Modern Terminals system. You can track your cargo down to the Hong Kong port. In other words, we take full responsibility for the transport of your cargo from the Pearl River Delta to Kwai Chung. We take care of the box-rom the time the shipper completes Customs clearance to its loading at Kwai Chung. We're also trying to promote the concept to the freight forwarder. If they are convinced that the cargo will get to Modern Terminals on schedule, then they will try to convince the shipping line to use Hong Kong as their port of choice," says Chung.

"Feedback from industry is quite positive, but there are some areas that can be quite delicate. There are relationships in place between operational staff and barge operators, between barge operators and the feeder terminals. They have been dealing with each other for many years, so unless the barge operator or the terminal is already within the Inland Gate network, then it would take some convincing for them to switch over to the Inland Gate network," says Chung.

"Faster time, and connection is guaranteed. The shipper would have to consider whether the cost gap between using Yantian and Hong Kong is probably not worthwhile, since there are more services in Hong Kong and a lot more advantages in shipping through the Hong Kong port. We are trying to lower the costs as much as possible and improve the efficiency of shipping through Hong Kong from the PRD," says Hung.

Trucking

"We are now studying the tucking processes from Shenzhen down to Huanggang and then down to MTL. We're trying to simplify the cross boundary processes, some parties are trying to convince both governments on either side of the border to relocate the Huanggang Chinese Customs to a designated depot that will choose to cooperate. The boundary processes need to be simplified so that there would be no need for clearance of containers at the border which would reduce queuing time," explains Chung.

"So once they cross the boundary, clearance would be done only at the designated depot which would have Customs there. So if we copy the Inland Gate barging service to trucking and depot processes, it would mean that we would have to contract or appoint the trucking companies. We would have to provide them real-time information, when they go through the boundary and come to the terminal. But for the trucking processes, our emphasis is not on the Inland Gate concept. Our emphasis is on how to simplify the processes, how to make it a 'green lane' for the trucking companies to pass through the boundary without stopping."

Hung says that trucking to Yantian port from Zhongshan in the western PRD costs $3,000, while to barge the container to Hong Kong would see an expense of below $1,000 for the barging and an additional $400 to $500 for inland trucking.

hkskyline

November 25th, 2004, 11:20 PM

Determining factors for CT 10

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Mar/Apr 2004

On the cost side, Christiansen cited the inefficiencies and discrepancies in crossborder trucking costs. He said Hong Kong had an overall cost disadvantage: on port construction charges, port charges, and total transportation cost that included trucking, THC, ocean freight.

A call for Hong Kong to play a part in the coordination of complex administrative structure in the southern China region was made by Martin Christiansen, Director of South China and Hong Kong, of Maersk Sealand shipping line, at a Pearl River Delta breakfast meeting discussion held by the German Industry and Commerce Hong Kong, South China, Vietnam, entitled "PRD Container Terminals, Upriver, Downriver or on Lantau?" at the Hong Kong Club in February.

Christiansen said there is a lack of unified infrastructure 'vision' for south China and the "One Market" approach is missing. He said there are too many stakeholders and Hong Kong must play a part in coordination in the region as it is too difficult to optimise in isolation. He enumerated the ongoing infrastructure plans: Shekou Phases II and III; Chiwan Phase I, CCT-Mawan; YICT Phase IIIB and Phase IV; Da Chan Bay, Nansha and Hong Kong's Container terminals 10. He said prioritization is needed.

The breakfast meeting discussed the feasibility of a Container Terminal 10 and Christiansen's conclusion was that the key determining factors of whether a CT 10 would be successful lay in the selection of site and other factors that determined cost and connectivity to both the eastern and western sides of the PRD.

On the question of the need for the additional capacity of CT 10 in the region, Christiansen said that it was absolutely essential in order to meet the burgeoning south China manufacturing boom. "South China is turning into the factory floor of the world and significant infrastructure development is needed to support the growth."

Christiansen said there has been significant shifting of sourcing from the US, Europe and South and North East Asia that is still ongoing. "PRD sourcing now is not only for the big multinationals, but medium and small enterprises are also moving production into southern China." The continuous upgrading of skills in the manufacturing region has led to the widening range of products. He said the end of the quota regime would further accelerate migration to the region.

"Year-on-year container growth for southern China from 2008 onwards is estimated to be at least 4 mn TEUs per annum," he said.

Christiansen said significant infrastructure developments are needed to support the growth and avoid bottlenecks. He cited some of Hong Kong's structural disadvantages that should be tackled so that CT 10, if constructed, would be successful and Hong Kong could remain competitive. He said these included the Western Corridor link that would help but not sufficiently. The question over the Zhuhai/Macau /Hong Kong bridge remains and there is a lack of efficient 24-7 border crossings. Customs rules should be simplified along with improved 24-7 Customs handling. He also sees a need for barge optimisation.

On the cost side, Christiansen cited the inefficiencies and discrepancies in crossborder trucking costs. He said Hong Kong had an overall cost disadvantage: on port construction charges, port charges, and total transportation cost that included trucking, THC, ocean freight.

He said that eventually there would be cost convergence but that it would not happen overnight.

Christiansen, who is with the world's largest container shipping line, Maersk Sealand, enumerated the basis on which terminal selection is conducted by carriers:

Pearl River Delta
Advantages
* "Low" terminal infrastructure cost
* Cost of operation
* Location close to production market

Disadvantages
* Customs regulations
* Experience/flexibility
* Connectivity/services

Northwest Lantau
Advantages
* Connectivity to Zhuhai/Macau-Hong Kong bridge
* Greenfield operation
* Free port status

Disadvantages
* Split operation
* Environmental impact
* High infrastructure cost compared to PRD

SW Tsing Yi
Advantages
* Connectivity to CT 1-9
* Barge optimisation
* Free port status

Disadvantages
* Cost
* Distance from production market
* Flexibility/experience

Christiansen said that for a carrier, Tsing Yi would be the preferred location due to its connectivity to existing terminal facilities. He explained that split operations would be more expensive and have less flexibility.

The above presentation, entitled "PRD Container Terminals Upriver or Downriver or Lantau?" can be obtained from the Dutch Business Association.

hkskyline

November 26th, 2004, 05:06 AM

Hong Kong port, airport show high increases in cargo handling for Oct. 04

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Hong Kong’s container throughput handling from Jan-Oct this year has reached 18.4mn TEUs an increase of 9.1% over the same period last year. Some 11.112mn TEUs were handled at the Kwai Chung terminals for Jan-Oct 04, a rise of 10.9% over the same period last year. For the month of October, a total of 1.25mn TEUS were handled at the Kwai Chung terminals, a rise of 21.9% over Oct 03.

Meanwhile, the Shenzhen ports recorded a year-on-year growth of 28.9% for Jan-Oct 04, handling a total of 11.17mn TEUs for the period, according to the latest figures compiled by the Port Development Council from statistics of the Census & Statistics Department, the Marine Department, and the Hong Kong Shippers’ Council.

Meanwhile, for two months in a row, air cargo throughput at Hong Kong International Airport (HKIA) has set new records. October figures grew by 14.6% over last year to 299,000 tonnes, representing a 7% increase over the previous record of 280,000 tonnes achieved in September. Robust cargo growth has been driven by continued strong demand for goods from North America, Europe and Mainland China. Exports (loaded cargo) rose to 195,000 tonnes, a gain of 16.1% over last year, while imports (unloaded cargo) grew by 11.8% to 104,000 tonnes. Both are all-time-high monthly records. Riding on the strong demand for air cargo services, total aircraft movements rose by 12.2% to 21,035, marking October the busiest month ever for aircraft movements at HKIA.

Air cargo throughput for the past 12 months rose to 3,042,000 tonnes, growing 17.3% over the corresponding period of last year.

hkskyline

November 29th, 2004, 06:02 PM

Lloyd's List
November 29, 2004
HK register hits 25m gt

Hong Kong's shipping register has broken through 25m gt nearly two months ahead of the forecast set by the Marine Department, writes Keith Wallis in Hong Kong.

The department said 997 ships totalling 25.3m gt are registered.

Among the most recent entrants are the 1989-built 15,903 gt ro-ro cargo vessel Lykes Sprinter and the 3,994 gt boxship Jin Teng.

Lykes Sprinterwas bought by Hong Kong's Xun Da International Shipping earlier this month, while the 1994-built Jin Teng is owned by Sinotrans Shipping, also based in Hong Kong.

The shipping register was set to surpass the 25m gt mark a few months ago, but the booming sale and purchase market led to a number of defections to rival registers, slowing expansion.

But the Marine Department pointed out that growth since the middle of this year has been significant.

In July, total tonnage on the register topped 24.07m gt. It was then the Marine Department believed the register would exceed 25m gt by the end of this year. Speaking at the time Marine Department director Tsui Shung-yiu said 40 vessels totalling about 1m gt would be added in the coming months.

The number of vessels currently on the register is about four times the number in 1997 when shipowners re-flagged their ships out of Hong Kong amid concern about the impact of Hong Kong's handover to China.

hkskyline

November 30th, 2004, 07:59 AM

HK Sun Hung Kai Ppties Sells 57% ACT Stake To PSA
29 November 2004

HONG KONG (Dow Jones)--Sun Hung Kai Properties Ltd. (0016.HK) said Tuesday it sold its 57% stake in Asia Container Terminals Ltd., one of Hong Kong's port operators, to Singapore's state-owned PSA International.

Sun Hung Kai Properties, a blue chip developer, declined to name the price, but said the sale fetched a "very satisfactory return."

The South China Morning Post, quoting a source close to the deal, reported Tuesday that PSA paid HK$2 billion in cash and assumed HK$600 million in debt.

"PSA has agreed to buy the 57% stake in Asia Container Terminals Ltd. from Sun Hung Kai Properties," a PSA spokesman said without providing further details.

Sun Hung Kai's stake comprises a long-term holding of 28.5%, and an additional 28.5% it acquired from Hongkong Land Holdings Ltd. (H78.SG) on Nov. 19.

Sun Hung Kai's spokeswoman said the company is optimistic about the future of the logistics industry, and will maintain its current strategy in logistics and infrastructure.

The spokeswoman also said the company will keep looking for other logistics and related investment and management opportunities in Hong Kong and mainland China.

PSA is also bidding for another stake in ACT. CSX World Terminals, another ACT shareholder and the ports arm of U.S. railway operator CSX Corp. (CSX), is in the process of disposing of its 17% stake in ACT.

ACT began its two berth-operation at Hong Kong's Kwai Chung Port in mid-2004, with a total stacking capacity of 36,414 twenty-foot equivalent units.

The terminal's founding shareholders were Hongkong Land Holdings, Sun Hung Kai Properties, CSX World Terminals and NWS Holdings Ltd. (0659.HK).

PSA operates 17 ports in 11 countries across Europe, India, China and east Asia. This is the first time PSA has entered the Hong Kong market.

PSA grabs port stake for $2.6b - SHKP sells its 57pc stake in Asia Container to the Singapore firm, 10 days after thwarting a bid to gain a foothold in HK
Russell Barling and Nichole Chan
30 November 2004
South China Morning Post

PSA International will pay at least $2.6 billion for majority control of Asia Container Terminals (ACT), giving Singapore's state-owned port operator the strategic foothold in Hong Kong's port that it has long coveted.

PSA will acquire 57 per cent of ACT from Sun Hung Kai Properties (SHKP) just 10 days after Hong Kong's biggest property developer blocked its initial bid for a piece of the Kwai Chung terminal operator.

"Sun Hung Kai Properties has agreed to sell its 57 per cent stake in ACT to the PSA for a very satisfactory return," a SHKP spokeswoman said. She declined to provide further details.

According to a source close to the deal, PSA made a cash offer of "more than $2 billion". It also assumes SHKP's portion of ACT's debt, which is estimated at $600 million.

PSA and SHKP, which is expected to turn a $1 billion profit from the disposal, are expected to announce the deal later this week once the deadline passes for ACT's two other shareholders to match the offer.

It is understood NWS Holdings and CSX World Terminals (Hong Kong) have said they will not match PSA's offer.

Earlier this month, PSA's $685 million bid for Hongkong Land Holdings' 28.5 per cent stake in ACT was trumped at the last moment by SHKP, which exercised its right as a shareholder to match any bids from firms outside the ACT consortium.

The move, viewed at the time as an instance of Hong Kong Inc circling the wagons against Singapore, now appears a shrewd intervention to increase the premium PSA has to pay to get its first foothold in the world's busiest container port.

In November 2001, CSX World Terminals paid $242.3 million for convertible shares in ACT, which increased its stake by 19.5 per cent. That acquisition valued ACT's 50-year concession for the two berths known as CT8 West at Kwai Chung at $1.24 billion.

PSA is apparently willing to pay about $2.6 billion for a controlling 57 per cent of ACT, a company that has yet to sign its first customer despite having taken possession of the two berths at CT8 West in March.

"Sun Hung Kai knew PSA desperately wanted it," an ACT shareholder said yesterday.

PSA also emerged yesterday as one of three companies in the running to buy the global port assets of US rail giant CSX Corp, which owns an effective 17 per cent in ACT.

PSA, Hutchison Whampoa's international port investment arm and the partnership of Wharf Group and APM Terminals are understood to have bid more than US$1 billion for CSX's global ports network.

"There are folks that truly believe the scarcity [of major port assets for sale] and strategic value of [CSX's] assets make them worth a lot more than the book price," an executive close to the CSX disposal said.

Finalists NWS Holdings and China Merchants are believed to have bid below the US$1 billion threshold and are no longer in the running.

Firms were required to bid for the whole CSX network - which also includes a majority stake in CT3 at Kwai Chung and existing terminals or undeveloped sites in the ports of Tianjin, Yantai and Qingdao on the mainland and Busan in South Korea - to reach the final stage of the sale.

A decision on the winner of the CSX sell-off is expected by the end of next week. PSA and Hutchison declined comment.

hkskyline

December 1st, 2004, 09:40 PM

Singapore port buys big stake in rival Hong Kong terminal
PSA pays hefty price to gain a foothold in world’s largest box port, write Marcus Hand in Singapore and Sam Chambers in Hong Kong
1 December 2004
Lloyd's List

SINGAPORE terminal operator PSA International has broken into the rival port of Hong Kong paying a hefty price for a 57% stake in Asia Container Terminals.

“PSA has agreed to buy the 57% stake in Asia Container Terminals Ltd from Sun Hung Kai Properties,” a PSA corporate spokesman confirmed yesterday. ACT controls two berths at CT8 in Kwai Chung.

PSA did not comment on the price which was reported by the South China Morning Post at HK$2bn (US$256m) or more in cash plus an estimated HK$600m in ACT’s debt, while SHKP merely said it was getting a “satisfactory return”.

“That is a very good return for them,” an industry source said.

Just two weeks ago, SHKP trumped a HK$685m bid from PSA for Hong Kong Land Holding’s 28.5% stake in ACT increasing its own stake to 57%.

It would appear to have been a shrewd move on the part of the Hong Kong property company which saw an opportunity to profit from PSA’s extreme keenness to break into the Hong Kong market.

The deal will give PSA a strategic foothold in Hong Kong, the world’s largest container port, and literally on the doorstep of its largest rival on a global basis Hutchison Port Holdings, whose original flagship facility, Hongkong International Terminals, is the dominant operator in Kwai Chung.

However the terminal it has bought into is largely moribund with ACT failing to sign up any customers since it took over the two berths at CT8 in March this year.

Whether PSA can leverage on its relationships with customers at other ports remains to be seen.

Will the entrance of PSA make Hong Kong container port, the world’s most expensive, more competitive?

Sunny Ho, executive director at the Hong Kong Shippers Council, certainly thinks so: “It will certainly lead to a more competitive environment,” he said.

He noted that the weakness of ACT in the past had been the lack of shareholders with shipping backgrounds to secure business.

“PSA has an advantage in that the Singapore government is a major shareholder in it as well as shipping line giant NOL; therefore they have a very good chance in securing business from the New World Alliance,” he said, referring to the group comprising NOL, Hyundai Merchant Marine and Mitsui OSK Lines.

The NWA currently calls at Hutchison’s HIT.

Conceivably, APL, NOL’s container arm, could transfer its transpacific service from Yantian in Shenzhen.

However, the two berths at CT8 are limited in capacity, with combined throughput of 1.4m teu. Even if PSA won CT3 from CSX, that would only give it roughly 2.7m teu of capacity, not enough to accommodate an entire alliance.

China Ocean Shipping Co, which has been keen to co-operate with PSA elsewhere, already has its own terminal in Hong Kong.

There are some Singapore companies which have in the past shown a loyalty to the state-owned port operator — Pacific International Lines was one its first customers both for Aden Container Terminal and Guangzhou Container Terminal.

hkskyline

December 5th, 2004, 07:57 PM

Cargo ports fouling air, says expert
Paris Lord, Hong Kong Standard
December 6, 2004

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Pollution linked to the Kwai Chung container terminal, above, is increasingly affecting Hong Kong, says a scientist. AFP

Air pollution from ships may increase as more container terminals open in and around Hong Kong, an atmospheric scientist fears.

While the maritime sector's contribution to the territory's total air pollution is small compared to vehicular traffic, its effects can be found in Kwai Chung and even Sha Tin, University of Science and Technology professor Alexis Lau said.

Emission standards worldwide will be tightened from next May and gradually become more stringent, a shipping industry official said.

Improvements in fuel standards and emission reduction devices mean local vehicles' contributions of hazardous elemental carbons such as nickel and vanadium are falling.

But maritime pollution sources are increasing, said Lau, who is the acting director of the university's Centre for Coastal and Atmospheric Research. "The area affected covers much of the Kowloon peninsula, so although the effect is not much in absolute terms, it's a cause for concern," he said.

"When you compound that with the container ports that are being built around Hong Kong, people should seriously look at this."

Hong Kong has nine container terminals and the government has proposed building a 10th. Its location and start date have not been decided. Shenzhen has three main container ports and these are expanding.

"This is a problem because ocean-going vessels use bunker fuel, the lowest grade of fuel you can have," Lau said.

Marine Department figures show that there were 17,650 ocean vessel arrivals in the first half of this year, and 93,250 river vessel arrivals.

Lau said an examination of Environmental Protection Department data over several years showed a rising trend of container ships in local waters leaving their "signature" on Kwai Chung, Mong Kok and Sha Tin. "The strongest signal is in the summer, because the summer wind blows it inland," Lau said. "That's very strange, because most of our other pollution problems are strongest in winter."

According to the 1990-2002 Hong Kong air pollutant emission inventory compiled by the EPD, all pollutants made by "navigation" sources - including international container ships and local and Pearl River Delta ferries - have increased since 1990.

This is despite a dramatic drop in pollutants created by power companies and motor vehicles.

In any event, fuel standards for marine vessels are weaker than for land vehicles.

According to the International Maritime Organisation's International Convention for the Prevention of Pollution from Ships , which comes into effect worldwide in May, fuel oil must not exceed 4.5 per cent sulphur content.

That compares with 0.5 per cent sulphur content rate for land-based industrial vehicles, Lam said.

The Marine Department is working on new laws in order to comply with ship pollution standards within Hong Kong waters, and expects to present them to legislators early next year.

hkskyline

December 6th, 2004, 06:24 PM

Source : http://www.fotop.net/garrey/cityscape

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hkskyline

December 11th, 2004, 06:42 PM

Dubai Buys CSX Ports for $1.15 Billion
Thu Dec 9, 4:16 AM ET
By Alison Leung

HONG KONG (Reuters) - Dubai is paying $1.15 billion for the global port assets of U.S.-based CSX Corp., outbidding the world's two biggest container port operators for terminals in Hong Kong and China as the region's trade soars.

Dubai Ports International, the investment arm of the state-owned Dubai Port Authority, was a late entrant and edged out bidders including Hutchison Whampoa Ltd. and Singapore's PSA International in a deal announced on Thursday for CSX's terminals and logistics assets.

The deal -- which includes terminals in Hong Kong, the world's busiest container port, and in booming China -- make the Dubai company the sixth-largest port operator in the world.

"It's not cheap. It seems that a ports bubble is building up right now," said BOC International analyst Michael Chan.

Soaring global trade, driven by China's rise as a manufacturing powerhouse, has created boom times for the shipping industry. Freight rates are hitting record highs and many of the world's container ports are heavily congested.

"Definitely China is the biggest growth area," Dubai Ports Executive Chairman Ahmed Bin Sulayem told a news conference in Hong Kong.

Managing Director Mohammed Sharaf said it was too early to say whether Dubai Ports would sell some of the assets, after the South China Morning Post reported the company may be planning to offload the Asia operations of CSX to Hutchison.

Dubai Ports operates terminals in the Middle East, Romania, Malaysia and India. It lost a bid for a Thai container terminal project to Hutchison earlier this year.

END OF FOREIGN ROAD FOR CSX

The transaction means CSX, the third-largest U.S. railroad operator, has completed its sale of non-rail operations and will no longer own assets outside the United States.

"Beginning in 2000, CSX began a series of divestitures of its non-rail assets. This is the company we held the longest because it is the best," said Andy Fogarty, president and chief executive officer of CSX World Terminals.

The deal includes 9 terminals with combined future capacity of 14.6 million 20-foot equivalent units (TEUs) in Hong Kong, Yantai and Tianjin in China, Adelaide in Australia, Venezuela and the Dominican Republic.

The transaction, expected to complete in the first quarter, gives Dubai Ports a controlling stake in the highly profitable container Terminal No. 3 at Hong Kong's main Kwai Chung Container Port.

It will also take over CSX World's 29.5 percent stake in Asia Container Terminals (ACT), the operator of two berths in Kwai Chung's CT8 West, and its interest in logistics businesses in Hong Kong and China.

Dubai Ports will also get a 25 percent interest in South Korea's Pusan Newport, with a capacity of 5.5 million TEUs that is expected to start operations in 2006.

Bin Sulayem said earnings before interest, tax, depreciation and amortization (EBITDA) for the CSX assets were expected to double in the next five years, but he would not give a figure.

The transaction will be financed from a committed loan facility arranged and underwritten by Deutsche Bank.

Singapore state-controlled PSA International Pte. Ltd. was reported by local media to have offered about US$1 billion for the assets. It bought 57 percent of ACT from Sun Hung Kai Properties last month for its first port holding in Hong Kong.

Other bidders included Hong Kong's two major port operators, Hutchison and Wharf (Holdings) Ltd.'s Modern Terminals Ltd. Hong Kong-listed COSCO Pacific Ltd., China Merchants Holdings (International) Co. Ltd., NWS Holdings Ltd. and Sun Hung Kai also bid.

hkskyline

December 12th, 2004, 10:57 AM

Statistics on Vessels, Port Cargo and Containers for the Third Quarter of 2004
Friday, December 10, 2004

The Census and Statistics Department today released statistics on vessels, port cargo and containers for the third quarter of 2004.

In the third quarter of 2004, total port cargo throughput increased by 6% over a year earlier to 55.1 million tonnes. Within this total, inward port cargo increased by 6% to 33.6 million tonnes, while outward port cargo also rose by 6% to 21.5 million tonnes.

For the first nine months of 2004 as a whole, total port cargo throughput increased by 9% to 165.9 million tonnes over the same period in 2003. Within this total, inward port cargo was up by 8% to 102.2 million tonnes, while outward port cargo also rose by 10% to 63.7 million tonnes.

On a seasonally adjusted quarter-to-quarter comparison, total port cargo throughput was up by 1% in the third quarter of 2004. Within this total, inward port cargo recorded virtually no change, while outward port cargo increased by 3%. The seasonally adjusted series enables more meaningful shorter-term comparison to be made for discerning possible variations in trends.

Port cargo

Within port cargo, seaborne and river cargo went up by 9% and 1% over a year earlier to 40.1 million tonnes and 15.1 million tonnes respectively in the third quarter of 2004.

Within inward port cargo, imports decreased by 3% over a year earlier to 20.0 million tonnes in the third quarter of 2004, while inward transhipment surged by 24% to 13.6 million tonnes. For outward port cargo, exports (including domestic exports and re-exports) and outward transhipment rose by 4% and 8% to 9.2 million tonnes and 12.3 million tonnes respectively.

Within port cargo, seaborne cargo went up by 10% in the first nine months of 2004 over a year earlier to 119.8 million tonnes, while river cargo also increased by 7% to 46.1 million tonnes.

Within inward port cargo, imports rose by 2% in the first nine months of 2004 over a year earlier to 62.7 million tonnes, while inward transhipment surged by 21% to 39.5 million tonnes. For outward port cargo, exports increased by 11% to 26.7 million tonnes, while outward transhipment was up by 9% to 37.0 million tonnes.

The detailed port cargo statistics are summarised in Table 1(text version of table 1).

The main countries/territories of loading for inward port cargo and countries/territories of discharge for outward port cargo are shown in Table 2 (text version of table 2)and Table 3 (text version of table 3)respectively.

Comparing the third quarter of 2004 with the third quarter of 2003, double-digit increases were recorded in the tonnage of inward port cargo loaded in Malaysia (+26%), the United States (+21%), and Thailand (+14%). Over the same period, double-digit increases were registered in the tonnage of outward port cargo for discharge in Malaysia (+35%), Singapore (+32%), Australia (+32%), the United States (+13%) and Germany (+11%). On the other hand, a double-digit decrease was recorded in the tonnage of outward port cargo discharged in Taiwan (-17%).

Comparing the first nine months of 2004 with the same period in 2003, double-digit increases were recorded in the tonnage of inward port cargo loaded in Australia (+46%), Malaysia (+27%), Singapore (+24%), the United States (+17%) and the Republic of Korea (+14%). Over the same period, double-digit increases were registered in the tonnage of outward port cargo for discharge in Australia (+44%), Singapore (+27%) and Malaysia (+18%).

Comparing the third quarter of 2004 with the third quarter of 2003, double-digit increases were recorded in inward port cargo of "machinery" (+28%), "textile yarn, fabrics, made-up articles and related products" (+22%), "artificial resins and plastic materials" (+20%) and "bricks, ceramic tile and refractory construction materials" (+20%). On the other hand, double-digit decreases were recorded for "stone, sand and gravel" (-30%) and "iron and steel" (-18%). As for outward port cargo, double-digit increases were recorded for "tools, cutlery, metal household ware and manufactures" (+25%), "machinery" (+23%) and "bricks, ceramic tile and refractory construction materials" (+23%). On the other hand, double-digit decreases were recorded for "metalliferous ores and metal scrap" (-22%) and "iron and steel" (-11%).

Comparing the first nine months of 2004 with the same period in 2003, double-digit increases were recorded in inward port cargo of "bricks, ceramic tile and refractory construction materials" (+33%), "machinery" (+24%), "metalliferous ores and metal scrap" (+22%), "textile yarn, fabrics, made-up articles and related products" (+19%), "artificial resins and plastic materials" (+17%) and "petroleum, petroleum products and related materials" (+15%). On the other hand, a double-digit decrease was recorded for "stone, sand and gravel" (-21%). As for outward port cargo, double-digit increases were recorded for "bricks, ceramic tile and refractory construction materials" (+32%), "machinery" (+21%), "artificial resins and plastic materials" (+14%), "organic chemicals" (+11%) and "pulp and waste paper" (+10%).

Containers

In the third quarter of 2004, the port of Hong Kong handled 5.8 million TEUs of containers, representing an increase of 9% over a year earlier. Within this total, laden containers and empty containers rose by 9% to 4.6 million TEUs and 10% to 1.2 million TEUs respectively. Among laden containers, inward and outward containers were up by 16% and 4% in the third quarter of 2004 over a year earlier to 2.2 million TEUs and 2.4 million TEUs respectively.

For the first nine months of 2004 as a whole, the port of Hong Kong handled 16.4 million TEUs of containers, representing an increase of 9% over the same period in 2003. Within this total, laden containers rose by 10% to 13.4 million TEUs, while empty containers increased by 3% to 3.0 million TEUs. Among laden containers, inward and outward containers were up by 15% and 6% in the first nine months of 2004 over a year earlier to 6.4 million TEUs and 7.0 million TEUs respectively.

On a seasonally adjusted quarter-to-quarter comparison, laden container throughput increased by 3% in the third quarter of 2004, comprising increases of 4% and 2% respectively for inward and outward laden containers.

Seaborne laden containers went up by 11% in the third quarter of 2004 over a year earlier to 3.6 million TEUs, while river laden containers increased by 4% to 1.1 million TEUs.

Within inward laden containers, imports increased by 10% to 1.0 million TEUs, while inward transhipment surged by 21% to 1.2 million TEUs in the third quarter of 2004 over the same period in 2003. For outward laden containers, exports rose by 3% to 1.3 million TEUs, while outward transhipment increased by 5% to 1.2 million TEUs.

Seaborne laden containers went up by 10% to 10.2 million TEUs in the first nine months of 2004 over the same period in 2003, while river laden containers also increased by 10% to 3.2 million TEUs.

Within inward laden containers, imports and inward transhipment amounted to 2.8 million TEUs and 3.6 million TEUs respectively in the first nine months of 2004, representing increases of 10% and 19% over the same period in 2003. For outward laden containers, exports amounted to 3.5 million TEUs in the first nine months of 2004, representing an increase of 7% over the same period in 2003, while outward transhipment rose by 5% to 3.5 million TEUs.

Port cargo and laden container statistics are compiled from a sample of consignments listed in the cargo manifests supplied by shipping companies or agents to the Census and Statistics Department.

Vessel arrivals

In the third quarter of 2004, the number of ocean vessel arrivals decreased by 1% over a year earlier to 8 860, with the total capacity recording virtually no change over a year earlier to 76.3 million net registered tons. Over the same period, the number of river vessel arrivals was up by 6% to 48 430, with the total capacity increasing by 9% to 23.5 million net registered tons.

In the first nine months of 2004, the number of ocean vessel arrivals recorded virtually no change over a year earlier to 26 520, with the total capacity increasing by 4% to 230.4 million net registered tons. Over the same period, the number of river vessel arrivals was up by 5% to 141 680, with the total capacity increasing by 8% to 68.1 million net registered tons.

FM 2258

December 12th, 2004, 11:05 AM

I don't know why but the container idea and system is so cool. :)

hkskyline

December 17th, 2004, 06:23 AM

South China Morning Post
December 16, 2004
HK cruising to cargo record
Russell Barling

Hong Kong will set another global benchmark for containerised cargo this year, with about 22 million boxes expected to have crossed its docks by the end of
the month despite intense competition from low-cost rivals in Shenzhen.

After cutting their prices for handling vessel-to-vessel relay cargo, the main terminal operators in Kwai Chung rebounded from a weak first quarter to move 12.27 million teu (20-foot equivalent units) in the first 11 months, up a comparative 11.3 per cent. They moved 12.07 million boxes during all of
last year.

"November was another good month. Kwai Chung has absorbed 33 per cent of the overall market growth in the Pearl River Delta so far this year and that is a
very good performance for Hong Kong," said Eric Bogh Christensen, the managing director of Modern Terminals, the port's No2 operator.

"It is particularly impressive when you consider there has been no increase in cross-border trucking. There's a big increase in trucked volumes in Shenzhen, but we're not seeing any of it."

Hong Kong for the past few years has been steadily losing direct import and export shipments, the highest value sector of the market based on the contribution they make to local economies, to the ports across the border due to a US$ 300 per-box cost differential compared with terminals in Shenzhen.

"We remain very concerned about the direct import-export cargo," Mr Christensen said. "It's just not coming."

About US$ 100 of the differential is attributable to higher terminal handling fees, with the remainder due to higher trucking costs of transporting goods to Hong Kong from south China's key manufacturing centres such as Dongguan.

Overall throughput at the port reached 20.17 teu in the first 11 months, up 8.5 per cent year on year.

But, while the main terminals' more competitive pricing policies in some sectors breathed new life into their businesses, it has in part come at the expense of mid-stream and river trade operators. Aggregate growth in mid-stream and river trade volumes slowed to 4.3 per cent for the year, or 7.9 million teu, after peaking at 25.5 per cent in the first three months.

The port handled 1.81 million boxes last month, up 3.3 per cent from November last year.

hkskyline

December 19th, 2004, 09:09 AM

Containers on the rise as resurgence rocks the doubters
But the ability to hold off Chinese competition could be compromised by high terminal handling costs and increased freight rates
13 December 2004
Lloyd's List

SOARING growth in box throughput volumes, completion of additional terminal facilities and turmoil among existing operators that led to Singapore’s PSA Corp gaining a foothold, have made the past 12 months in Hong Kong among the most memorable.

The resurgence in container throughput has surprised those who believed the nearby Shenzhen ports in southern China would continue to bite into Hong Kong’s competitiveness as the world’s busiest container port.

Provisional figures from the Port Development Council show box volumes climbed 9.1% in the first 10 months of this year to 18.38m teu, of which the nine Kwai Chung container terminals accounted for 11.1m teu.

This compared with a 1.5% drop in total container throughput volumes for the whole of 2001, 7.4% growth in 2002 and 6.8% in 2003.

The government-sponsored council said there were particularly strong results in October when container throughput rose 11.3% to 1.97m teu, compared with a year earlier.

Industry observers said that although container volumes had been growing at a faster clip at the Shenzhen terminals, which mainly comprise Yantian, Shekou and Chiwan, handling fees and freight rates had also been increasing.

This had narrowed the cost competitiveness of the Shenzhen ports.

The higher cost of transporting containers from the factories in southern China to Hong Kong, coupled with the territory’s more expensive terminal handling charges, were partly offset by the wider range of liner calls offered by Kwai Chung port.

But commentators still see the higher cost of using Hong Kong port as a key issue that holds back Hong Kong’s ability to properly compete with the Shenzhen ports.

Modern Terminals managing director, Erik Christensen, says: “We have an excellent free port with the world-class expertise and efficiency in container terminal management and operations, as well as state-of-the-art technology and equipment. Here, shippers enjoy flexible shipping services with frequent calls to destinations all over the world.”

But he also points out that shippers using the Shenzhen ports enjoy a $300 per teu cost advantage compared with those shipping cargo through Hong Kong.

“Two factors contribute to the gap: higher trucking costs for cargo sent to Hong Kong, which accounts for two-thirds of the difference, and higher THCs levied by shipping lines for cargo loaded in Hong Kong,” Mr Christensen says.

He adds: “It is clear that Hong Kong must first remove the structural disadvantages of higher trucking costs and THCs in order to restore growth in container throughput.”

Alan Lee, chairman of the Hong Kong Container Terminal Operators Association, added that the high trucking and terminal handling charges, “are issues that we must resolve. If we don’t the growth in container traffic in Hong Kong will have a problem in the next five years and we will be losing out to [southern China] container terminals.”

While the Hong Kong government has been loath to step into what it sees as commercial issues to resolve the problem of high THCs, it has been more proactive in seeking ways to reduce trucking costs.

Officials have met with industry groups, including the Hong Kong Container Terminal Operators Association, and held talks with their counterparts in China to help ease the rules governing cross-boundary trucking.

Mr Christensen believes the boom in box volumes has been driven by transhipment, including barge traffic mainly from the less accessible western side of the Pearl River delta.

He estimates that the volume of boxes moved to Hong Kong by barge for onward shipment has risen by a compound rate of 18% a year between 2000 and 2004.

“We project the barge cargo segment to continue to grow by 15%-20% a year over the next five years,” Mr Christensen says.

The expansion in volumes has coincided with the completion of the $510m container terminal nine development on Tsing Yi.

Operation of the facility’s six berths, including two which specifically handle barges, is split between Modern Terminals and Hongkong International Terminals, the local subsidiary of global terminal operator, Hutchison Port Holdings.

Initially, facing an uncertain future when construction started in 2000, the completion of container terminal nine and the surge in volumes has spurred talk about the development of future terminal facilities.

The government, which shortlisted two possible sites for extra port facilities a few years ago, recently lodged a draft executive summary of its 2020 port master plan with local legislators.

The plan, which is also out for public consultation, suggests future port facilities should be built at either south-west Tsing Yi, one of the areas previously selected by government, or north-west Lantau Island.

Whatever the eventual results, they are unlikely to benefit two existing players — CSX World Terminals and the River Trade Terminal Co.

CSX World Terminals, part of the US transport giant, is disposing of its interest in container terminal three as part of a worldwide sell-off of its port investments.

RTT is also facing an uncertain future after losing a court case, which meant it would have continued to handle intra-Asian container vessels in additional to river feeders.

hkskyline

December 22nd, 2004, 05:04 AM

Source : http://www.fotop.net/garrey/conterminal

http://www.fotop.net/albums/garrey/conterminal/2004071802_G.jpg

http://www.fotop.net/albums/garrey/conterminal/2004071804_G.jpg

http://www.fotop.net/albums/garrey/conterminal/2004071805_G.jpg

http://www.fotop.net/albums/garrey/conterminal/2004071806_G.jpg

hkskyline

December 23rd, 2004, 08:11 PM

PSA runs into fresh setback in its Kwai Chung ambitions
ACT shareholders vow to take control of Sun Hung Kai Properties' stake by the end of this month
Nichole Chan
23 December 2004
South China Morning Post

Efforts by Singapore's state-owned PSA International Corp to grab a slice of Hong Kong's lucrative container traffic business have been foiled again, after its $2.3 billion offer for a 57 per cent stake in Asia Container Terminals (ACT) was nullified by existing shareholders yesterday.

NWS Holdings and CSX World Terminals, the two minority shareholders in the Kwai Chung container terminal operator, will match PSA's bid and take control of the stake owned by Sun Hung Kai Properties (SHKP) by the end of this month, an NWS spokesman said yesterday.

"We have exercised our first right of refusal [as allowed in the ACT shareholding agreement]," the spokesman said.

The stake would be split between CSX and NWS in proportion to their shareholdings in ACT, he added.

Last month, PSA offered $685 million to Hongkong Land Holdings for a 28.5 per cent stake in ACT, which owns two idle berths at Container Terminal 8 West.

SHKP, however, swooped in to take the stake at a marginally higher price, doubling its holdings in ACT to 57 per cent.

Later in the month, SHKP announced it would sell its entire stake to PSA.

PSA's undoing came on December 7, when Dubai Ports International bought the equity in CSX World held by United States-based CSX Corp, or an effective 16.7 per cent interest in ACT.

Under the ACT shareholding agreement, shareholders retain the first right of refusal to buy any stake in ACT before it can be offered to non-competing outside parties.

With CSX selling its assets, it was never expected to pursue that option. But when Dubai Ports bought the CSX assets, it also acquired that pre-emption prerogative, which it has now apparently exercised.

Under the new arrangement, CSX World's stake in ACT will be raised to 68.61 per cent from 29.5 per cent.

NWS's holding in the terminal operator will increase to 31.39 per cent from 13.5 per cent.

NWS has an attributable interest of 33 per cent in CSX World.

There had been rumours that NWS might apply for an injunction to halt the sale of CSX's Hong Kong assets to Dubai Ports.

This would appear unlikely, given the companies' joint move to derail PSA's purchase of the ACT stake.

The NWS spokesman denied any ill will towards the Dubai Ports purchase.

"The rumours are not true. We have no intention of stopping the sale," he said.

hkskyline

December 24th, 2004, 05:56 PM

US-based CSX also exercising rights over Asia Container - SHK Properties

HONG KONG (AFX) - Sun Hung Kai Properties, which is divesting its entire 57 pct stake in Asia Container Terminals, said ACT's US minority share-holder CSX Corp is also exercising its pre-emptive rights over the Kwai Chung container operator, after shareholder NWS Holdings announced the same intention.

NWS said earlier it has exercised its rights and subsequently offered to take the entire 57 pct stake of Sun Hung Kai in ACT.

A NWS spokesman has said that if CSX also exercised its rights, NWS's share would be limited to just 54 pct.

NWS, the infrastructure arm of New World Development, said it wanted to increase its stake in ACT to widen its business presence in Hong Kong's port industry.
CSX recently sold its assets to Dubai Ports, and along with them, the pre-emption prerogative to increase its shareholding in ACT.

The Sun Hung Kai spokeswoman said arrangements relating to the property developer's 57 pct stake in ACT will be finalized by year-end.

Under the current ACT shareholding agreement, existing ACT shareholders have the right to buy any stake in the terminal before it can be offered to outside parties.
The moves by the two minority shareholders effectively thwart Singapore state-owned PSA International's bid to acquire a significant stake in the terminal.

PSA had offered to buy Sun Hung Kai Properties' 57 pct stake in ACT and was reported to have offered 2.3 bln hkd for the stake.

hkskyline

January 1st, 2005, 04:53 AM

Rivals oust PSA from Hong Kong port terminal
By Financial Times reporters
December 31 2004

PSA's ambition to enter Hong Kong's port, the world's busiest cargo hub, was dealt a blow by the decision of two rivals to oust the Singapore state-owned port group from one of the territory's terminals.

Dubai Port Authority and NWS Holdings, a local conglomerate, have exercised their pre-emption rights, paying HK$2.3bn (US$295.6m) to buy out PSA's 57 per cent stake in Asia Container Terminals, a small Hong Kong operator, DPA announced on Friday.

It is understood that DPA paid HK$1.58bn for an additional 39.1 per cent stake in ACT, boosting its total holding to 68.8 per cent, while NWS paid HK$720m to raise its total stake to 31.2 per cent.

The move is a blow to PSA, which has long been seeking a foothold in Hong Kong to compete with Hutchison Whampoa, the world's largest port group and its fiercest rival, for the growing trade coming from China.

Industry experts said Hutchison, controlled by Li Ka-shing, Asia's richest tycoon, could be interested in buying NWS's stake in ACT in order to ensure PSA is kept out of Hong Kong.

This month, the Singaporean group lost out to DPA in the race to buy the international assets of CSX, the US transport group, which comprised interests in some of Hong Kong's container terminals including a minority stake in ACT. After the US$1.2bn deal DPA became the world's sixth-largest port operator.

Industry analysts believe the latest setback could prompt Temasek, the Singapore state investment agency that is PSA's controlling shareholder, to revive plans for a listing of the port operator next year.

An initial public offering would enable PSA to raise funds to mount a stronger challenge against international rivals.

Although ACT's two berths in Hong Kong are idle, their purchase would strengthen DPA's position in the territory.

Bond James Bond

January 1st, 2005, 11:52 AM

Wow, neat thread! I should check this section more often!

I should also sit down and read some of these articles sometime when I get the chance. Some of it's interesting stuff.

However, I still think the Port of Rotterdam is cooler. :D It looks like it's spread over a bigger area, which is cool. :D

Hong Kong's got better scenery though. :D

hkskyline

January 4th, 2005, 09:34 PM

Dubai firm to boost stake in ACT - Mideast operator's US$200m buy-in will more than double its holding
Russell Barling
4 January 2005
South China Morning Post

The international investment arm of state-owned Dubai Ports Authority will spend US$200 million to increase its stake in Asia Container Terminals, Hong Kong's third-biggest terminal operator by capacity.

The outlay will more than double Dubai Ports International's stake in ACT but it will not wrest majority control of the company from its last remaining partner, NWS Holdings, which spent about $720 million to raise its shareholding in ACT last month, according to sources close to the Hong Kong-listed firm.

"It is in addition to the agreement we reached last month with CSX Corp and I can tell you the cost is in the area of US$200 million," Dubai Ports managing director Mohammed Sharaf said yesterday.

Last month, Dubai Ports agreed to pay US$1.15 billion before tax and liabilities for the global port assets of United States rail giant CSX Corp, including a 29.5 per cent stake in ACT, which owns and manages two berths at Container Terminal 8 West, and a majority share of Container Terminal 3.

NWS and CSX World Terminals (Hong Kong) exercised their options as original shareholders in ACT to match PSA International's $2.3 billion offer for the 57 per cent stake put on sale in November by Sun Hung Kai Properties.

Their intervention ended the Singapore port operator's dream of gaining its first foothold in the world's busiest container port.

By the end of next month, Dubai Ports will at least match the $1.58 billion CSX paid to raise its stake in ACT, while NWS lifted its effective shareholding in ACT to 54 per cent.

It is unclear if Dubai Ports will pay a premium to CSX for the extra stake, but the deal is expected by March to bring the Middle Eastern firm's three-month outlay for port infrastructure to at least US$1.35 billion before tax and liabilities.

SHKP said yesterday the deal had generated a one-off gain of $1.41 billion, sending property analysts scurrying to adjust last year's profit forecasts for Hong Kong's biggest commercial developer.

French investment house CLSA, for example, boosted its earnings target for SHKP 13.5 per cent to $11.9 billion, according to John Saunders, the head of regional property research.

NWS and Dubai Ports are soon to be partners in three container berths in Hong Kong and in logistics facility, Asia Terminals.

CSX also owned the "long-term" management contract for Container Terminal 8 West, a detail the partnership has yet to address, according to an ACT source. "The priority was to complete the [acquisition] first," he said. "Which company will run ACT has yet to be decided."

hkskyline

January 7th, 2005, 04:14 AM

SHKP gains $1.4b from stake sale
Raymond Wang, Hong Kong Standard
January 4, 2005

Sun Hung Kai Properties (SHKP) said it will book a gain of HK$1.41 billion from selling its port stake to CSX World Terminals and NWS Holdings.

The exceptional gain, which accounts for about one-fifth of the company's HK$6.9 billion net profit for the year ended June 30, beat analysts' estimates of about HK$1 billion.

CLSA raised its forecast for the company's fiscal year 2005 earnings by 13.5 percent to HK$11.9 billion.

"The disposal further strengthens SHKP's already strong financial position," CLSA analyst Keith Yeung said. "Together with the recently arranged HK$12 billion bank loan, SHKP is likely to be entering into a big buying sphere in property."

SHKP initially planned to hold its stake in Asia Container Terminals Holdings (ACT) as a long-term investment and part of its strategy to expand into the logistics industry. The developer's first investment was in 1998, and it bought a further 28.5 per cent interest from Hong Kong Land for HK$685 million in November last year to obtain a controlling stake.

"However, the directors consider the offers to be exceptionally attractive and that it is in our best interest to dispose of our interest in ACT," SHKP executive director Michael Wong said.

Wong said the company continues to retain an interest in the logistics industry by holding 43 per cent of River Trade Terminal and 100 per cent of Airport Freight Forwarding Center.

"It is intended net proceeds from the disposal will be reinvested into the logistics industry whenever suitable investment opportunities arise," he said.

ACT wholly owns a unit whose principal asset is a container terminal at Kwai Chung and which is chiefly engaged in running the facility.

SHKP's stake in ACT was first sold to Singapore's state-owned PSA International Corp for HK$2.3 billion, but existing shareholders NWS and CSX exercised their pre-emptive rights to increase their stakes.

NWS, which owned a 13.5 percent stake, bought a 17.9 percent interest for HK$722.09 million while CSX raised its holding to 68.6 percent from 29.5 percent for HK$1.58 billion.

The deal came after an agreement last month in which Dubai Ports International signed a deal to buy the global port assets of CSX for US$1.15 billion.

SHKP shares closed unchanged at HK$77.75 per share on Monday. Shares of NWS, an infrastructure unit of New World Development, closed unchanged at HK$11.50.

hkskyline

January 9th, 2005, 08:20 AM

DPI not likely to make waves
New player at HK port poses little threat to its well-established rivals
6 January 2005
South China Morning Post

By Valentine's Day, the bankers, lawyers, accountants and dealmakers who for the past year have pored over one of the biggest and most complex port sell-offs in history will have safely tucked billions of dollars into their clients' bank accounts.

It is an appropriate date because they will be remembered as sweetheart deals for the sellers. Not least of those will be American rail giant CSX Corp, which will pocket at least US$1.35 billion - or almost four times the book value of its assets, according to executives who have valued them - and be relieved of all associated tax and liabilities.

The jewels of the geographically diverse portfolio were undoubtedly its Hong Kong-based assets, including stakes in three berths. But questions remain about whether the deals will benefit the world's biggest container port and the economy that relies on it.

Last month, Dubai Ports International (DPI) emerged from the pack by having the deepest pockets and will take its place in Kwai Chung beside two of the world's biggest terminal developers, Hutchison Whampoa and Wharf Group.

Gone from Kwai Chung are CSX, and developers Hongkong Land Holdings and Sun Hung Kai Properties, for whom the lure of a quick buck proved too great to ignore.

Conglomerate NWS Holdings, however, shelled out $720 million last month to increase to 54 per cent its effective stake in Asia Container Terminals (ACT), and shore up its commitment to the port.

The management credentials of DPI, the Middle East's biggest port operator, are respected. There is also consensus that DPI's emergence on the scene is very unlikely to increase competition for customers or drive down cargo-handling rates at the main terminals.

But carrier executives and commodity traders cannot help but wonder what might have been if more-established players such as Singapore's PSA International or Denmark's APMoller Group, which owns the world's biggest container shipping line, Maersk Sealand, had won the bid for CSX's portfolio.

"From a shipping line's perspective, it was always going to be better to have CSX's Hong Kong assets sold to Dubai or PSA rather than have the incumbents increase their stranglehold on the deep-sea market here," said an executive at a leading European carrier. "But it also would have been better for the competitive environment at the port if the PSA or APMoller Group would have won, rather than Dubai."

DPI managing director Mohammed Sharaf has already moved to calm any jangled nerves exposed by a new face in Hong Kong's close-knit port community by saying DPI would "get our share without disrupting the market".

In fact, it is understood DPI will retain many of CSX's senior executives to manage the facilities they currently run, particularly in Asia.

But even if DPI was inclined to generate immediate business by undercutting the market, the carrier executive said the berths it bought a stake in - CT3 and CT8 - would have only limited appeal to the world's biggest shipping lines given the challenge of moving boxes between them.

"If you look at the locations of terminals 8 and 3, it would be difficult for a line to mount an efficient operation," he said. "That would handicap any operator from being able to attract a sizeable customer. DPI will be in a less advantageous position than the incumbents."

The volume of cargo moving across the docks at the main terminals rebounded last year after shaking off first-quarter doldrums caused by greater competition from facilities in Shenzhen.

Operators in Kwai Chung saw business grow a comparative 11.1 per cent to 13.4 million teu (20-foot equivalent units) for the year.

Perhaps more importantly, said Modern Terminals Ltd's (MTL) managing director Erik Bogh Christensen, they were also finally able to reclaim a portion of the growth from the greater Pearl River Delta market. By his estimates, Kwai Chung's operators siphoned off more than 30 per cent of the markets' expanded cargo volume last year.

Mr Christensen said the addition of the "like-minded" DPI to Hong Kong's waterfront would be more beneficial to the port than the property developers it replaced.

"It's good news because DPI is a real port operator; they're not a property developer trying to play port operator," he said.

Sun Hung Kai Properties and Hongkong Land both disposed of their stakes in ACT for tidy profits at the end of the year without the consortium ever having handled a box.

Several maritime trade executives saw the disposals as a lack of commitment to the overall development of the port and a direct result of the government's tendency to bend to influential firms wanting to bid for infrastructure projects outside their core industries.

There is also a camp that believes DPI brings less potential business to the table than other players which had been in the running for the CSX's assets.

United Arab Shipping, the flag carrier for the United Arab Emirates where DPI is based, already calls at MTL and contributes a maximum of 200,000 teu a year to the port's throughput. Other Middle Eastern carriers are relatively small players in the Asian region.

Given the dual constraints of its acquisitions and an acquisition price that would appear to rule out a rates war, the smart money is betting that DPI will slowly build its customer base over the next few years by serving smaller carriers and the spillover from the main operators.

Having paid a premium for rights to be in the world's biggest container market for the next 50 years, time is now on its side.

hkskyline

January 9th, 2005, 06:29 PM

Industrial; property; sector roars; back to life
Resurgent demand for space attracts investors with rental yields of up to 10pc
Peggy Sito
29 December 2004
South China Morning Post

The industrial property market has rebounded this year after a decade-long slump, reflecting a turnaround in the economy.

A double-digit leap in air-cargo throughput and re-export volume fuelled demand for industrial space, property agents said.

Investors refocused on the industrial sector, lured by rental yields of 8 to 10 per cent, the highest across property segments where returns have been as low as 2 per cent.

Industrial space prices have risen 30 per cent and rents are up 15 per cent this year.

Alvan Chan Wai-chi, a sales director at Midland Realty's industrial and office division, said 4,474 transactions had been registered this year, surpassing 1997's 3,996 deals. But the figure was still less than half the number recorded at the sector's peak 10 years ago.

Property agents expect the sector to remain buoyant next year.

"The continued economic growth and the implementation of the closer economic partnership arrangement (Cepa) are expected to act as the incentives for real demand," Mr Chan said.

The number of categories of products made in Hong Kong entitled to zero import tariff when exported to the mainland rose from 374 to 713 after the second phase of Cepa was introduced in August.

More industrialists may move parts of their manufacturing bases back to Hong Kong in light of the Cepa arrangement, which is expected to lift demand for factory space, according to Mr Chan.

Hong Kong has been suffering from an oversupply of traditional factories since manufacturers moved their operating bases to the mainland in the 1980s.

"Next year, we will see a general recovery in the industrial property sector, from warehouses to factories and industrial office buildings," Mr Chan said.

Superior warehouses with substantial headroom capable of handling various cargoes have already taken the lead in the resurgent sector, having shown a recovery since the second half of last year.

Property agents said multinationals were increasingly choosing Hong Kong as a distribution hub while overseas companies that sourced goods in Asia and the mainland were selecting the city as a centre for consolidation.

Warehouses in prime locations such as Kwai Chung, Tsing Yi and Tsuen Wan now fetch monthly rents of $8 to $9 per square foot, up from $6 to $7 a year ago. The vacancy rate has fallen to zero.

Roy Wong Ying-nin, a general manager at Centaline Property Agency's industrial and office department, said improved retail sales would prompt manufacturers to increase demand for storage space. Instead of leasing quality warehouses, they would choose traditional factories because of cheaper rents.

But not all factory space will be in demand.

Mr Chan said newly built factories and those in the districts accessible to MTR stations, such as Kwun Tong and Kowloon Bay, would be sought after and he predicted vacancy rates would fall to less than 10 per cent.

"But those factories which were built a decade ago and are located in decentralised areas such as Yuen Long and Tuen Mun will still suffer from low demand," he said.

However, even in such areas with continuing higher vacancy rates of about 30 per cent, demand may eventually turn around as hotel and office developers, enticed by low prices, move in and enhance values.

hkskyline

January 9th, 2005, 09:41 PM

Journal of Commerce Online
January 7, 2005, Friday
Hong Kong revamps land border clearance
BY P.T. BANGSBERG

A new system is in place to streamline clearance of the daily mountain of containers moving across the Hong Kong-China border.

Truckers with loaded vehicles must complete six copies of the new unified road cargo manifest, one of which is kept by the driver. Two copies go to mainland customs and the three others to Hong Kong customs. It will send copies to the territory's Trade and Industry and Census and Statistics departments.

Drivers of empty vehicles need a single copy of the unified manifest for both mainland and Hong Kong customs.

The revised system has been adopted formally by both Chinese and Hong Kong authorities.

"After a year of testing and extensive consultation with the cross-boundary transportation industry and relevant parties involved in cross-boundary trade, the unified road cargo manifest has been revised and improved," a spokesman for Hong Kong Customs and Excise said.

"Not only will the use of unified road cargo manifest save the manifest completion time, improve accuracy in road cargo manifests, but it will also facilitate cross-boundary trade."

Despite the sharp inroads made on Hong Kong's container business by adjacent Shenzhen on the mainland, trucks still move thousands of boxes back and forth. Most carry only a single container, leading to regular bottlenecks at the three crossing points and at Hong Kong terminals.

Officials in the territory and the mainland have worked for years to streamline cross-border movements as one way to ease the congestion. A bridge linking the world's busiest box port with Shenzhen's three biggest terminals should be complete this year, which officials say will further ease and speed movement.

hkskyline

January 10th, 2005, 05:10 PM

HK's Modern Terminals to invest HK$1.2 bln on upgrade

HONG KONG, Jan 10 (Reuters) - Modern Terminals Ltd. (MTL) said on Monday it will invest HK$1.2 billion (US$153.8 million) over the next 18 months to upgrade its facilities at the Kwai Chung container terminals in Hong Kong.

"We aim to expand the handling capacity of our terminals 1, 2, and 5 in Kwai Chung," said Joel Cheung, MTL's corporate affairs manager. "Our goal is to bring the standard of our older terminals up to the standard of our other newer terminals."

Cheung said the upgrade will include the purchase of quayside cranes and other machinery. MTL, which is 55.34 percent owned by Wharf (Holdings) Ltd. , operates berths spread over terminals 1, 2, 5 and 9 in Hong Kong's port area.

(US$1=HK$7.8)

Aboveday

January 10th, 2005, 07:06 PM

Any news about terminal #9?there are 6 berth in total.

hkskyline

January 11th, 2005, 06:09 PM

South China Morning Post
January 10, 2005
Modern Terminals pumps $ 1.2b into facilities upgrade
Russell Barling

Modern Terminals (MTL) will spend $ 1.2 billion over the next 18 months to upgrade facilities at Kwai Chung, an investment the operator says will increase its annual handling capacity by as much as 25 per cent.

Managing director Erik Bogh Christensen told the South China Morning Post the upgrade was in line with a strategy outlined in the recent $ 7.8 million Master Plan 2020. The report suggested optimising the port's present infrastructure before building more terminals, perhaps on Lantau Island.

"The aim is to bring the older container terminals 1, 2 and 5 up to the newest terminal's operational standards," said Mr Christensen. "Master Plan 2020 recommends optimising existing capacity before considering CT10, and the government agrees that should be the immediate focus. We are acting on that."

The government report, commissioned from consultants GHK, said productivity improvements at Kwai Chung's ageing wharves would "expand the capacity of the port at a lower incremental cost and reduce the environmental footprint" compared with a new terminal project.

It estimated building a four-berth CT10 on Lantau would cost up to $ 9 billion.

The MTL upgrade will increase productivity - largely measured by how many boxes a quayside crane moves per hour - as well as prepare some of its wharves to serve the future generation of giant container ships.

Shipyards in South Korea have developed blueprints for 12,000-teu (20-foot equivalent unit) vessels, which would be 25 per cent larger than the biggest container ships now afloat, and at least one major European carrier is thought to be already building the industry's next-generation vessel.

MTL will purchase 10 of the latest quayside cranes, which can reach 22 boxes wide across a ship's deck. They have a list price of US$ 6 million to US$ 7 million each.

Deputy managing director Sean Kelly said MTL was "negotiating with several companies" to supply the cranes. Four are earmarked for the new wharves at CT9, which will receive $ 200 million of the overall investment budget.

Work will begin next year to strengthen the quay at CT5 to handle giant cranes and the stresses of berthing a new generation of 140,000 deadweight-tonne vessels. Dredging will begin this year to bring the alongside depth at terminals 1, 2 and 5 to 15.65 metres, in line with the Rambler Channel, the port's access route.

"The old terminals, which are around 30 years old, were built for a different era," said Mr Kelly. "Now that CT9 is online, with the growth we anticipate this upgrade is something that needed to be done."

Hutchison's Hongkong International Terminals (HIT) has also ordered a significant amount of port equipment - including new quay and rubber-tyre gantry cranes - to be delivered within the next two months, according to port sources.

However, a HIT spokesman declined to confirm those orders, saying: "It is group policy that we do not give specific details of investments or projects. Irrespective of the Master Plan 2020, HIT is continuously involved in investment programmes to modernise our facilities."

MTL will replace its older rail-mounted yard cranes, which are confined to tracks, with more-flexible rubber-tyre ones.

All told, the upgrade is expected to bring MTL's quay rate to 200 box moves per hour by 2008, expanding its annual handling capacity by about 1.4 million units.

It handled about 40 per cent of Kwai Chung's 13.4 million boxes last year.

"Hong Kong will continue to be an important part of the infrastructure that handles the trade connected to the Pear River Delta, which we expect to grow in double digits for the foreseeable future," Mr Kelly said.

hkskyline

January 12th, 2005, 11:40 PM

Dearth of warehouses spurs rise in rents - Over the past year, logistics operators have been compelled to turn to older factory buildings in decentralised areas
12 January 2005
South China Morning Post

Warehouse landlords have been raising rents over the past year, with average rents going up 19.4 per cent. According to CB Richard Ellis, the rent hikes have been prompted by an overall vacancy rate of 3.5 per cent in Hong Kong warehousing (the figure is as low as 2.5 per cent in the Kwai Chung area).

The lack of sufficient purpose-built warehousing space for lease has resulted in logistics operators being driven increasingly to lease facilities in ordinary, clearly specified industrial buildings.

While there was no major resurgence of demand for industrial space for manufacturing purposes last year, the fact that logistics operators were being compelled to locate operations in ordinary industrial buildings has had a positive impact on the market for flatted factory buildings. According to the Ratings and Valuation Department, average vacancy levels in this industrial market sub-segment dropped from 10.6 per cent to 10.1 per cent in the 12-month period.

It should be noted that the flatted factory buildings market is sub-divided into two tiers which perform differently.

On the one hand, there are the older, generally outmoded factory buildings that tend to be concentrated in decentralised locations. Large pockets of vacancies exist in the older factory buildings in secondary industrial areas, with vacancy rates hovering at above 10 per cent.

The second tier covers modern factory buildings with better specifications and good access to transportation networks. At present, the demand is strong for such properties. Vacancies for buildings in this category are estimated at slightly under 5 per cent. Such high quality, better-positioned factory buildings are benefiting from a number of factors.

The first is the simple lack of warehouse space for lease in traditional logistics hub areas, a situation that has forced many logistics operators to lease space in standard industrial buildings in good locations.

Second, there is the fact that while the demand for better quality, conveniently located industrial facilities continues to grow, virtually no new industrial buildings have been developed in Hong Kong over the past five years.

Against a backdrop of no new supply, a substantial number of factory buildings have been demolished in recent years, starting in the late 1990s. Developers have been trying to either convert properties for other uses, or to demolish buildings for redevelopment.

Between 2000 and 2004 alone, a total of 3.7 million sq ft of factory space was demolished, the equivalent of 742,000 sq ft per annum.

The relocation of certain small-sized business operations from the mainland back to Hong Kong, under the preferential terms of Cepa Phase II, has not had a marked impact on the local factory space market.

As a result of the continuing demands of logistics company operators, we would expect average prime factory vacancies (currently at slightly under 5 per cent) to continue to decline over the short to medium term, and rents and capital values to rise 12 per cent and 15 per cent, respectively, this year.

At the same time, we would expect rentals and vacancy rates in the more weakly positioned older factory properties in decentralised locations to continue to hover around the present level.

Andrew Ness is an executive director of global research and consulting at CB Richard Ellis

hkskyline

January 15th, 2005, 07:35 PM

Kwai Chung needs to reverse the tide
14 January 2005
South China Morning Post

It's official. For the first time last year Shenzhen handled more of south China's direct shipments of manufactured goods than the main terminal operators at Kwai Chung.

Although the writing has been on the wall for years, when the official figures are released tomorrow they will reveal that Kwai Chung handled just under 13.4 million boxes last year, up a comparative 11 per cent, against 13.66 million units in Shenzhen, up 28 per cent.

The chart above maps out Shenzhen's rising share of south China's deep-sea trade over the past five years; look at it another way and Hong Kong's declining recent fortunes in the region's highest-value sector of maritime trade is just as starkly illustrated.

Moreover, analysts believe Kwai Chung's rate of growth will slow to mid-single digits this year because its operators are unlikely to repeat the one-off boost they generated from substantially dropping box-handling fees to attract more river trade.

If they are right, it would open the door next year for Singapore to regain its title of the world's busiest container port, a moniker it has held just once - 1998 - in the past decade.

Given up as a port entering its sunset years in 2002 when Maersk Sealand and Evergreen Marine left the Lion City for the cheaper confines of Malaysia's Tanjung Pelepas (PTP), the PSA Corp is back.

The world's No2 port operator by volume moved 20.6 million boxes across its Singapore docks, up a comparative 14.1 per cent. Tack on the contribution from the independent Jurong Port development and Singapore reached 21.34 million boxes, up 15.9 per cent, and just a hair under the 22 million boxes Hong Kong will post later this week.

PSA engineered its resurgence by facing some home truths, chief among which was that its container handling prices were going to have to come down if it was going to stop the exodus of cargo across the Johor Strait.

Hong Kong needs to grasp the same nettle, but the signs are not promising.

For one, it was always a zero-sum game for PSA: any cargo that moved to PTP came 100 per cent off its bottom line. With Hong Kong's main operators also controlling the ports across the border, there is less incentive to keep the cargo in Kwai Chung.

Worryingly, while there is prima facie evidence, the cost of calling at Hong Kong's main terminals has gradually declined in the past five years, operators say there is no need to further reduce their fees as they are now roughly equal to those in Yantian, Shenzhen's biggest port.

Those fees put the biggest dent in local shippers' pockets, but the terminal operators are not responsible for all cost disadvantages foisted on traders opting to use our port.

Rules governing the trucking industry have put Hong Kong at a US$200 per box disadvantage vis-a-vis our cross-border rivals, as has the government and industry's inability to come to grips with US$100 higher terminal handling charge (THC) levied by shipping lines.

The government, led by the permanent secretary for economic development Sandra Lee Suk-yee, appears to want to tackle the problem alone. According to a member of our port community, her ministry has declined the private sector's offers of help.

Early indications are that Shenzhen and Beijing are open to dismantling two of the regulations - known as 4-up-4-down, and 1-truck-1-driver - artificially inflating the cost of cross-border trucking.

However, dissolution of the licensing cartel is thought to be unlikely.

Elimination of the two regulations would cut US$132 off the overall US$300 per box cost disadvantage, according to last year's McKinsey report.

Reducing the US$100 THC differential remains the furthest from our grasp: the terminal operators and shipping lines have no interest in solving the issue and the government lacks the steel to hold them to account.

The level of the THC, a basket of costs that the carriers pass on to customers for calling in Hong Kong, has not changed here for more than a decade, despite clear evidence port costs have dropped.

A quick scan of the results for Cosco Pacific - the port's No4 operator - appears to prove container handling charges fell for the six years to 2003: revenues per box at CT8 East were $814 in 1998 against $668 in 2003.

A different cargo mix could account for some, but not all, of that difference.

However, eliminating any one of the myriad of our cost disadvantages is not going to solve the problem, which is why Hong Kong is really behind the eight-ball this year if it wants to remain the world's top container port.

Instead of following tradition and pointing to causes outside their domain, each sector, public or private, will have to ask what they can do to this year to maintain the long-term economic health of the port where they have made their billions.

For the government that means getting a backbone; for the carriers it means coming clean on the THC; and for the terminal operators it means a further cut in container handling charges.

Otherwise, at the end of the year, we'll be able to hear Singapore's celebrations from Kwai Chung.

hkskyline

January 16th, 2005, 06:07 AM

Hong Kong NWS Says It Has No Plan To Buy Dubai Ports' ACT Stake
Tuesday January 11

HONG KONG -(Dow Jones)- Hong Kong infrastructure firm NWS Holdings Ltd. said Tuesday it has no plan to buy Dubai Ports International's 46% stake in Asia Container Terminals Ltd., one of Hong Kong's port operators.

A local Chinese-language newspaper, The Hong Kong Economic Journal, reported Tuesday that NWS offered to buy Dubai Ports' entire stake in ACT for more than HK$3 billion, to make it the sole owner of the firm.

However, Maria Cheung, corporate communications manager at NWS, said: "We haven't submitted any proposals to Dubai Ports and we have no plan to buy Dubai Ports' stake."

Early last month, Dubai Ports agreed to buy U.S. railway operator CSX Corp.'s (CSX) container terminal portfolio for US$1.5 billion. That portfolio included a 20% stake in ACT.

Before the completion of Dubai Ports' deal with CSX, expected this quarter, CSX and NWS exercised their pre-emptive rights to buy Sun Hung Kai Properties Ltd.'s 57% stake in ACT at the end of December.

NWS said its effective stake in ACT is now 54%, while CSX holds 46%, which will be transferred to Dubai Ports on completion of their deal.

ACT has a total stacking capacity of 36,414 20-foot equivalent units, or TEUs It began its two berth-operation at Hong Kong's Kwai Chung Port in the middle of 2004.

Gavin Anderson & Co., a public relations firm representing Dubai Ports, declined to comment.

-By Carmen Chan, Dow Jones Newswires; 852-2802-7002; carmen.chan@dowjones.com

hkskyline

January 17th, 2005, 09:37 PM

Sea Transport Overview
Source : http://transport.tdctrade.com/

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 11th largest trading entity in the world. The port handles more than 80% of Hong Kong's total external cargo volume.

Hong Kong was the world's busiest container port in 2003, handling 20.4 million TEUs. According to the Marine Department, Hong Kong gets 1 vessel arriving or departing every 1.2 minutes, 1 TEU handled every 2 seconds and 1 passenger entering or leaving by ferries every 2 seconds.

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.

The completion of Container Terminal Number 9 in August 2004 added 4 berths for container vessels and 2 feeder berths for coastal vessels and barges. This new container terminal has a design capacity to handle 2.6 million TEUs per year.

Strong expansion of the southern China cargo base is expected to provide long-term growth of port traffic in Hong Kong, despite some diversion of ocean-going transhipment cargo and the competition from new ports in southern China.
According to Hong Kong Port Cargo Forecasts 2000/2001, Hong Kong's total container throughput is projected to reach 29.7 million TEUs in 2010 and 40.5 million TEUs in 2020. These represent average annual growth rates of 5.3% and 3.1% respectively during the first and second decades from 2000.

The United Nations Conference on Trade and Development (UNCTAD) ranked Hong Kong as the seventh busiest maritime centre in 2003 in terms of vessel tonnage.

Range of Services

The sea transport sector is of vital importance in supporting Hong Kong's status as the world's 11th largest trading entity, since it handles more than 80% of Hong Kong's total external cargo tonnage. River trade vessels are increasingly being used to carry goods between Hong Kong and Southern China, which has become the main cargo source for the territory.

In 2003, Hong Kong handled 207 million tonnes of seaborne and river cargo, 72% of which were by ocean-going vessels. Of all such seaborne cargo, 61 million tonnes (29%) were transhipment cargo. The Chinese mainland was the biggest source and destination of Hong Kong's transhipment business.

Overall, 73% of the seaborne cargoes in 2003 were containerised. Practically all transhipment cargoes were carried by containers. More than 90% of seaborne exports were containerised, while the ratio for seaborne imports was more than 60%.

Hong Kong handled 20.4 million TEUs of containers in 2003, making it the world's busiest container port. Of the total, two-thirds were handled by container terminals at Kwai Chung and Stonecutters Island, with the rest handled mid-stream by Hong Kong's 58 mooring buoys and by river trade facilities. The moorings also handle most of Hong Kong's break bulk cargo.

Liner versus bulk shipping

Sea cargoes to and from Hong Kong are 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 served by some 200 shipping lines. Containerised cargo dominates the liner market in Hong Kong.

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.

Bulk shipping takes care of bulky, unpacked goods such as oil, gas, grain, minerals and timber.

Port Facilities

Hong Kong's port facilities are financed, built, owned and operated by private firms. It is the only major port not run by a port authority.

Container Terminals

Hong Kong has 9 existing container terminals with a total of 24 berths at Kwai Chung and Stonecutters Island, operated by 5 private consortia. Through various productivity enhancement measures, their combined throughput capacity is around 14 million TEUs per year.

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 has been the fastest growing external transport mode over the past few years, rising from 9.3 million tonnes in 1990 to 59 million tonnes in 2003. Currently, river-trade vessels use the 8 public cargo working areas, some privately run berths and terminals, 3 feeder berths at the container terminals, and the dedicated River Trade Terminal (RTT) in Tuen Mun, which started operation in November 1998.

Service Providers

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

Hong Kong is a major ship owning and management centre. As at May 2004, there were 953 vessels (23 million gross registered tons) on the Hong Kong Shipping Register. According to the Hong Kong Shipowners' Association, the total tonnage of ships owned or managed by its members was around 62 million deadweight tonnes (8.1% of world's commercial fleet) as at December 2002.

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, its routes and cargo.

Shipping lines use shipping agent 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.

Moreover, there are more than 1,000 companies in Hong Kong providing shipping-related services such as ship management and brokerage services, financing, insurance and legal support.

Exports

Hong Kong earned HK$ 40.2 billion from exporting sea transport services in 2001, or 12.3% of total services exports for that year. Unlike air transport, passenger revenue constituted an insignificant part of the exports of sea transport services.

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

According to China's WTO commitment and the Regulations on the Administration of Foreign Investment in International Marine Shipping (issued by MOCOM and became effective in June 2004), only foreign joint-venture is 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.

By contrast, the CEPA II provisions allow Hong Kong services provides to have greater flexibility to access the market as they will be allowed from 1 January 2005 to form wholly-owned units in providing certain types of maritime services like international ship management services, containers station and depot services, non-vessel operating common carrying services, port cargo loading and unloading services.

Although Hong Kong services providers can only establish wholly-owned companies to provide supplies services (except fuel and water) and shipping agency services for vessels owned or managed by their parent companies, it is still important as Hong Kong shipping companies will have greater autonomy in conducting their own business resulting from CEPA II provisions.

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.

hkskyline

January 18th, 2005, 03:36 PM

Tuesday January 18, 7:17 PM
Hong Kong Port's Container Traffic Rose 7% In 2004

HONG KONG (Dow Jones)--Container shipping traffic through Hong Kong grew 7% in 2004, according to preliminary estimates from the city's Port Development Council.

A total of 21.93 million twenty-foot equivalent units, or TEUs, passed through the container terminals and other cargo-handling facilities of the world's busiest container port last year. In 2003, the port's throughput was 20.45 million TEUs.

For the month of December, Hong Kong's port handled 1.79 million TEUs, representing a decline of 2.9% from the same month last year.

The Kwai Chung container terminals, which handle the bulk of Hong Kong's traffic, had throughput of 13.43 million TEUs, an 11.2% increase over the previous year.

Though there was a double-digit increase in its throughput last year, Kwai Chung's terminals handled less cargo than the Shenzhen port for the first time ever, highlighting the intense competition between the local port and neighboring facilities in southern China.

In the mid-1990s, Hong Kong handled more than 90% of all cargo originating from the Pearl River Delta, the region's industrial hub. That share has fallen to about 60%.

Throughput in Shenzhen, comprised mainly of the Yantian, Chiwan and Shekou terminals, reached 13.65 million TEUs last year, a rise of 28% from 2003.

The pace of throughput growth in Shenzhen is expected to accelerate further as newly completed berths add to the port's handling capacity. By contrast, no new berths are planned in Hong Kong until 2015 at the soonest.

In Hong Kong, the throughput of other cargo-handling facilities, such as private wharves and anchorages, rose a modest 1.5% to 8.51 million TEUs last year. They handled 8.38 million TEUs in the previous year.

The nine container terminals at Kwai Chung have five operators: Modern Terminals Ltd., which is 55% owned by Wharf (Holdings) Ltd. (0004.HK); Hongkong International Terminals Ltd., or HIT, a unit of Hutchison Whampoa Ltd. (0013.HK); CSX World Terminals Hong Kong Ltd., a unit of CSX Corp. (CSX); COSCO-HIT Terminals Ltd., a joint venture between COSCO Pacific Ltd. (1199.HK) and HIT; and Asia Container Terminals Ltd., whose shareholders are CSX World Terminals, NWS Holdings Ltd. (0659.HK), and Sun Hung Kai Properties Ltd. (0016.HK).

hkskyline

January 20th, 2005, 05:45 PM

Study says 13-18% higher cost for shipping through Hong Kong than Yantian

http://www.tdctrade.com/shippers/img/vol27_6.jpg
Nov / Dec 2004

Terminal handling charges could be another differentiator, averaging HK$8,750 for a 5,000 kilo shipment through Hong Kong, versus HK$2,750 through Guangzhou's Baiyun

The cost of transferring consignments through Hong Kong is high by comparison with competitor exit points in the Pearl River Delta, but the sources of additional cost varied, according to a study commissioned by DHL Express conducted by a team from the Chinese University's Center of Cyber Logistics.

For sea freight, the cost of getting a consignment from factory gate to a destination market varied from 13% to 18% higher through Hong Kong than Yantian. Most of the cost difference was accounted for by high trucking costs Dan average of HK$3,200 through Hong Kong, compared with HK$1,200 through Yantian.

For air freight, terminal handling charges could be another differentiator, averaging HK$8,750 for a 5,000 kilo shipment through Hong Kong, versus HK$2,750 through Guangzhou's Baiyun.

As a result, overall costs of getting a consignment to market ranged from 11% more expensive through Hong Kong (to Europe) to 26% more expensive to Japan.

"The study clearly flagged that such a large cost difference could be a source of vulnerability for Hong Kong in future," said Kelly Yu, General Manager of DHL Express Hong Kong. "However, there are currently tremendous strengths that enable Hong Kong to remain attractive and competitive in spite of these costs. These include superior connectivity and frequencies both in Asia and globally, as well as immense trust in the efficiency and simplicity of Hong Kong's customs processes. They also include tax management advantages that arise from establishing an "importer of record" in Hong Kong."

Many Pearl River Delta manufacturers could take better advantage of logistics services that would improve the reliability of the supply chain, aid efficiency, and reduce costs, according to the study. Hong Kong retains considerable strengths as a competitive hub, including unmatched connectivity, and high levels of transparency and efficiency in customs and excise procedures.

At the same time, however, a key challenge for Hong Kong as a competitive logistics hub is high costs. The study highlights the need for investment in specialized logistics centers in Hong Kong, in particular for material handling and component distribution.

DHL believes that a logistics centre should focus first on spare parts storage, repair and return and other specialized services, and second on driving highly efficient "cross docking" services for cargoes transiting "Hub Hong Kong".

Professor Cheung Waiman, who leads the Chinese University team in an intensive study of 25 companies across five sectors in four PRD cities, concluded that most manufacturers are either unaware of, or not making optimal use of value- and efficiency-driving logistics services.

The study found evidence of a powerful clustering of activity around a "North Asia-Pacific Economic Zone" - with Hong Kong being the hub for strong growth in material imports from Japan, Korea and Taiwan, with finished goods emerging for sale in global markets. In addition, the study noted a Japanese clustering, with materials being imported from Japan for eventual re-export to Japan as finished goods: "This seems to point to many Japanese companies outsourcing to the PRD certain stages of the production chain," said Professor Cheung: "Hong Kong appears to play an important "cross-docking" role as materials and components are brought together by road, air and sea from many origination points in Asia."

Yu believed the findings called for careful attention to costs in Hong Kong, but perhaps more importantly called for enhanced focus on specialized and value-adding logistics services. He called for the Hong Kong Government to consider the need for new Logistics Centres both at Chek Lap Kok (CLK), and at locations close to CLK, like Tsing Yi.

mams

January 22nd, 2005, 02:58 PM

HK may lose busiest container port title

HONG KONG, Fri: Hong Kong is set to lose its title as world’s busiest container port to Singapore this year and China’s Shanghai and Shenzhen ports are steadily catching up, analysts said today.

Hong Kong moved 21.93 million twenty-foot equivalent units (TEUs) of goods last year, up 7.3 per cent from the year earlier as China’s export growth remained strong, the Port Development Council estimated.

But Singapore, the world’s second-busiest port, handled a record 21.3 million TEUs in 2004, up about 16 per cent due to booming regional trade.

“It is very possible that Singapore will surpass Hong Kong by volume as Hong Kong’s throughput growth is seen slowing to about 2.3 per cent this year,” said K.Y. Ng, a port analyst at Nomura International. — Reuters

hkskyline

January 22nd, 2005, 08:27 PM

Hong Kong may lose title of busiest container port

HONG KONG - Hong Kong is set to lose its title as world's busiest container port to Singapore this year and China's Shanghai and Shenzhen ports are steadily catching up, analysts said on Friday.

Hong Kong moved 21.93 million 20-foot equivalent units (TEUs) of goods last year, up 7.3 percent from the year earlier as China's export growth remained strong, the Port Development Council estimated.

But Singapore, the world's second-busiest port, handled a record 21.3 million TEUs in 2004, up about 16 percent due to booming regional trade, according to port operators.

"It is very possible that Singapore will surpass Hong Kong by volume as Hong Kong's throughput growth is seen slowing to about 2.3 percent this year," said K.Y. Ng, a port analyst at Nomura International.

Singapore government-run PSA Corp Ltd, the city state's main port operator, has said it plans to build 15 new berths over the next five to seven years to expand its annual handling capacity to 31 million TEUs from 20 million TEUs.

PSA moved 20.6 million TEUs of goods last year, up 14 percent, while its rival Jurong Port more than doubled its throughput to 711,000 TEUs from 340,000 TEUs.

Despite what is often seen as a keen regional rivalry, Ng said Singapore and Hong Kong are not direct competitors.

Singapore focuses on the less-profitable transhipment business, where goods are moved from ship to ship before sailing to their final destination. Hong Kong, capitalising on its location on the doorstep of China's export engine, specialises in more-profitable direct shipments.

Analysts said the PSA has become more responsive on pricing since losing several key customers to neighbouring Malaysia a few years ago. In Hong Kong, many of the port operators also have significant investments in neighbouring Chinese ports, making them less vulnerable to competitive pressures.

Hong Kong's listed port operators, including Hutchison Whampoa Ltd. (0013.HK), Wharf (Holdings) Ltd.'s (0004.HK) Modern Terminal Ltd., China Merchants Holdings (International) Co. Ltd. (0144.HK) and COSCO Pacific (1199.HK) should have good earnings growth in their Hong Kong and mainland business in 2004, analysts said.

China's export growth is expected to slow to between 10 to 15 percent this year from 32.7 percent last year and that could slow container traffic growth in the region, Ng said.

China's robust exports underpinned buoyant container traffic in the mainland, Hong Kong, Singapore and other Pacific ports.

About one-third of mainland exports originate from the booming southern province of Guangdong, and are shipped mainly through Hong Kong and Shenzhen ports.

Hong Kong officials say there is plenty of China business to go around, but the territory has been steadily losing market share in the past few years to Shenzhen, where a 40-foot container is US$300 cheaper to process.

Last year, Shenzhen port for the first time moved more goods than Hong Kong's main container facilities at Kwai Chung. The city handled 13.66 million TEUs while Kwai Chung moved 13.43 million TEUs in 2004.

Shenzhen's growth rate was close to that of China's busiest container port Shanghai, which increased 29 percent to 14.55 million TEUs. Shenzhen port forecast 10-14 precent volume growth this year to 15-15.5 million TEUs.

"It is not surprising that Shenzhen will overtake Hong Kong -- it's just a matter of time," said Peter So, an analyst at Macquarie Securities.

Hong Kong port operators have been stepping up investments in mainland ports to tap China's trade growth, a trend that is expected to continue.

Reuters

Bunny

January 22nd, 2005, 09:32 PM

reply: Hong Kong may lose title of busiest container port

This is all about investors, like whats listed :Hutchison Whampoa Ltd. (0013.HK), Wharf (Holdings) Ltd.'s (0004.HK) Modern Terminal Ltd., China Merchants Holdings (International) Co. Ltd. (0144.HK) and COSCO Pacific (1199.HK) ...

They controlled the port, they can do what they want, as long as it's profitable to them. So what I mean is the cost of shipping using HK ports are quite expensive because they monopolized the ports, and rise prices to earn money. This leads to the lost attraction of customers. Please correct me if I'm wrong

hkskyline

January 22nd, 2005, 10:53 PM

Hutchison has port interests throughout China and worldwide. They are the world's largest port operator. In fact, they're so powerful in the international arena that the US government issued a report accusing Li of colluding with the Chinese government to control the seas.

To Hutchison, it doesn't matter if Hong Kong might be 2nd or 3rd or 1st in terms of traffic. They are making money there. Similarly, Shenzhen may be a bit cheaper, but they are not as well-connected internationally and they are less efficient. Hong Kong is trying to negotiate simplified border agreements to simplify the transport of goods into Hong Kong for export. As well, the local logistics industry is implementing value-adding solutions to make them more competitive. The bridge to Macau / Zhuhai will open up the western delta to send goods to Hong Kong for export rather than have them go to Guangzhou.

In the end, the port operators will gain because they are well-diversified throughout China. Hong Kong's port is still growing, but Shenzhen is growing even faster. Since they have stakes in both ports, it's all nice, isn't it? Hong Kong's container port is still very attractive. Singapore investors tried to pay a huge premium to buy a stake last year, but they were thwarted by an even larger bid by Dubai.

Bunny

January 23rd, 2005, 12:41 AM

Wow really? Hutchison (or the Li's family) are really that powerful in the international arena? Well then I guess they will do the job for to increase competitiveness for their ports, that means lots of places in China. Cause they need to earn money for themselves and stock owners. Small characters like us don't need to worry..haha. I'm just wondering are they doing the same thing like in "Hong Kong Electric Group", by monopolizing the market, and keep increasing the electric prices even when the economy for lower and middle classes are bad. Well but the bridge to Macau/Zhuhai proves that they (including the government) are working. And this proves that HK's port still have spaces to grow, am I right? And also ports in the mainland would grow, this is good for the whole region, including Singapore and other South east Asia.

Hey HKskyline, any information on port facilities of HK? Stuffs like the maximum capacity, volume, and handled capacity in 2004...etc? Is HK's port nearly exceeded to maximum? Is there a need to build more port facilities?

hkskyline

January 25th, 2005, 03:42 PM

Hong Kong retains box crown
21 January 2005
Journal of Commerce Online

Hong Kong's shipping traffic grew 7 percent in 2004, to 21.93 million TEUs, up from 20.45 million TEUs in 2003, but regional rivals continue to gain on the world's busiest container port complex.

In December, Hong Kong's volume slipped 2.9 percent from the same period in 2003.

Most of the shipping though Hong Kong comes though the Kwai Chung container terminals, where volume increased 11.2 percent from a year ago, to 13.43 million TEUs. But growth may be constrained since no new berths are planned at Hong Kong until 2015 at the earliest.

By contrast, the mainland's neighboring Shenzhen complex of the Yantian, Chiwan, and Shekou terminals together handled 13.65 million TEUs in 2004, up 28 percent year-on-year, and there are plans to add new berths to expand port capacity, according to the city's Port Development Council.

hkskyline

January 27th, 2005, 03:47 PM

Cosco lines up spending spree in Hong Kong
26 January 2005
Lloyd's List

COSCO is mustering its various corporate divisions into a dress parade centred on Hong Kong, writes Sam Chambers.

Cosco Pacific, the ports and box leasing arm, has unveiled a $700m spree in 2005 alone, split between terminals and new containers. In a meeting with Hong Kong analysts, the company also stirred up expectations for other group company moves.

The market expects Cosco will list its Cosco Container Lines by mid-summer, raising $1bn. There are also indications that Cosco Container Lines is preparing for dramatic fleet expansion from the current 250,000 teu, as it attempts to match the meteoric growth of China Shipping Container Line.

Cosco has also signalled that it will shift the majority shareholding of Cosco Pacific from the hands of Cosco Hong Kong, back to the Beijing headquarters.

Such a streamlining will make Cosco Hong Kong a pure dry bulk shipping unit. As such, it would be another perfect listing candidate.

These initiatives, flashed for analysts this week, appear to be the biggest burst of Cosco brand efforts since the bravado surrounding the 1997 handover of Hong Kong, when the company first started to pump assets into Cosco Pacific.

This was also the era when Cosco Hong Kong went the extra mile to display patriotic support for Hong Kong stability during the transition to Chinese rule. Cosco Hong Kong was pulled together from a patchwork of small Cosco-controlled front companies, the Cosco office skyscraper was erected and the company unveiled a big dry bulk fleet expansion for Cosco Hong Kong.

While Cosco Pacific has joined the blue chip pantheon of the Hang Seng Index, there has been a sense — including from inside Cosco itself — that rival China Shipping has stolen the initiative.

Last year the five-year-old China Shipping Container Line raised $1bn with a Hong Kong listing that seemingly jumped the queue, ahead of the bigger and older Cosco Container Lines.

China Shipping has also staked a claim to the massive Yangshan Deepwater Port in Shanghai.

Of note, perhaps in response, Cosco Pacific said it would take over the parent’s Long Beach terminal in the second half of 2005.

Other target ports on the shopping list include phase two of Dalian Container Port, two container terminals and one ro-ro terminal in Tianjin, Nanjing Container, Taicang Container and phase two of Guangzhou Nansha.

The biggest terminal will be phase two of Guangzhou Nansha, which has a capacity of 3,500 teu across six berths.

By contrast, the Long Beach terminal has a capacity of 1,500 teu across four berths, which should explain why southern California ports have been so congested, though Cosco Pacific believes that the Long Beach delays should be cleared later this year.

The company is also ordering more boxes and at higher prices.

Capital expenditure on new boxes will be $350m, as it orders 170,000 teu at a cost of $2,100 each, or 50% higher than the previous swathe of ordering at $1,400 each.

China will probably record a growth of 23% in imports and 20% in exports in 2005, China’s National Development and Reform Commission said.

vincent

January 31st, 2005, 02:50 AM

i watched a RTHK tv program talking about Li's enterprise. (it was shown in 1998) i believe it is still avialable online in rthk.org.hk. They said Li control like 30% (if i remember correctly) of all port around the world back in 98. I don't know the percent now.

vincent

January 31st, 2005, 03:05 AM

i don't know why HK doesn't build a railroad straight to the port (i know they got plan for that though), so all the truck traffic can be eliminated. It save time and money.

hkskyline

February 1st, 2005, 07:23 PM

Modern Terminals sees 6.2% growth in first nine months

Source : Shippers today (Nov/Dec 2004)
http://www.tdctrade.com/shippers/img/vol27_6.jpg

http://www.tdctrade.com/Photo/cms/article/shippers/21853S2.jpg

While the shipping industry ponders the question of whether Hong Kong is indeed losing its competitive edge to ports across the border, Modern Terminals has stayed a step ahead with its innovative logistics solutions such as Inland Gate which has contributed largely to the the terminal's Hong Kong port throughput.

This year, for the first nine months alone, Modern Terminals has already registered a large volume year-on-year growth of 6.2%, handling 3,160,000 TEU. This was largely contributed by barge transshipment from the western PRD. "This is due to the fact that the western PRD is an area with significant growth and the success of the company's cost-effective, reliable integrated feeder and terminal service, Inland Gate," said Hung Hin Chau, Logistic Manager of Modern Terminals.

Under rapid service network expansion, Inland Gate service now covers 21 terminals in 11 PRD ports for major shipping lines in South China.

With the direct communication between barge operator and terminal, there is greater reliability on feeder schedule and cargo connection with high container visibility, enabling liners and shippers to monitor container movement as soon as a container enters the gate of feeder port in PRD.

"Because of the ad-vantage of the smooth operation flow in Hong Kong, regular barge departure time at PRD feeder port becomes possible. This enables shippers to accurately plan their pre-carriage arrangement, which in turn gives shippers more time for production to the last minute," said Hung.

Hung added, "Shippers can also benefit from other tailor-made and value-added services under the umbrella of Inland Gate."

hkskyline

February 3rd, 2005, 05:52 AM

River Trade Terminal misses volume and profit targets
Operator still in red, hounded by main rivals' rate cuts and land grant litigation
Russell Barling
3 February 2005
South China Morning Post

Loss-making River Trade Terminal (RTT) fought off strong competition last year to capture more of the Pearl River Delta's river cargo, but still fell short of the three million containers management says it needs to turn its first profit.

Shareholding sources say throughput at the $6.5 billion facility rose "11 or 12 per cent" last year to about 2.5 million teu (20-foot equivalent units) despite the main terminals in Kwai Chung slashing handling fees for river trade to fill under-utilised wharves.

RTT, whose shareholders include Sun Hung Kai Properties, Hutchison Port Holdings and Jardine Matheson Holdings, next month will take the final step in its drawn-out legal battle with the government over its right to move ocean-going cargo across its docks.

It is believed that RTT relied on non-river trade for as much as 25 per cent of its business last year, much to the consternation of the government, which claims the practice is contrary to the conditions of its 1995 Land Grant. After the Court of Appeal in June overturned an earlier ruling in their favour, RTT management approached the Lands Department about changing the provisions of their lease as they are entitled to do after five years of operation.

However, Hutchison ultimately blocked the deal, according to an executive from one of the shareholding firms.

"Sun Hung Kai was eager to renegotiate the land grant, but that would have cost a premium, something Hutch wasn't willing to pay," the executive said.

"[Hutchison] does not want RTT to handle intra-Asian trade because that would eat into their core business at the main terminals," he said. "RTT has always been a defensive investment for them."

A spokesman for Hutchison declined to comment while legal proceedings were ongoing.

After watching overall volumes fall in the first quarter, the main terminal operators aggressively cut their rates for transshipment cargo, much of which moves by barge from the delta.

In the first 10 months last year they handled 1.91 million teu of river trade, up 45 per cent year on year.

But the move increased the pressure on RTT, which has not turned a profit in its first six years of operation.

RTT's trial at the Court of Final Appeal is set for March 7.

hkskyline

February 7th, 2005, 08:37 PM

Hong Kong's NWS Holdings Sells Port Assets
Monday February 7, 5:39 am ET

HONG KONG (AP) -- Hong Kong infrastructure company NWS Holdings Ltd. said Monday it has agreed to sell its port assets here to Singapore's state-owned port operator for 3 billion Hong Kong dollars (US$385 million).

The deal marks the end of a long quest by Singapore's PSA International Pte. Ltd. to buy into Hong Kong's Kwai Chung container port -- the world's largest.

Analysts have said PSA wants to make its assets more attractive as a prelude to a stock market listing in Singapore.

But they have questioned whether PSA, the world's second-largest port operator after Hong Kong's Hutchison Port Holdings Ltd., has paid too much for NWS Holdings' stakes in two container terminals at the Kwai Chung port.

Hong Kong is quickly losing its market share to rival ports in southern China, including one in the nearby city of Shenzhen.

NWS Holdings, the infrastructure arm of Hong Kong property company New World Development Co., said it will focus on developing its mainland China operations after the sale to PSA.

NWS Holdings will a book a profit of HK$1.8 billion (US$230 million) from the sale, while PSA will acquire a 31 percent stake in Asia Container Terminal Ltd., a port operator in Kwai Chung.

Two months ago, PSA tried to acquire a 57 percent stake in Hong Kong's Asia Container Terminals Ltd. for HK$2.3 billion (US$295 million), but the deal was thwarted by the company's shareholders, including NWS.

Last month, PSA also lost a bid for a 28.5 percent stake in Asia Container Terminals to Hong Kong developer Sun Hung Kai Properties Ltd.

hkskyline

February 8th, 2005, 03:33 PM

River Trade Terminal in loss despite 12% rise
7 February 2005
Lloyd's List

THE River Trade Terminal, now in the final stages of a bruising battle with the government over whether it can handle ocean-going vessels, had a throughput of about 2.5m teu last year, up 12%, writes Keith Wallis.

But the HK$6.5bn (US$833m) facility, completed in 1998, is still making a loss. RTT managers believe the complex, in the Tuen Mun area of Hong Kong’s north-west New Territories, would need 3m teu to be profitable.

The company is jointly owned by Hutchison Port Holdings, Sun Hung Kai Properties and Jardine Matheson Holdings. But it was hit financially after the main Kwai Chung operators slashed handling fees for barge and river trade traffic to boost use of barge wharves.

hkskyline

February 10th, 2005, 04:15 PM

South China Morning Post
January 29, 2005
Expanding to meet volume
Growth at the world's top container port and second busiest cargo airport is expected to create new jobs, writes John Cremer

LEADING PLAYERS in the logistics industry are speaking with one voice about last year's results. If they decided to sing with one voice, they would have to choose the old Frank Sinatra standard It Was a Very Good Year.

Those are the words you hear repeatedly from people at all levels within the sector, and it is not surprising when you consider some of the key facts.

As Anthony Wong Foo-wah, president of the Hong Kong Logistics Association, is proud to point out, the city's position as the world's leading container port was maintained last year with Hong Kong handling a total of 21.93 million 20 -foot equivalent units, up 7.3 per cent from 2003. Impressive growth was also seen in airfreight, with a double-digit increase to 3.1 million tonnes, making Chek Lap Kok the world's second busiest cargo airport after Memphis, Tennessee - the hub of FedEx Express.

"We see 2005 as another good year, particularly for airfreight," Mr Wong said. "The Chinese economy is getting better, both imports and exports are rising, and infrastructure projects like the western corridor and new bridge links to Shenzhen will help the flow of cross-border traffic."

He said he was confident this would translate into further job vacancies as logistics companies opened new branches in southern China and manufacturers hired specialists to help streamline their supply chain operations.

Raymond Fan Wai-ming, Deputy Secretary for Economic Development and Labour and secretary of the Hong Kong Port Development Council, shares that optimism. He emphasised that, with about 13,000 trucks crossing the border every day, continued healthy growth could be expected. Hong Kong might not always be able to compete on cost, but it still offered premium services, more connections and professional expertise.

"The good news is that the pie is getting bigger, so there is enough for everyone to have growth," he said.

"The port and logistics industry is now providing work for about 200,000 people in Hong Kong and more will be needed. It's now a highly sophisticated business, involving accountants, lawyers, banking and IT, and that is why we want to develop it on many fronts."

A ninth container terminal was completed last year and projections show that another will be needed in 10 years. The Digital Trade Transportation Network system, providing a service environment for transmitting data, is to be launched this year and - as a possible medium-term development - a logistics park on Lantau Island is being studied.

With all this happening, the government is encouraged that tertiary institutions are stepping up related courses to meet demand, and that qualified graduates are now entering the industry.

One possible destination for such graduates is TNT Express Worldwide (HK). Ambrose Linn, the company's deputy country general manager, is looking for management trainees and more experienced staff because business growth plans mean that up to 50 recruits will be added to the local workforce of 500.

"As logistics is getting more professional, employees need advanced skill sets and to understand IT solutions," Mr Linn said.

"On a personal level, they should be hard working, self-motivated, and possess great integrity, as they are dealing with high-value consignments every day and have access to sensitive commercial information."

TNT is also co-operating with the Vocational Training Council and the Labour Department to provide skills redevelopment opportunities and jobs for middle -aged people.

"If we see they have the enthusiasm and commitment to do well, we will arrange retraining and help them to switch careers to a field with ample potential."

Peter Yin, regional vice-president for Fedex South Pacific, is also expecting a good year and further recruitment.

He cited the "phenomenal growth" of the Pearl River Delta as a key reason for adding three flights to Seoul in October and for opening an eighth Hong Kong operating station.

"We are expanding in order to carry the volume," he said. "It is the trend, even smaller manufacturers now realise that logistics is one of the key tools for achieving competitiveness and in making the supply chain cycle more efficient."

hkskyline

February 17th, 2005, 03:37 PM

Reduced charges lift HK port business
Russell Barling
17 February 2005
South China Morning Post

A full month of build-up to the Lunar New Year helped Hong Kong's main terminal operators get off to a strong start this year as reduced handling charges continued to attract more of South China's relay cargo to their docks.

The total South China deep-sea cargo market expanded a comparative 26 per cent last month to 2.3 million teu (20-ft equivalent units), with operators in Kwai Chung handling just over half of the volume, or 1.17 million teu - 16.7 per cent more than last year.

"The timing of Chinese New Year this year gave us more time to move cargo," said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers Council. "The rush was pretty much across the board. There was also a 20 per cent growth in airfreight."

Hong Kong port overall saw its volume reach 1.85 million teu, up 7.8 per cent year on year. However, January's growth was inflated by last year's low base comparison when business at the main terminals shrank in the first quarter.

"The first three or four months last year were pretty slow for us so we anticipate that the port's overall growth will slow in the second quarter when we begin comparing with stronger numbers from last year," said Erik Bogh Christensen, managing director for Modern Terminals (MTL), the No2 operator.

In the second quarter of last year, operators such as MTL and Hongkong International Terminals cut container handling charges for transshipment cargo in a bid to boost lagging volumes. The move siphoned cargo away from Shenzhen ports, but intensified competition between the main terminals and mid-stream community.

Cargo handled outside the main terminals last month shrank a comparative 4.7 per cent, to 687,000 teu.

hkskyline

February 20th, 2005, 06:24 PM

Seven shipping containers stolen from Hong Kong terminal

HONG KONG, Feb 20 (AFP) - Thieves have stolen seven fully-laden shipping containers from a Hong Kong barge, police said Sunday.

The 20-foot containers were lifted off the vessel on Saturday night while it was moored in the city's terminal that handles traffic that plies China's Pearl River.

Five men boarded the barge from their own vessel and overpowered the lone man keeping watch.

The lighterman, aged 53, was tied, gagged and hidden in a cabin while the robbers unloaded the containers.

He was freed uninjured an hour later by a colleague who found him after the robbers had fled.

Police said the containers held consignments of lighting accessories. They were unable to give a full value of the contents.

Hong Kong's container port is the busiest in the world, with more than 20 million such containers moved in and out in 2003. Insurance experts say it is also a black-spot for container thefts, which are stolen for their scrap value.

Nemo

February 22nd, 2005, 11:43 AM

Thats not easy, to steal some containers..... :cheers:

hkskyline

February 24th, 2005, 07:29 PM

Hong Kong register on course for tonnage target
Competition hotting up, writes Keith Wallis in Hong Kong
23 February 2005
Lloyd's List

HONG Kong’s shipping register is on course to top 30m gross tonnes this year, but still faces strong competition from regional rivals in other sectors of the maritime industry.

Marine Department officials in Hong Kong are confident that the 30m gt target will be achieved after phenomenal growth in the past 12 months on the back of capesize and panamax newbuilding deliveries.

They believe that, with more than 500 vessels due to be delivered this year, including capesize, panamax and handy bulkers plus very large crude carriers (VLCC) and aframax tankers, a sizeable number will fly the Hong Kong flag.

The register, with 1,027 vessels totalling 26.26m gt, has added 3m gross tonnes within the last 12 months alone. This was despite the loss of ships from the Hong Kong register following their sale to new owners.

But even as Hong Kong celebrated its buoyant shipping register, a senior Chinese shipping executive warned that Hong Kong could lose its position as an international shipping centre to rival cities unless it tackles four serious issues.

Liu Guoyuan, president of Cosco (Hong Kong), an offshoot of China’s largest shipping company, China Ocean Shipping (Group), said: “The lead that Hong Kong enjoys over its competitors is becoming narrower.”

Hong Kong is facing challenges and these need to be addressed, he added.

Outlining the issues, Mr Liu said: “There is a serious shortage of qualified professionals in the logistics and shipping industries. Both the cost of land and operating expenses are high in Hong Kong.

“Shipping, logistics, ports and other relevant industries have yet to form an integrated operational system that is interactive and mutually supportive to the benefit of all.”

Finally he believed there should be more effective co-ordinated guidance from different government departments.

Mr Liu, speaking at a joint lunch hosted by the Hong Kong Shipowners Association and Marine Department yesterday, said there was a “chronic” shortage of qualified professionals in shipping and logistics.

In the short term this was being dealt with by recruiting staff from outside Hong Kong. But in the longer term, local youngsters needed to be encouraged to join the industry. Mr Liu believed the cost issue could be solved with a further simplification in shipping registration and customs formalities, while improving efficiency and co-operation in government.

hkskyline

February 25th, 2005, 02:05 PM

HK raids not the last for ambitious operators
Dubai Ports has until April 4 to match PSA offer
25 February 2005
South China Morning Post

Dubai Ports International (DPI) has until April 4 to match PSA International's offer for some of NWS Holdings' Hong Kong port assets. Expect it to exercise that right.

At stake is a controlling interest in Asia Container Terminals (ACT), the company that owns and operates the two idle yet world-class berths known as CT8 West.

It is hard to imagine that DPI will pay US$1.14 billion in cash before tax and liabilities for the global port assets of CSX Corp without getting control of the portfolio's most prized asset.

Matching the offer will stop Singapore's state-owned PSA Corp from buying control of ACT. But DPI cannot stop the PSA from becoming a minority shareholder, despite what has been reported elsewhere.

Nor does DPI have the right - legal, pre-emptive or otherwise - to block PSA from buying a 33 per cent minority stake in CT3, the other asset NWS, a New World Group company, sold last week.

According to a report in another newspaper, "the shareholding agreement for CT3 forbids any shareholder from selling its stake to another port operator".

If true, that would unquestionably give DPI the leverage to block the PSA acquisition.

However, senior executives at both NWS and the PSA say no such clause exists. If it did, the Middle East's biggest port operator, DPI, would never have been able to buy its part of the asset from CSX in the first place.

The fact is, DPI does have the right to match PSA's offer for the stake in ACT that NWS directly holds. That amounts to 31.4 percentage points of the effective 54 per cent in ACT that NWS holds.

DPI does not have the right to match the offer PSA made for the stake in ACT that NWS indirectly holds through its partnership in CT3, or the former CSX World Terminals (Hong Kong).

Assuming PSA's $1.9 billion offer for the effective 54 per cent stake, DPI would have to stump up $1.1 billion to exercise that pre-emptive right and retain control of ACT.

But any way you slice it, by April, PSA will own an effective 22.6 per cent of ACT and 33 per cent of CT3, according to the people who are writing the cheques.

The acquisition trail is unlikely to end there for either company, however.

PSA, which has one eye on resurrecting the potential US$3 billion listing it shelved several years ago, is working on more acquisitions in China to match the minority share in a Tianjin project it agreed to take in December last year and its stakes in Dalian and Guangzhou terminals.

Expansion, while also likely to enhance the value of PSA's initial public offering, is vital to its global ambitions.

DPI's parent, the Dubai Ports Authority, was virtually debtless before signing on for a US$1.45 billion loan to fund the CSX acquisition.

The purchase will make it the world's sixth-biggest operator by available capacity once all the projects it has acquired are up and running. But, like PSA, it still has a long way to go if it wants to compete on an equal footing with industry leader Hutchison Port Holdings.

So do not be surprised if you see either state-owned operator make another CSX-sized purchase this year. Both are bent on expansion and well capitalised.

In Hong Kong, however, they will be partners on Kwai Chung's busy waterfront. Business, like politics, makes for strange bedfellows.

hkskyline

March 1st, 2005, 05:48 PM

South China Morning Post
March 1, 2005
PSA clears last hurdle to secure HK berths
Russell Barling

PSA International of Singapore yesterday secured a place on Hong Kong's busy waterfront after the last shareholder in Asia Container Terminals (ACT) declined to exercise a right to match part of PSA's $ 3 billion offer to NWS Holdings.

Dubai Ports International (DPI), the global investment arm of the state-owned Dubai Ports Authority, chose not to pre-empt PSA's bid by last night's deadline, effectively clearing the Singapore firm's stake in three berths at Kwai Chung.

"We are optimistic of the long-term future of Hong Kong port and confident that we are able to add value to the port scene," PSA International chief executive Eddie Teh said.

"We look forward to working closely with our partners and the authorities to provide shipping line customers with high productivity and service levels."

DPI had the right to match the PSA's offer for the 31.4 per cent in ACT held directly by NWS, a stake valued at a little more than $ 1.1 billion.

The final payment for that part of the PSA's overall $ 3 billion offer remained outstanding last night, according to NWS.

"The transaction will continue with PSA International because the other party did not exercise its pre-emptive right," said NWS spokesman Kwan Chuk-fai.

Mr Kwan said he expected the full deal - which will give the PSA an effective 54 per cent of the two-berth ACT and 33.3 per cent in the firm which owns Container Terminal 3 - to be completed by the first week of next month.

However, as 22.6 percentage points of PSA's new stake in ACT would be indirectly held, DPI would remain in control of the company with 68.6 per cent of the voting rights, DPI said last night.

The deal brings to an end the flurry of bids and counter bids for Hong Kong port assets that began with the sale of CSX Corp's global port assets last year.

hkskyline

March 3rd, 2005, 05:43 PM

March 1, 2005
Government Press Release
No decision on container terminal 10 location

No decision has been made on the location of the proposed Container Terminal 10, the Economic Development & Labour Bureau says.

In response to media enquiries, the bureau said the Study on Hong Kong Port Master Plan 2020 identified northwest Lantau and southwest Tsing Yi as possible locations for the proposed terminal.

As recommended, an ecology study will be conducted on the northwest Lantau site to further assess its environmental suitability for constructing the terminal, the bureau said.

The bureau will also update the port cargo forecast to work out the optimal timing for the construction and will review the port expansion options when more data is available.

Environmental impact assessment to be completed

The Government will have to further evaluate the relative merits and suitability of the northwest Lantau and southwest Tsing Yi sites pending the investigations, the bureau said.

When a decision is made on the preferred site, a detailed environmental impact assessment and feasibility study will have to be conducted to fulfill planning requirements.

The bureau has no more than a concept plan for the proposed site at northwest Lantau. A detailed plan has yet to be drawn. When the preferred site is decided, the public will be fully consulted on the proposed plan.

hkskyline

March 4th, 2005, 01:32 AM

Ocean-vessel trade key component of RTT profitability
As much as 50 per cent of revenue rides on Monday's outcome of legal battle
Russell Barling
4 March 2005
South China Morning Post

The $6.5 billion River Trade Terminal (RTT) could turn its first profit within three years if operating costs are cut and it is allowed to continue to serve vessels that deliver goods from south China's prolific factories to Asian markets, according to its top executive.

The company on Monday will reach the final leg of its two-year legal battle with the government over its right to serve ocean-going vessels, a valuable and growing source of revenue for the firm.

Its new general manager, Paul Wong Hok-leung, yesterday said that win or lose, the RTT's business model would change to be more in line with the low-margin business it is in and the low overheads of its rivals.

"One of my key goals is a substantial re-engineering, in simple terms substantial cost reduction," Mr Wong said. "But there's no doubt having the right to handle vessels from the intra-Asia trades would help me build a hub quicker, and turn around the company."

The government insists the provisions of the RTT's nine-year-old land grant restrict it to handling cargo shipped to and from the Pearl River Delta. It moved about 2.6 million boxes of cargo across its 49 berths last year, 900,000 of which were from the type of ocean-going vessels the government says is in contravention of the RTT lease.

As its tariffs for handling intra-Asia cargo are on average double those for the river trade, as much as 50 per cent of RTT's annual revenue may rest on the two-day trial at the Court of Final Appeal.

"On Monday, if the court says I cannot [handle intra-Asia vessels], I will stick to my job, positive that we can still operate on a break-even basis," Mr Wong said. "If I am allowed to do a small volume [of intra-Asia trade] - one million teu [20-ft equivalent boxes] - within 30 months, the RTT will turn a profit."

Mr Wong declined to reveal how much money the RTT lost last year, saying it was "more than many, many millions". Shareholder provisions in 2002 and 2003 annual reports indicate the company lost at least $450 million in those years.

Part of the problem, he said, was the fragmented nature of the river trade business made it difficult to market the RTT, which he said was the best facility of its kind in Asia.

"Because of the dispute, the RTT's marketing efforts have been undermined," he said. "The quickest way to turn the RTT into a hub for river trade is to target the intra-Asia vessels plying it.

"If I can market from that angle, it would be a far more effective way to create a hub [for the river trade]. It is the right way."

While the RTT has increased the amount of cargo it handles every year since its 1998 launch, it has largely failed to live up to its original billing when it was awarded to a RTT consortium which included Hutchison, Sun Hung Kai, Jardine Matheson, Cosco Pacific and the Bank of China (International).

Tired of the endless cash calls, Cosco and the BOC sold their 10 per cent stakes in the past two years.

Many industry watchers are beginning to see the RTT as a lost opportunity for Hong Kong, with ports across the border increasingly turning their attention to the promising river trade. The 10 billion yuan new international port at Nansha is one of several south China facilities looking to the river for additional revenue.

"Hong Kong is at the southern tip of the Pearl River Delta, Nansha is almost the geographical centre," Mr Wong said. "If the RTT does not attract the critical mass it needs to become a river trade hub in three years, we are in serious trouble."

hkskyline

March 4th, 2005, 06:03 PM

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Container Terminal 9 (South)

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Modern Terminals owns and operates Container Terminals 1, 2, 5 and 9 (South) in Kwai Chung Port, Hong Kong, with an annual handling capacity of 5.5 million TEUs.

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Some new quay cranes delivered to Modern Terminals' CT9. These cranes have an outreach capability of 22 containers across, designed to service the biggest container vessels in the world. Photo taken on: 3/9/2004

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Among the first batch of advanced equipment delivered to the new Container Terminal 9 (South) are rubber-tyred gantry cranes (RTGs).

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Container Terminal 9 (South) commenced operations in 2003.

hkskyline

March 10th, 2005, 03:42 PM

Higher Rates, Capacity Helped Double OOIL 04 Net
By Jeffrey Ng
Of DOW JONES NEWSWIRES
10 March 2005

HONG KONG (Dow Jones)--Higher shipping rates and increased capacity helped Orient Overseas (International) Ltd. (0316.HK) double its net profit in 2004, the container shipping and port operator said Thursday.

Net profit for the year ended Dec. 31 rose to US$670.4 million, compared with US$329.0 million in the previous year. Revenue rose to US$4.14 billion from US$3.24 billion.

OOIL recommended a final dividend of 18 US cents, up from 12.8 US cents. OOIL also recommended a bonus share for every 10 stocks held.

The results came in above market expectations. A Thomson Financial poll of eight analysts put OOIL's net profit at US$563.8 million.

In anticipation of strong 2004 results, OOIL's shares have risen over 20% since the end of February. On Thursday, its shares closed up 1.1% at HK$37.90.

The company said its average shipping rates in 2004 rose about 7.3% from the previous year, while shipping capacity increased 19%, after the company took delivery of four large container vessels.

OOIL, which is controlled by the family of outgoing Hong Kong Chief Executive Tung Chee-hwa, said its outlook for 2005 remains positive, driven by still-strong shipping rates, and the continued improvement in its container terminals business.

"We expect that demand will exceed supply this year," said OOIL's Chief Financial Officer Nicholas Sims. "(Shipping) rates won't fall if demand is still there."

In 2004, OOIL's container terminal investments in North America recorded a 47% on-year rise in profits before tax. The company expects such growth to be maintained this year.

Contributions from port investments in China are also expected to increase, after OOIL in January signed a letter of intent with Ningbo Port Group and other parties to develop five berths at the port of Beilun in eastern China.

However, Sims didn't provide any growth forecasts for this year. "We don't know what the second half will hold," he said.

OOIL's results come a day after rival China Shipping Container Lines Co. (2866.HK) reported a near-threefold surge in net profit to CNY4.02 billion on a 16% increase in average shipping rates. China Shipping expects shipping rates to continue rising at about 4% to 5% this year, before holding steady in 2006.

For this year, OOIL has earmarked US$693 million for capital expenditure costs, which includes the purchase of new ships and container boxes.

However, that amount might be decreased, Sims said, as OOIL plans to defer the order of some container boxes due to current high container costs.

hkskyline

March 13th, 2005, 05:50 PM

Threat of price war at Hong Kong strikes fear in port operators’ minds
7 March 2005
Lloyd's List

THE single greatest fear among the established port operators in Hong Kong following the big money merry go round seen in the last few months is the threat of a price war at the world’s most expensive port.

Dubai Ports International’s purchase of CSX World Terminals for around $1.4bn gives the Middle Eastern firm holdings in container terminal 3 and 8 West, while PSA International of Singapore has spent HK$3bn (US$384.6m) to bag the shares of NWS Holdings in CT8 West. The moves have brought two new faces into what was a de facto duopoly at Kwai Chung for three decades between the Wharf-controlled Modern Terminals and Hongkong International Terminals, part of the Hutchison Port Holdings empire.

“Both CT3 and CT8 West are not exactly full,” says one well placed terminal executive, referring to the 20% utlisation rates at the former and the zero business at the latter.

“Some tempting deals might be made, which would be bad for everyone in the long run,” he adds. Last April the terminal operators, under duress following many consecutive months of negative growth, slashed fees for transhipment cargoes by 20-30%, informed sources report.

This led to a significant uptick in transhipped cargo, taking cargoes away from the midstreamers and the river trade terminal, though of course, this is not the revenue-generating business model any operator in the high cost environment of Hong Kong would want to pursue full time, as John Meredith told Lloyd’s List nearly two years ago. He said that transhipment “does not add anything of real value to a national economy” and that “any country spending money on port infrastructure with an eye on box league tables or transhipment is doing a disservice to both the country and the taxpayer”.

Ironically, these are the boxes that are providing the growth figures for Hong Kong these days as it stares down the inevitable eclipse by its rivals north of the border.

hkskyline

March 14th, 2005, 07:04 PM

March 11, 2005
Government Press Release
2004 port cargo throughput up 6%

Total port cargo throughput in the fourth quarter of 2004 slipped 1% over a year earlier, to 54.9 million tonnes. But for 2004 as a whole, total port cargo throughput rose 6% to 220.9 million tonnes.

In the fourth quarter, inward port cargo fell 5% to 32.6 million tonnes, while outward port cargo rose 6% to 22.3 million tonnes.

Within port cargo, seaborne cargo fell 2% over a year earlier, to 38.8 million tonnes, while river cargo went up 2% to 16.1 million tonnes.

Within inward port cargo, imports dropped 11% over a year earlier to 19.7 million tonnes in the fourth quarter, while inward transhipment went up 7% to 12.9 million tonnes.

For outward port cargo, exports (including domestic exports and re-exports) recorded virtually no change, at 8.9 million tonnes, while outward transhipment rose 10% to 13.4 million tonnes.

On a seasonally adjusted quarter-to-quarter comparison, total port cargo throughput fell 2% in the fourth quarter. Inward port cargo dropped 5%, while outward port cargo rose 4%.

For 2004 as a whole, inward port cargo went up 5% to 134.9 million tonnes, while outward port cargo also rose 9% to 86 million tonnes.

Within port cargo, seaborne cargo rose 7% to 158.6 million tones and river cargo rose 6% to 62.3 million tonnes over a year earlier.

Within inward port cargo, imports fell 2% over a year earlier to 82.5 million tonnes in 2004, while inward transhipment soared 17% to 52.4 million tonnes.

Outward cargo to Thailand up 37%

For outward port cargo, exports rose 8% to 35.5 million tonnes, while outward transhipment went up 9% to 50.5 million tonnes.

Comparing the fourth quarter of 2004 with that of 2003, a double-digit increase was recorded in the tonnage of inward port cargo loaded in the United States (+17%). But double-digit falls were recorded in the tonnage of inward port cargo loaded in Taiwan (-28%), the Republic of Korea (-22%) and Indonesia (-20%).

Over the same period, double-digit surges were registered in the tonnage of outward port cargo for discharge in Thailand (+37%), Australia (+26%), Singapore (+23%), Malaysia (+18%), the United States (+17%) and Japan (+14%). But a double-digit fall was recorded in the tonnage of outward port cargo discharged in Italy (-26%).

Comparing 2004 with 2003, double-digit surges were recorded in the tonnage of inward port cargo loaded in Australia (+29%), Malaysia (+19%), Singapore (+17%) and the United States (+17%). At the same time, double-digit increases were registered in the tonnage of outward port cargo for discharge in Australia (+39%), Singapore (+26%), Thailand (+21%), Malaysia (+18%) and the United States (+11%).

Q4 container handling up 4%

In the fourth quarter, the port of Hong Kong handled 5.6 million TEUs of containers, representing a rise of 4% over a year earlier.

Within this total, laden containers rose 3% to 4.5 million TEUs, while empty containers went up 11% to 1.1 million TEUs. Among laden containers, inward containers went up 2% to 2.1 million TEUs while outward containers rose 3% to 2.4 million TEUs.

For 2004 as a whole, the port of Hong Kong handled 22 million TEUs of containers, representing a rise of 8% over 2003.

Within this total, laden containers rose 8% to 17.9 million TEUs, while empty containers went up 5% to 4.1 million TEUs. Among laden containers, inward containers rose 11% to 8.5 million TEUs while outward containers rose 5% to 9.4 million TEUs.

47,850 river vessel arrivals in Q4

In the fourth quarter, the number of ocean vessel arrivals went up 1% on a year earlier to 9,380 with the total capacity falling 1% to 77.3 million net registered tons. Over the same period, the number of river vessel arrivals recorded virtually no change, at 47,850, with the total capacity increasing 3% to 23.2 million net registered tons.

In 2004, there were 35,900 ocean vessel arrivals, representing virtually no change from 2003, while river vessel arrivals rose 4%, to 189,530.

The total capacity of ocean vessels rose 2% to 307.7 million net registered tons and river vessels rose 11% to 85.7 million net registered tons.

hkskyline

March 16th, 2005, 06:01 PM

Forging through logistics initiatives

http://www.tdctrade.com/shippers/img/vol28_1.jpg
Jan / Feb 2005

Deputy Secretary for Economic Development and Labour (Economic Development), Raymond Fan, who also holds the portfolios of Secretary of the Logistics Development Council, Port Development Council and Marine Industry Council, says 2004 has been a very useful year. "We continued the follow-up work on the initiatives that were laid down to develop Hong Kong as the preferred regional hub for logistics."

While certain initiatives agreed upon a couple of years ago are just about to come online in 05, Fan says, "We have been prudent and thorough, taking into account everyone's opinion, resulting in our work being open and transparent. We place a lot of emphasis on openness, transparency and industry consensus."

The Hong Kong port's results, by the first 11 months of 04, had already reached the level for the whole year's projection. "We will achieve reasonable growth for 04, breaking another record as we reach an estimated 22mn TEU throughput despite the rapid growth of neighbouring ports. Hong Kong continues to maintain a big enough slice of the cargo pie and our initiatives ensure that, together with the other ports in the region, we're in a win-win situation," said Fan.

The LOGSCOUNCIL (www.logisticshk.gov.hk) has been geared to maintain the industry's competitiveness by showing all that we offer a premium service, albeit at a higher price, which people appreciate for its good quality, reliability and efficiency.

The work of the LOGSCOUNCIL is supported by five Project Groups. The P-Group handles the area of infrastructure. "A very important issue that has always been top of the P-Group's agenda is how to facilitate cross boundary crossing, through infrastructure support, and in how we effect new measures to improve the flow. Last year, a report brought out by the Better Hong Kong Foundation, the McKinsey Report, pointed out that the trucking or land transportation cost is a major factor hindering Hong Kong's competitiveness causing a cost differential of US$200 per FEU to ship a container through Hong Kong if trucked from the factories, and another US$100 difference on the THC paid here compared to that in Shenzhen ports."

The report pointed out that, in fact, the cost differential can be tackled in many ways but the most important thing is that there are some administrative arrangements being imposed on the Mainland side of the boundary - the four-up-four-down, the one-driver one-truck, the licensing scheme - that are contributing to the higher costs of land transportation for cargo going through the Hong Kong port.

"We have been working hard to try and relax these rules. The Hong Kong Guangdong Cooperation Joint Conference is working on it. A result such as allowing "4-up 2-down" (relaxing the strict 4-up 4-down rule) would be something of a breakthrough already. Operators are now actually able to leave the container and trailer in China and pick up a new load for return to Hong Kong. This would mean the possibility of multiple trips per day and drive down costs."

Another P-Group infrastructure focus is the bridges, such as the Lok Ma Chau pure cargo bridge and the co-location of Customs and immigration, and the HK - Shenzhen Western corridor which will be opened by the middle of 2006. "And then of course we are waiting to hear what will happen to the Hong Kong-Zhuhai-Macau Bridge." A feasibility study is being done by the Environment, Transport and Works Bureau.

"The P-Group is also looking at the Lantau Logistic Park, formerly called the Value Added Logistic Park, which is part of the Lantau Development Concept plan. In the beginning of 04, the Chief Executive, Mr. Tung, in his Policy Address, said a task force would coordinate the development of Lantau," explained Fan.

"The Lantau Logistics Park (LLP) is one of the priority projects of the Lantau plan. Preliminary work is being conducted at the moment, calling for Expressions of Interest so people can let us know their opinions on the project, which will end Feb 28."

A second LOGSCOUNCIL project group, the E-Group's main focus is on the Digital Trade and Transportation Network (DTTN). "We have been working with Tradelink, a service provider, to come up with a system in accordance with the guiding principles contained in the original Accenture report which consultants prepared for us on how to build a Digital Trade and Transportation Network," said Fan.

"We are at a very advanced stage of discussions with Tradelink, with a view on concluding some legal agreements on operations of the DTTN. It is our aim, and we are confident, that the DTTN will be launched within the year."

Fan said the E-Group has always been forward looking. "We have been exploring the use of Radio Frequency Identification (RFID), which has been developing rapidly in the past year, stemming from Wal-Mart - the big US retail chain's adoption of the technology. RFID has very extensive applications throughout the supply chain. The E-Group has been monitoring the developments and its possible applications in logistics management. We're always on the lookout for opportunities to improve the electronic environment for logistics practitioners."

The S-Group that deals with small and medium enterprises which make up the majority of Hong Kong logistics service companies, has been designing tailor-made training for SMEs, industry updating seminars to practitioners, including RFID and CEPA." Almost half of those who have applied for and received the HK Service Supplier Certificate, are from the logistics industry. The Industry has been actively taking advantage of the benefits of CEPA," said Fan.

The H-Group focuses on enhancing the quality of human resources and promoting professionalism in the logistics industry. Roadshows have been organised for senior secondary and activities for tertiary logistics students. Roundtable discussions encourage practitioners to facilitate professional exchanges.

"The M-Group or marketing group's major initiative in 2004 was Logistics Hong Kong which attracted more than 2,000 participants from around the world. In 2005, we will be looking at something beyond Hong Kong. We have new plans and a new Shepherd for the M-Logistics Group," said Fan. With the return to London of Swire Chairman James Hughes-Hallett, the Shepherd of the H-Logistics Group, Willy Lin, will fill his seat. Meanwhile, Victor Mok, Chairman of the Hong Kong Association of Freight Forwarding and Logistics Ltd is the new Shepherd of the H-Group. "We will be consolidating our M-Group promotions this year. We had Logistics Hong Kong last year which was a local one, and whose aim was to bring attention to the strengths of Hong Kong and its competitiveness as it continues to be the preferred logistics hub. So we want to bring the message more internationally and possibly organise roadshows, particularly as other logistics centres in the region are also doing promotions out there. We want to let them know that Hong Kong continues to provide premium services at a competitive price," said Fan.

Port development

The Port Development Council has been working on the Hong Kong Port Master Plan 2020, which is a study into the further development of the port up to the year 2020. "A lot of people thought the study is focussed on building new terminals. In fact, it deals with what we should do now, and in the short, medium and long term. One important finding of the study which happened to be similar to the findings of the McKinsey Report, is that trucking cost is something we must tackle now.

"It is called 'Super Connectivity Initiative'. Since practically all the cargo we handle comes from the Mainland, we should find ways to ensure it continues to pass through Hong Kong. One important measure is to cut down trucking costs which we mentioned earlier. Another is to enhance productivity at the terminals we now have in existence, that is, CT 1 to 9. We have 24 berths that can handle up to 18mn TEU, but Kwai Chung at present handles between 12 to 13mn only. So there is spare capacity that should be utilised. We focus now on how to enhance productivity and ensure continued growth with the present facilities. But in the meantime, we should also start planning for CT 10 because no matter what we do, one day, we will use up all available capacity. In the study's projection, we'll probably need more berths by 2015," explains Fan.

"And we also need to update the way we do our cargo forecast. In the old days, the Port Cargo Forecast was quite straightforward as it only looked at the demand side. There was only one factor to the supply side, and that was Hong Kong! Ten or 15 years ago, we were the only major port in the area and whatever demand there was, was solely on Hong Kong," said Fan.

"The supply side has become much more complex as the terminals and ports in the region begun to develop, such as Yantian, Chiwan, Mawan, Shekou and other ports surrounding us. So with such an expanded supply side, we would need a new methodology. Questions arise such as where do we build future container terminals? The report pinpointed two possibilities, one in Tsing Yi area, right next to the existing one or Northwest Lantau. But the site in Lantau has an ecological impact so we must again do investigations, and at the end of the process, we would know which site is viable. That would be a decade down the road.

"But in the next few years, we need to know exactly when new capacity - from the Mainland side - would be coming online. For Hong Kong, we know exactly how much capacity there is up to CT 9, then we have river trade and mid-stream. The supply side becomes more complex as we not only have to focus on quantity but on quality - we must know if the new terminals would focus say, purely on handling bulk, or on intra-Asia cargo.

"Ultimately, we would form one synergy to produce a win-win situation for us all. So it must be done right because as you know building terminals takes years and involves a lot of money. So the decision to build more terminals must be done at the right time hence we must be very thorough in the planning and execution," said Fan. "We have already consulted and briefed the Maritime Industry Council, the PDC and the LOGSCOUNCIL on the findings of the Port Master Plan 2020. We also have been to the Economic Services Panel of Legco, and the Town Planning Board."

hkskyline

March 16th, 2005, 06:48 PM

8 March 2005 Corporate Press Release
Modern Terminals Holds Milestone Ceremony to Celebrate its Handling of 50 Millionth Container

Container terminal operator Modern Terminals today (Tuesday) hosted a quayside ceremony at Kwai Chung to celebrate the milestone of the 50 millionth TEU passing through its facilities in the 33rd year since it opened Hong Kong’s first-ever purpose-built container terminal in 1972.

The Secretary for Economic Development and Labour, Mr. Stephen Ip, G.B.S., JP, was the officiating guest of honour and keynote speaker at the event. Around 100 guests representing the company’s major customers and business associates, as well as Government officials and members of the media also attended.

In his speech, Mr. Ip commented: “Way back in 1972, Modern Terminals invested and operated the first purpose-built container terminal in Hong Kong. Since then, Modern Terminals has been playing an important role in the development of the Hong Kong port. I understand that Modern Terminals is investing over HK$1 billion on upgrading its terminal facilities, which will further increase its handling capacity.”

Mr. Erik Bøgh Christensen, Modern Terminals’ Managing Director told the gathering that the company was very proud to welcome its 50 millionth container at its terminal facilities in Hong Kong. “This milestone event takes place at a significant time in our company's history. As an integral part of our commitment to continue to grow with our customers, we have recently brought all our 4 new Berths at Container Terminal 9 (South) into full operation.

“In addition, we have launched a project to upgrade every aspect of our facilities at Container Terminals 1, 2 and 5 (CT125). The implementation of this project will take around 18 months and involve a total investment of more than HK$1 billion. Our objective is to boost our total throughput capacity by up to 25 per cent, in order to meet current and future customer requirements. The project will also support the recommendation of the Government-commissioned Hong Kong Port Master Plan 2020, which is to improve existing operations at Kwai Chung Port before constructing additional terminals. Through the industry combined efforts, the total throughput capacity of Kwai Chung container port is set to rise to 24 million TEUs a year,” he said.

Modern Terminals will continue to develop and provide more value-added customer services to improve the flow of cargo between Hong Kong and the Pearl River Delta – such as the Inland Gate network of dedicated feeder services and the company’s advocacy of more efficient cross-boundary trucking arrangements. The company is also actively expanding its operations in Mainland China.

In addition, Modern Terminals is proactively contributing to the enhancement of security standards in the global container-transportation industry. In this respect, the company is collaborating with other Kwai Chung terminal operators in embarking on a high-technology pilot project for integrated container inspection, screening every container that arrives at its entry gate and quayside barge facility.

“As Modern Terminals starts handling the next 50 million containers, its goal will remain the same: to grow with our customers, offering industry-best services, and to be their preferred partner,” he concluded.

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hkskyline

March 19th, 2005, 07:01 PM

HK sea container traffic up 2.6 pct in February

HONG KONG, March 16 (Reuters) - Sea container traffic through Hong Kong, the world's busiest container port, rose 2.6 percent in February from a year earlier, and throughput at its main facilities in Kwai Chung surged 18.9 percent after price cuts.

Hong Kong moved a total of 1.58 million 20-foot equivalent units (TEU) of goods last month, and terminals at Kwai Chung, which accounted for more than 60 percent of the city's total throughput, handled 998,000 TEU in February, data from the Port Development Council showed on Wednesday.

The more efficient Kwai Chung facilities continued to lure customers away from the river trade terminal and mid-stream operators following price cuts in the past few months on hopes to attract business to fill their new berths in container terminal nine, analysts said.

Goods moved by the river trade terminal and mid-stream operators fell by 16.9 percent in February to 583,000 TEU, the data showed.

In recent years, Hong Kong has continued to lose market share to the neighbouring Chinese city of Shenzhen, where exporters can ship their goods at prices that are about one-third less than they are charged in Hong Kong.

Shanghai, the busiest container port in the mainland, is also growing at a fast pace. It handled 1.11 million TEU of goods in February, up 18.3 percent from the same month last year.

hkskyline

March 26th, 2005, 04:59 AM

Hong Kong shipping in budget boon
By Sam Chambers in Hong Kong
18 March 2005
Lloyd's List

HONG Kong’s maritime community received a surprise welcome boost at the first budget to be unveiled since Tung Chee-hwa resigned last week.

Henry Tang, Financial Secretary for the Special Administrative Region, said: “To consolidate our position as an international port as well as a shipping and logistics hub, we must promote our strengths and the latest developments in these areas in the mainland and overseas markets.”

Consequently, he proposed giving the Logistics Development Council and the Maritime Industry Council HK$5m ($640,972) each “to enhance the marketing of our port, shipping and logistics facilities”.

hkskyline

March 29th, 2005, 12:28 AM

Terminal blow as ruling against sea trade is upheld
Russell Barling
19 March 2005
South China Morning Post

The beleaguered River Trade Terminal (RTT) has been dealt what eventually may be a knockout blow as the Court of Final Appeal upheld a judgment barring it from serving ships that carry trade outside the Pearl River Delta region.

While the unanimous judgment of the five-member panel yesterday may slash the facility's revenue potential by as much as 50 per cent, it is sure to be warmly received by the main terminal operators at Kwai Chung, where business volumes will grow.

None of the terminal's shareholders - Jardine Matheson Holdings, Hutchison Whampoa or Sun Hung Kai Properties - would comment, other than to say they needed time to study the verdict.

The terminal last year handled about 2.6 million containers, 900,000 of which were from deep-sea vessels and in contravention of its 1996 land grant, according to yesterday's decision.

The $6.5 billion terminal has lost more than $1 billion since its launch in 1998 and has never turned a profit.

At all three trials - including ones in the Court of First Instance and the Court of Appeal - the case hinged on the interpretation of special condition 16 (SC16) in the grant, part of which reads: "[The RTT] shall not be used for any other purpose than as a terminal for {hellip} the berthing of vessels regularly employed in trading or going with the Pearl River region."

Dennis Chang Kin-lai, senior counsel for the RTT, argued that by entering the port of Hong Kong, any vessel therefore qualified.

"The paramount intention of [SC16] is to define what type of trade may be served, not what type of vessel," Mr Chang argued at the trial, which wrapped up two weeks ago. "It is not just a river vessels terminal; it is a river trade terminal."

He said that SC16 was not intended to impose restrictions on the type of vessel the terminal could serve. That was already fixed by the terminal's physical limitations; it was designed with nine metres of water at its berths, a depth suitable only for smaller vessels.

He said that SC16 restricted the terminal only from handling vessels that had never called in Hong Kong - thereby not fitting the definition of "regularly" - and those that called solely to transfer cargo bound for outside the delta.

But in the court's judgment, Mr Justice Roberto Ribeiro found that argument unconvincing.

He said: "If [Mr Chang's interpretation] suffices to qualify a vessel for berthing, and if it is a matter of indifference where that vessel came from or where she is going to call next, then virtually any vessel qualifies."

hkskyline

April 1st, 2005, 05:37 PM

Future in doubt for Hong Kong River Trade Terminal
31 March 2005
Lloyd's List

HONG Kong’s River Trade Terminal is facing an uncertain future after losing a court case that now officially bans the HK$6.5bn (US$833m) facility from handling ocean-going ships, writes Keith Wallis.

About 30% of the 2.6m teu handled by the terminal last year was from liner services, especially those operated by intra-Asian shipping lines.

The RTT Company had tried to overturn an earlier court ruling, which decided the company could only handle containers and freight from coasters operating in the Pearl River delta region.

But a five member panel at the Court of Final Appeal upheld the earlier court’s decision and rejected the RTT’s claim it could handle any ships with cargo coming from or destined for the Pearl River region.

Mr Justice Roberto Ribeiro said that if this was true “and if it is a matter of indifference where that vessel came from or where she is going to call next, then virtually any vessel qualifies”.

The ruling upholds the government’s position that the RTT Company, which is owned by Hutchison Whampoa, Sun Hung Kai Properties and Jardine Matheson, broke the conditions of its 1996 land lease by handling ocean-going ships, and ends a three year legal wrangle.

The decision could spell closure or major changes at the 49 berth facility, which has yet to make a profit, while running up HK$1bn in losses, despite being fully operational since 1998.

The complex was purpose-built at Tuen Mun in Hong Kong’s north-west New Territories to handle river trade vessels and barges plying between the Kwai Chung terminals and ports in the Pearl River delta.

Former RTT Company general manager John Wan forecast the terminal would need to handle 3m teu to be profitable. The court decision means the facility will lose at least 900,000 teu that is now directly handled by intra-Asian vessels.

Consequently, losses are likely to mount, a situation that is expected to put shareholders under pressure to pull out or buy out the other investors.

This could pit Hutchison Whampoa against Sun Hung Kai Properties, which was advised by a former Hong Kong Port Development Board secretary Tony Clark.

Insiders pointed out that it was originally the mid-stream stevedoring barge association, which was fronted by a Hutchison Whampoa executive, that complained to the government about the RTT’s activities and led directly to the court case.

Sources believe the move was part of a wider corporate ploy by Hutchison Whampoa and Sun Hung Kai to wrestle control of the complex from the other.

hkskyline

April 3rd, 2005, 04:00 AM

Modern Terminals brings aid to Wharf
21 March 2005
Lloyd's List

MODERN Terminals, the oldest Hong Kong Kwai Chung terminal operator, helped controlling shareholder Wharf (Holdings) post a 24% increase in net profit to HK$3.77bn (US$483.3m) last year on a 6% rise in turnover to HK$11.95bn, writes Keith Wallis.Modern Terminals’ net profit contribution “grew satisfactory” last year as a result of a significantly higher profit contribution from its terminal investments in China coupled with lower charges for profits and deferred tax, Wharf said.

Modern Terminals, which began operating at Kwai Chung in 1972, operates four terminals. Wharf has a 55.3% stake in the company.

Overall, Wharf's logistics operations posted a slight 1% rise in operating profits to HK$1.84bn last year, compared with nearly HK$1.83bn in 2003.

Turnover rose 4% to almost HK$3.45bn against HK$3.22bn a year before. But Modern Terminals’ contribution to operating profits was marginally less than in 2003 after it slipped to HK$1.72bn in 2004, down from HK$1.74bn a year earlier. This was despite an increase in turnover to HK$2.96bn, up from HK$2.87bn in 2003.

Wharf’s other logistics interests, which include the V-Logic warehousing and transport operation, put in a stronger performance, contributing HK$125m in operating profits in 2004, up from HK$92m in 2003. Turnover was up, to HK$383m, against HK$353m a year earlier.

Wharf said throughput at Modern Terminals’ facilities in Hong Kong and China rose 9% but “the company’s total revenue grew by 3% only, given that the throughput growth was largely driven by lower-tariff feeder and transhipment volume”.

Release of the figures came as Modern Terminals is set to receive the official go-ahead for the Yuan7bn (US$854m) first phase of its Dachen Bay container terminal project on the west coast of Shenzhen, near Hong Kong.

hkskyline

April 4th, 2005, 08:07 PM

A more fragrant harbour
24 March 2005
Lloyd's List

Hong Kong’s shipping community is quietly optimistic at the recent turn of political events. Ironically, having a former shipping magnate as the first leader of the Special Administrative Region has widely been perceived to be bad for the maritime industries in the city that can still boast the number one container port ranking.

Under Tung Chee-hwa, maritime policies were generally not favourable and were thwrted by a lack of long-term vision. The shipping industry was crying out for help as the rise of China threatened its middle man status, yet aid and direction was generally not forthcoming.

Mr Tung had warned shipowners before acceding to power that he was not going to be in a position to help them for fear of bias accusations. Now that the former Orient Overseas Container Line man has resigned, ironically just 15 minutes after his brother announced record results for the family shipping line, there is a creeping feeling that a new administration under the bow-tied Donald Tsang, the only knight of the realm ever to take charge of a communist territory, will see a more proactive stance in evidence.

The first budget since Tung Chee-hwa left office announced HK$5m (US$640,000) each to the Port Industry Council and the Maritime Industry Council for marketing purposes — a small but significant step in the right direction.

On the port side there is much regulatory work that the new government must tackle to ensure that containers continue to pass by in large numbers. Most notably, resolving the myriad trucking issues that account for the two thirds difference in costs between neighbouring Shenzhen and Hong Kong — an issue that, despite repeated pleas, has never been properly tackled and one that will require much negotiation with the local government north of the border.

Mr Tsang is known to be a big advocate of Kwai Chung Container Terminals, the mainstay of the city’s throughput, having taken mainland leaders up in a helicopter a couple of years back to show off the terminals’ efficiency. If he can resolve the trucking issues he will regain the trust and friendship of the maritime fraternity in the Special Administrative Region.

If not, then many will hope he stays in power for just the two years that the territory’s Basic Law stipulates.

Tiger in the tank It is surprising what hides behind the current euphoria about freight rates in so many sectors. Problems which would ascend rapidly into crises for the industry, if the rewards were as they were for the past quarter century, don’t seem nearly so bad. The manpower problems can at least be addressed by paying rather better rates for seafarers (although this is always a last resort).

Fuel prices seem to be the most intractable, especially in a number of sectors which have been ratcheting up average speeds in recent years, as well as putting thirstier machinery in ships. There is only so much you can do to “shop around”, especially as bargain fuel so often seems to come with a hidden penalty, which may include a wrecked engine.

Similarly, the great ruses of the 1980s, most of which involved owners buying worse and worse quality dregs from refineries to feed into their engines, cannot be repeated.

Surprisingly, as it would appear that the current oil price surge is no brief temporary peak, we have been seeing few of the technical answers that previously came along.

Perhaps the advances in hydrodynamics which would shave a few percentage points of fuel costs have all been implemented. It may be that there are really no great breakthrough solutions available. Or perhaps it is that when the next rate slump comes, slow steaming will be the only option!

hkskyline

April 5th, 2005, 04:01 AM

25 March 2005
Modern Terminals Appoints New CEO

http://www.modernterminals.com/images/Press%20release/20050225/Sean%20Kelly-S.jpg

After almost eight years as Managing Director and CEO of Modern Terminals, Mr. Erik Bøgh Christensen has decided to step down and – after more than 25 years in Hong Kong – prepare for return to his native Denmark.

The Board of Directors has appointed the Company’s Deputy Managing Director, Mr. Sean Kelly as Managing Director and new CEO of the Company. Mr. Kelly, formerly a senior shipping line executive with American President Lines, has been with Modern Terminals for five-and-a-half years.

Mr. Kelly’s appointment will take effect from 1st April 2005. Mr. Christensen will continue as Senior Director of Modern Terminals and during a transition period till September 2005, he will be supporting the board and management on a full time basis on special projects including Mainland China development projects.

Commenting on the announcement, Mr. Peter K.C. Woo, Chairman of Modern Terminals said:

“Under Erik Christensen’s leadership starting in 1997, Modern Terminals has developed and grown impressively and the Company is today in excellent shape, fully prepared and capable of not only meeting future challenges but also to capitalize on the opportunities, of which there are many”.

“Sean Kelly has been with Modern Terminals for over 5 years and as Deputy Managing Director he has made a significant contribution to the excellent market position which the Company now enjoys. The appointment of Sean Kelly, is ensuring senior management continuity and under his leadership I am confident that Modern Terminals business will continue to grow”.

hkskyline

April 5th, 2005, 08:47 PM

Valuing Hong Kong
BY IAN PUTZGER
5 April 2005
Air Cargo World

Just a few years ago, visitors coming into Hong Kong would head straight to the tailors in Kowloon for for cut-price suits or the Temple Street night market for counterfeit designer labels. Today, there are still plenty of fake Rolexes available for $10 in some spots in the territory, but the real bargain hunters have moved north into China.

They have followed the same path as Hong Kong manufacturers, who set up shop across the border as costs on their home turf became prohibitive.

Today, some of the former manufacturing areas in Hong Kong are stacked with ocean containers filled with products made in China and waiting for ships to take them to overseas destinations. But ports and airports in China also have boosted capacity, raising question of whether Hong Kong's storied transport and logistics business - what many consider the life's blood of the city - could go the same way as the bargain hunters and the manufacturers.

The opening of Guangzho Baiyun International Airport last summer has added fuel to concerns that Hong Kong's high costs could hurt its air freight growth. Although some initiatives are underway to curb costs, the emphasis is on service levels.

In the maritime sector, the transshipment business - a long-standing cornerstone of activity in the territory's port - is showing signs of slowdown, pointed out David Oldridge, chief executive of Tradeport Hong Kong. Still, more sophisticated logistics activities should flourish in the territory, he says. "Cost is always an important issue, but the value proposition is what we have to focus on," said Oldridge. "The 3PL contracts are very much decided by the correct value proposition."

Better value has turned into something of a mantra in Hong Kong. "The evidence is that cargo will move through the hub that provides the best value proposition, in terms of service levels, cut-off times, protection against pilferage, loss and so on," said Ron Mathison, director and general manager of cargo of Cathay Pacific.

A study commissioned by DHL and conducted by the Center of Cyber Logistics of Hong Kong's Chinese University takes the same line.

It identifies the airport's unrivaled connectivity and high transparency and efficiency as key strengths of the territory and advocates investment in specialized logistics centers, especially for material handling and component distribution.

This is right in the sweet spot for Oldridge, whose outfit, a joint venture by Fraport and Amsterdam Schiphol, performs value-added services at Hong Kong International Airport.

In a notoriously overcrowded place, the large, open-plan Tradeport building is an oddity, but it's both on target and on budget, despite many misgivings from observers and forwarders, Oldridge insisted. By the end of last year, the facility was 50 percent full, and he expects a significant increase in use this year. By 2006 or 2007, he anticipates building a second level to cope with rising demand. Further down the road, Oldridge is thinking of taking up some space off airport. A likely target is a 185-acre logistics park planned near Chek Lap Kok.

Hong Kong's air cargo market has taken some time to get used to the concept of modern-day logistics.

After all, the old Kai Tak airport, which shut down in 1998, had no space for such activities, notes David Miller, managing director of Trinity Aviation and the representative of Fraport for the region.

Despite all the talk of moving up the logistics food chain, the strongest argument in favor of Hong Kong versus the upstart competition across the border has been its plethora of air links with other points on the planet. That makes it a natural magnet for airlines and logistics companies and the government of China's " Special Administrative Region" has been eager to keep it that way.

"The government wants to sell the airport, go for an IPO, so it's in their interest to make the airport busy," said Alfred Chui, cargo sales and service manager for Hong Kong of Air Canada.

But the cost question remains a thorn in HKIA's side.

According to the DHL study, terminal handling charges at the airport averaged US$144 for a five-ton shipment last year versus $45 at Baiyun.

"No question, China is cheaper. It's definitely an issue," said Andrew Jillings, vice president for Northeast Asia at BAX Global.

But to some extent, cost comparisons between HKIA and Chinese airports are warped. Operators say privately that there are a certain amount of invisible costs associated with doing business in China.

Last July, Hong Kong authorities signaled their discomfort over the cost issue when they announced a 50 percent rebate on landing charges to airlines for the first year on flights they operate to a new destination, and a 25 percent rebate in the second year.

On the cargo side, new measures are coming up to maintain Hong Kong's attractiveness to exports from the Pearl River Delta. Customs clearance is speeded up further through the creation of the new Shenzhen Western Corridor, and rules on truck and trailer movements that effectively limited them to one cross-border trip a day are being jettisoned.

Under the Close Economic Partnership Agreement that kicked in last year, cargo agents based in Hong Kong or Macau are allowed to establish wholly-owned offices in locations in China, including the major hubs like Shanghai or Beijing.

Much is riding on the back of a trucking service that CLK's dominant handler, HACTL, has established. It has set up drop stations in several locations and runs regular trucks to over 20 cities in the Pearl River Delta.

That operation has proved very attractive to logistics firms, says Jillings.

For 2004, HACTL recorded a throughput of 3.1 million tonnes, up 17 percent from the previous year. Rival handler Asia Airfreight Terminals, whose shareholders include Singapore Airport Terminal Services and FedEx, announced last summer that it would invest US$224.3 million to build a terminal in a bid to triple its air cargo capacity.

The new terminal, covering a floor area of 423,000 square feet, will have an annual cargo capacity of 910,000 tonnes when construction is completed by the end of 2006.

Last year also produced record cargo results for Hong Kong-based carriers Cathay Pacific and Dragonair, with the promise of more to come.

Dragonair clocked up 342,413 tonnes, 26.8 percent more than in 2003. Cathay carried over 970,000 tonnes, 11 percent rise from the previous year.

Both airlines are boosting their main deck capacity.

Dragonair, which added a 747-200 freighter and a wet-leased A300 freighter last year, acquired five 747-400s from Singapore Airlines, which will be converted into all-cargo configuration. The first two are slated to enter service in 2006, with two more to follow in 2007 and the last one the following year.

Cathay took delivery of a new 747-400 freighter in January, bringing its 747 freighter tally to six -400 and seven -200 editions of the aircraft. The carrier is the launch customer for Boeing's 747-400 conversion program, with the first revamped freighter due this coming December. Cathay has signed up for six 747-400SFs, with options for six more conversion slots.

Mathison has no intention of phasing out the -200 models when the newer freighters come in. "We plan to keep flying the -200s as long as possible. At this stage, there are no plans to replace our -200 fleet," he said.

In August, Cathay will launch freighter flights to Dallas/Fort Worth and Atlanta.

It will serve the two cities in tandem with three 747 freighter flights per week, bringing trans-Pacific freighter operations to 21 a week. These cities mark new destinations for the airline.

Overall, Cathay prefers to strengthen frequency on existing routes rather than add new points. But Mathison is using a broader all-cargo network to combat imbalances in traffic flows, which have become more pronounced.

"We try to be as close as possible to cargo coming out of regions with imbalanced flows. For example, in Europe, we serve many points rather than one or two hubs. In a similar vein, we plan to fly to Dallas/Fort Worth and Atlanta instead of moving all freighters through Los Angeles," he said.

hkskyline

April 20th, 2005, 01:16 AM

Friday April 15, 6:23 PM
Hong Kong Port's Container Traffic Fell 7.2% In March

HONG KONG (Dow Jones)--Container shipping traffic through Hong Kong fell 7.2% on year in March, the government said Friday, reflecting a slowdown from the previous month, when traffic rose 2.6%.

A total of 1.8 million twenty-foot equivalent units, or TEUs, passed through the container terminals and other cargo-handling facilities of the world's busiest port in MArch, according to preliminary estimates from the Port Development Council.

The Kwai Chung container terminals, which handle most of Hong Kong's traffic, registered a 6.1% on-year increase in throughput to 1.1 million TEUs.

Throughput of other cargo-handling facilities, such as private wharves and anchorages, fell 23% to 690,000 TEUs in the same period.

The nine container terminals at Kwai Chung have five operators: Modern Terminals Ltd., which is 55% owned by Wharf (Holdings) Ltd. (0004.HK); Hongkong International Terminals Ltd., a unit of Hutchison Whampoa Ltd. (0013.HK); CSX World Terminals Hong Kong Ltd.; COSCO-HIT Terminals Ltd., a joint venture between COSCO Pacific Ltd. (1199.HK) and HIT; and Asia Container Terminals Ltd.

hkskyline

April 25th, 2005, 04:22 PM

Logistics hub at Yuen Long Industrial Park

http://www.tdctrade.com/Photo/cms/article/shippers/24900S2.jpg
Raymond Fan (left), Dep Secretary for Economic Development & Labour Bureau, Joseph Leung, CEO & Chairman of Dispatch Services Logistics Air Ltd, C D Tam, CEO of Hong Kong Science and Technology Parks Corporation at the ground-breaking ceremony of logistics hub at Yuen Long Industrial Park last month.

Hong Kong Science and Technology Parks Corporation (HKSTP) and Dispatch Services Logistics Air Limited (DSLAL) global logistics services provider have signed an agreement for DSLAL to acquire land at the Yuen Long Industrial Park to establish a major logistics and distribution centre. DSLAL's planned Yuen Long Logistics Centre will occupy 24,385 sqm of land and will be completed in two phases over the next four years.

The HK Yuen Long Logistics Centre will be DSLAL's largest project to date, with an estimated total investment of HK$211mn to construct the facility and install new machinery and equipment.

Upon completion, the advanced nine-storey logistics centre will become the largest facility in Hong Kong to implement an RFID (radio frequency identification) system. From the Yuen Long Logistics Centre, DSLAL plans to provide high value-added services for customers including, laboratory and inspection services, electronic product code labelling, repackaging services, commercial documents origin verification and customs/brokers clearances services. In addition, DSLAL will offer professional training courses at the centre.

"We are proud to say that the centre in Yuen Long will be the first of its kind in Hong Kong with such an advanced system and building structure," said Joseph Leung, CEO & Chairman of DSLAL. "Hong Kong is a key logistics centre for Greater China with our massive port facilities and modern airport. DSLAL chose the Yuen Long Industrial Park as the site for our new facility to support the continued growth of Hong Kong as a regional and global distribution and logistics hub for its proximity to key infrastructures and the Mainland."

The initial phase of the Logistics Centre will consist of 28,000 sqm of gross floor area and will be made of a modern steel structure with a ceiling over 60 ft high. An automated storage/retrieval system (AS/RS), as part of the overall warehouse management system, will enable the warehouse to handle over 30,000 pallets in only 7,500 sqm of floor space. The AS/RS system will be enhanced with RFID and GPS (global positioning system) technologies that will allow up-to-the-minute inventory record accuracy, fast searching for goods' locations, accurate product identification and global tracking capabilities. Phase 2 will bring the gross floor area to 60,000 sqm.

"HKSTP's goal is to transform Yuen Long into a location for high value-added services and facilities to support the logistics market in Hong Kong and the Pearl River Delta. With our world-class communications network, excellent transportation infrastructure and geographically strategic location, Hong Kong should achieve rapid market leadership in this area," stated CD Tam, CEO of HKSTP. "DSLAL is a globally recognised leader in the industry and as such is an excellent anchor tenant for the Yuen Long logistics hub."

Supporting the drive to enhance Hong Kong's logistics capabilities, HKSTP has designated the Yuen Long Industrial Park to be a key location based on its geographic position. It is only 12 kilometres from the Lok Ma Chau border checkpoint and is connected to the Kwai Chung container terminals by Route 3 and the Tuen Mun Highway.

DSLAL provides customers in the garment, medical, electronics, automotive, construction materials and printing industries with air, ocean and general freight services including customs and overall freight management along with forwarding, warehousing and distribution services. Headquartered in Hong Kong, DSLAL also has subsidiaries in Los Angeles, Shenzhen, Qingdao, Shanghai and works with partners located on every continent.

Hong Kong Science and Technology Parks Corporation (HKSTP) is a statutory body set up by the Government of the Hong Kong SAR. More information about HKSTP is available at www.hkstp.org.

hkskyline

April 28th, 2005, 03:00 PM

Port operators want security fees - Terminal operators want security fees
Russell Barling
26 April 2005
South China Morning Post

Container terminal operators are determined to impose cargo security fees from next month despite a rejection of the levy in south China by many of the same shipping lines that use Hong Kong.

From Sunday, operators at Kwai Chung will charge $50 a laden box for all direct shipments outside Asia as they look to recover additional infrastructure and labour costs related to United States-led security initiatives against terrorism.

"We will proceed as scheduled even though discussions [with the lines are continuing]," a port executive said. "They may end up being small concessions but it won't be much, perhaps something like a two-month deferral [of payment] to give the lines more time."

A levy of 50 yuan from March 1 for all boxes except relay cargo and empties was rejected by shipping lines calling at ports in Shenzhen, with invoices returned unpaid and a demand for evidence of the terminals' security-related costs.

Like their Shenzhen counterparts, Hong Kong operators will not charge for empties or relay cargo but they want a fee of $20 per box for intra-Asia shipments.

It is thought the levy could add $1.5 billion to the cost of shipping manufactured goods from the region at a time when volume growth in Hong Kong is already stagnating. Terminal operators say the aggregate cost may be as much as 50 per cent of that total.

The port of Singapore moved more cargo than Hong Kong in the first quarter for the first time in seven years.

According to a shipping executive, Hongkong International Terminals (HIT), the port's biggest operator, said its one-off security-related costs had reached $200 million and it expected its related recurring annual outlay to be as much as $60 million.

A spokeswoman for Hutchison Whampoa, which controls HIT, declined to comment yesterday.

Hutchison fought a six-month battle with carriers and cargo owners to get a separate security fee implemented at its ports in Felixstowe and Rotterdam last year.

In England, it threatened to reject shipments from lines that refused to pay, according to carriers.

"In the end, we all caved in. Hutchison has an effective monopoly in the UK," said an executive with an Asian shipping line. "If they try that here, we'll just move over to DPI (the new Dubai Ports International-owned terminals)."

The two berths at Container Terminals 8 West now run by DPI , have been idle for more than a year.

It is understood that terminal operators are working to convince large shipping lines to accept the charge in the belief that others will then fall in line.

With only five days left before the implementation date, another port executive said he believed the deadline might pass without invoices being sent out, but that carriers were warming to the idea.

"We've showed them our capital costs and our running costs going forward," he said. "The strict timing is less important than the fact that we are making progress."

hkskyline

April 28th, 2005, 11:26 PM

SAR snubbed as mainland ports thrive
Vanson Soo, Hong Kong Standard
April 29, 2005

For years, experts have warned that cheaper mainland ports posed a grave threat to Hong Kong's status as the export hub of South China.

New trade figures suggest that the territory's competitive position may be eroding even faster than many people expected.

Hong Kong's total merchandise exports grew just 3.5 percent in March from year-ago levels, to HK$168.7 billion, according to the Census and Statistic Department. That's way below the 13.4 percent growth projected by eight economists surveyed by Reuters.

Hong Kong's re-exports grew 4.9 percent in March, to HK$160.6 billion, while domestic exports decreased by 17.2 percent to HK$8 billion. The value of imports grew 2.5 percent year-on-year in March, to HK$182.5 billion, far below analysts' expectations of 10 percent.

What's most troubling is that most of the goods shipped through Hong Kong originate in, or are headed for, the mainland - and China's exports and imports continue to surge.

The increasing divergence in exports between Hong Kong and China is troubling, says Standard Chartered economist Tai Hui: The territory's exports, 94 percent of which are re-exports, grew 15.8 percent in 2003 and 15.9 percent in 2004, while China's exports surged about 35 percent a year in that period.

"China is exporting more directly to the rest of the world and not going through Hong Kong," said Hui. "Competition between Shenzhen and Hong Kong is quite intense."

Ports in the Pearl River Delta pose mounting threats to Hong Kong, says Trade Development Council deputy chief economist Daniel Poon, with Shenzhen's Yantian port the most significant rival.

In the first quarter of this year, Shenzhen's outward container throughput grew 20 percent, outpacing the 13 percent growth in Kwai Chung, Hong Kong's container port. Though the disparity was even greater last year - Shenzhen grew 31 percent while Kwai Chung gained 11.5 percent - that reflected capacity constraints in the neighboring special administrative region, not lack of demand from mainland shippers. Since Shenzhen's ports continue to add capacity, Poon said, the growth gap will widen again.

One bright spot is Hong Kong's airport, one of the world's largest freight handlers. Airfreight tonnage grew 8.2 percent in March, though that was down from the 10.3 percent growth recorded in the first two months of this year.

"Hong Kong's airport is much ahead of those in China in terms of efficiency and traffic volume so our advantage is still here for this area," said Core Pacific-Yamaichi senior economist Kent Yau. "However, the mainland's seaports are doing so well now they are poised to take over the sea-going portion of goods trade for the mainland."

hkskyline

May 3rd, 2005, 05:19 AM

Changing structure of a Hong Kong economic pillar
As more gateways open to the mainland, Hong Kong's logistics industry is investing heavily to stay an international hub
23 April 2005
South China Morning Post

AS THE FAMED "gateway to China", Hong Kong's success was largely built on its historic role as the mainland's trading and shipping hub.

By a fortunate twist of fate, goods from the mainland were for decades routed through Hong Kong, creating the foundations for what is now the world's busiest container port and, in cargo terms, the second busiest airport. Not surprisingly, the modern logistics industry is hailed as one of the "four pillars" of the local economy.

However, many more gateways have opened in recent years, with the Pearl River Delta emerging as the "world's factory" and the mainland's membership of the WTO leading to other trading restrictions being lifted. Logistics companies have made significant investments to offer a wider range of services and move closer to the source of the cargo.

Where international air freight from South China once depended on flights from Hong Kong, there are now alternatives offered by new international airports in Guangzhou and Shenzhen, along with those in Macau and Zhuhai.

While convoys of trucks once had no option but to cross the border and ship containers from the port in Kwai Chung, they can now deliver to fast-growing ports along the South China coast, from Nansha and Shekou to Yantian and Xiamen.

Some newer terminals are seeing annual rates of growth approaching 50 per cent. In fact, ports in the Pearl River Delta now handle almost as many containers a year as all ports in the United States put together.

So, in a climate of general economic growth, it is a concern that Hong Kong is at risk of losing its edge and its historical raison d'etre.

In his last policy speech, even former Chief Executive Tung Chee-hwa acknowledged: "As our logistics industry faces increasingly stiff competition, we must further raise our competitiveness in order to reinforce our position as an international logistics hub."

The issues tend to come down to which logistics options are easier for exporters to use, and price. Some estimates say that shipping directly from the mainland can work out a third cheaper than moving cargo through Hong Kong, and this obviously has a big impact. Fears that Hong Kong is losing its cutting-edge were compounded by a study of cross-border trucking licences. The study showed they were as valuable and sought after as taxi licences, but were contributing to higher costs.

Whether our days as a logistics hub are numbered is a matter of perspective. In reality, the industry has simply evolved.

Just as Hong Kong's manufacturing industry migrated across the border, the same is happening with logistics providers. Dozens are setting up operations under the Closer Economic Partnership Arrangement (Cepa) and firms such as Kerry Logistics have established distribution networks covering all the major cities. Operations are still controlled from Hong Kong - the only difference is that jobs increasingly require staff to be based in the mainland.

Likewise, tycoon Li Ka-shing's Hutchison Whampoa has invested heavily in mainland ports. Hutchison Port Holdings is now the mainland's biggest port operator with 11 terminals, and there is a degree of irony in the fact that Hong Kong enterprises largely run the Pearl River Delta ports.

Simon Galpin, associate director general of InvestHK, calls it a "great control advantage".

Despite the migration, however, Hong Kong is still the world's busiest port, so something must be going right. Again, the explanation lies in the way logistics is changing. While Shenzhen is becoming South China's low-cost hub for bulk exports, Hong Kong is focusing increasingly on the top end of the market. For example, the state-of-the-art $8 billion Hong Kong Air Cargo Terminals complex sends a clear message about current capacity needs and future ambitions in the field of logistics.

South China's airports may be closer to the manufacturing base, but they have a long way to go to catch up with Hong Kong's far more extensive flight network. Significantly, landing fees and fuel are pricier over the border.

Meanwhile, Hong Kong's port operators are world leaders in the efficient handling of shipments. They also stand out for their use of high technology and in providing services for refrigerated and dangerous cargoes.

The unparalleled frequency of connections to international destinations is another key advantage. According to the Marine Department, one vessel arrives or departs Hong Kong waters every couple of minutes - hardly a sign of a logistics hub under siege. With the construction of ever larger vessels to serve the major trade routes, it should not be forgotten that Hong Kong's status as an easily accessible deep-water port remains a trump card.

As for cross-border trucking, the proposed new bridge providing a link to Zhuhai and Macau is forecast to generate huge growth in container volumes for Hong Kong.

"Hong Kong has long since lost its 'gateway to China' status and is fighting to retain market share of South China exports," said Cargonews Asia editor, Greg Knowler. "The good news is that manufacturing output in the Pearl River Delta is generating ever increasing exports. While South China ports are siphoning off market share, the overall market is growing."

Hong Kong handled a record 21 million teu (20-foot equivalent units) last year - growth of 7.3 per cent, he said.

"Air freight is facing even more intense competition," he added. Nevertheless, volumes at the Hong Kong Air Cargo Terminal continued to grow, "albeit a measly 3 per cent" in the first three months of this year.

Mr Knowler said Hong Kong would "remain the obvious air freight hub choice for the foreseeable future".

Meanwhile, the government is keeping a step ahead by preparing a Digital Trade and Transport Network System to enhance competitiveness with an "e-platform" for information flow and service integration. Also being proposed is the Lantau Logistics Park, purpose-built to consolidate Hong Kong's future supremacy as a logistics hub.

hkskyline

May 3rd, 2005, 05:27 PM

Hong Kong adopts zero-tolerance policy on single-hulled tankers
7 April 2005
Platts Commodity News

The Hong Kong government's Marine Department is strictly denying entry to all foreign vessels that do not meet the International Maritime Organization's new requirement for tankers carrying heavy grade fuel oil to be double-hulled, a department spokesman said Thursday. "Vessels carrying heavy grade that are not double-hulled will not be allowed entry into the Hong Kong port. We are not even making concessions for anyone, we don't want single-hulled vessels to be inside out port," said the spokesman. Under the IMO regulations, effective Apr 5, single-hull tankers of 20,000mt deadweight and above cannot carry heavy grade oil. The IMO has defined HGO as crudes or fuel oils having a density at 15 degrees centigrade or higher of 900 kg/cu m.

However, the Marine Department is temporarily granting exemptions to single-hulled vessels carrying HGO of 900-945 kg/cu m density that are already in the port to complete their existing contractual obligations. "This is only for a very short period of time," the spokesman stressed.

hkskyline

May 5th, 2005, 01:39 AM

Alan Tung joins board at OOIL
By Sam Chambers in Hong Kong
04 May 2005
Lloyd's List

PAVING the way for a third generation of Tungs at the helm of Hong Kong’s premier container line, Alan Tung has been appointed to the board of directors at Orient Overseas (International) Ltd, the parent of Orient Overseas Container Line.

Mr Tung is the 37-year-old son of Tung Chee-hwa, 67, who stepped down as head of the liner firm in 1996 to pursue his political career which ended this March with his resignation as the first chief executive of the Hong Kong Special Administrative Region.

CH Tung’s brother, Chee Chen Tung, 62, took over in 1996 as chairman of the firm which was founded by his father, CY Tung, in 1947. CY Tung died in 1982.

Alan Tung joined the OOIL group 13 years ago and has worked for its subsidiary bulker line, Island Navigation, as well its burgeoning property division.

The company moved into containerised cargo in 1969 and now boasts a very modern fleet including the world’s first ever 8,000 teu class containership, the 8,063 teu capacity OOCL Shenzhen.

OOIL notched record results for 2004 for the second year in succession, including US$4.14bn in revenues and a $670.45m net profit.

While OOCL was quick to point out that there are no immediate plans for CC Tung to step down, retirement soon might allow him more time for the hobbies he has on his curriculum vitae, namely tennis, wine and classical music.

hkskyline

May 5th, 2005, 04:29 PM

Truck freight gets rolling down south
Colleen Ryan
22 March 2005
Australian Financial Review

Every day 30,000 trucks move between the Hong Kong port and the province of Guangdong in mainland China.

By July, with the completion of a new eight-lane highway, the Shenzhen Corridor, there will be enough capacity for at least 120,000 trucks a day.

"It's all about freight the whole story about emerging market trade is a story about freight," JP Morgan's Ben Simpendorfer says.

Freight cycles have dropped dramatically from 10 weeks to four weeks in just the past two years. Retailers don't want to hold inventories any more.

When a retailer places an order, it is now four weeks to delivery, not 10.

"This is where China excels and particularly the Pearl River Delta," Simpendorfer says.

The container capacity of the Pearl River Delta and Hong Kong now exceeds that of the United States, according to JP Morgan.

For Hong Kong, freight is big business. The trade it does on behalf of China the logistics, air cargo, the ports and margins on the trade itself accounts for about 30 per cent of GDP.

And the freeing up of restrictions between Hong Kong and mainland China is having a big impact.

Until a few months ago, every one of those 30,000 trucks that crossed the border each day was bound by the "Four Up, Four Down" rule for cross-border traffic.

This meant that a driver, truck and container leaving Hong Kong had to return as one unit same driver, same truck, same container. It meant drivers had to hang around until a particular container had been filled.

The rule was abolished in December. Potentially, this removes two-thirds of the cost differential between the ports of Hong Kong and mainland China. It is a huge boon for Hong Kong.

The abolition of the rule came about because of CEPA, the common economic partnership arrangement between China and Hong Kong.

Beijing established CEPA when the Hong Kong economy was nosediving after the sudden acute respiratory syndrome epidemic in 2003.

The benefits it brought are starting to gain traction, and they are tying the future of the Hong Kong economy to southern China more than ever.

There is a real sense in Hong Kong that it is not really threatened by the growing clout of port cities in China such as Shanghai, Qingdao and Dalian. They can have the north, is the message. The proximity to southern China is Hong Kong's trump card.

The freeing up of trade offered through CEPA is additional assurance for Hong Kong.

"Hong Kong and China have had political integration which is mapped out in the Basic Law," Simpendorfer says. "They have never really had economic integration, but this is now mapped out by CEPA."

CEPA covers three areas trade in goods, trade in services and trade and investment facilitation.

Under trade in goods, the aim is to phase in zero tariffs over a period of years. In the first year 374 items were covered.

In services trade, the objective is to provide earlier and wider access ahead of the opening up promised to the rest of the world under China's accession to the World Trade Organisation. There are 18 service areas covered, including banking, telecommunications and tourism.

But the impact of CEPA is particularly noticeable in the third area trade and investment facilitation. It has improved the co-ordination between officials. It gives Hong Kong a channel to open communications.

And because it is backed by the central government in Beijing it can help overcome the warring between China's ambitious city administrations that has hampered trade and investment facilitation in the past. This is where rules like the Four Up, Four Down rule can be attacked with, in some cases, extraordinary consequences.

Hong Kong had a remarkable year in 2004. Economic growth was up 8.1 per cent. Exports increased by 15 per cent. The outlook is upbeat. GDP forecasts for 2005 centre on 5 per cent well above the past 10-year average of 3.5 per cent.

There is evidence of a strong trade surplus for the first quarter of this year, which is a good signal for the remainder of the year. The first quarter is generally very weak in Hong Kong's trading pattern.

And the property market, which has been a persistent drag on the economy for the past seven years, is coming back.

Property prices plunged 70 per cent from their peak in October 1997. They have since recovered 40 per cent of that.

JP Morgan predicts growth in property prices of up to 15 per cent in 2005 with a steady 10 per cent annual growth rate thereafter.

And while inflation at 2.5 per cent is on the way up, this is considered to be a positive factor, healing the economy after six years of deflation.

The growth of China is the key.

As long as Hong Kong can cement its economic integration with southern China, the outlook is upbeat.

hkskyline

May 8th, 2005, 07:05 AM

Modern Terminals helps keep Hong Kong's leading edge

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Mar / Apr 2005

Hong Kong's Kwai Chung terminals handled a total of 13.43mn TEUs in 2004, at a growth rate of 11.2%. Modern Terminals contributed about one-third of that total, registering a healthy, just under 10% growth and handling a total of 4.35mn TEUs in 2004. The entire South China market, meanwhile, grew by about 4mn TEUs in 2004 with about one-third of this increase handled by Hong Kong.

As the South China trade continues to flourish and throughput growth is maintained at the double-digits for Hong Kong, Modern Terminals is getting ready to meet the challenges of the future by embarking on a facilities upgrading project and other optimization measures that will contribute in boosting the overall Hong Kong total throughput capacity in the coming years from the present 19mn TEUs to 24mn TEUs.

Work is underway on the over HK$1bn project that will comprehensively upgrade Modern Terminals' facilities at Container Terminals 1, 2 and 5 (CT125). The aim is to boost total throughput capacity by up to 25% by enhancing productivity and efficiency. The project, according to Modern Terminals, is in line with the recommendations contained in the Government-commissioned Hong Kong Port Master Plan 2020, which is to improve existing operations at Kwai Chung port before constructing additional terminals.

CT 1, 2, and 5 were originally designed and built some 30 years ago with an alongside draft of -12.2 metres mCD and 13-across quayside cranes (QC) to cater for the container vessels of 2,500-TEU that were in use at the time. The quay decks were upgraded in 1997 to accommodate larger vessels and QC loading; and the berths were deepened to -14 metres mCD in 2003 to align them with the alongside draft of the initial phase of Rambler Channel dredging for CT9. Modern Terminals intends to enhance the standards of CT 1, 2, 5 facilities, so they match those of the new berths at CT9 (South) and meet the needs of the increasingly large container vessels now being constructed. Plans have already been drawn up to accommodate the even bigger vessels in the 12,000 TEU range in the future. The water depth alongside of CT 1, 2, 5 will be dredged to -15.5 metres mCD.

Six new quayside gantry cranes will be deployed at CT 1, 2, 5, which will have an outreach capability of 22 boxes across a ship's deck; four more such mega-cranes will also be installed at CT9 (South). The existing, obsolete rail-mounted gantry crane (RMG) stacking area will be converted into an RTG yard with the capacity to stack containers six high. Other terminal equipment will be rationalized, while the quay deck is being strengthened to accommodate heavier cranes and higher mooring/berthing loads. The yard layout, gatehouses and workshop are all being reconfigured.

The upgrade project is scheduled for completion in 2006 and CT 1, 2, 5 will be able to handle the new generation of ultra-large vessels. They will also have sufficient yard area, stacking capacity and equipment for quayside productivity of 150-200 moves per hour.

Port security

With much of its throughput destined for the US and Europe, Modern Terminals has been taking proactive measures to enhance security at the port. Following confirmation that all its facilities are compliant with the International Maritime Organization's International Ship and Port Facility Security (ISPS) Code that came into effect July 1, 2004, Modern Terminals, in collaboration with other Kwai Chung terminal operators, participated in a pilot project using two models of high-tech Integrated Container Inspection Systems (ICIS) to screen each container that arrives at its entry gate and quayside barge facility.

ICIS is provided by US company, Science Applications International Corporation (SAIC). ICIS performs optical character recognition, radiographic imaging, radiation scanning of all containers entering Modern Terminals' facilities since September 2004 to date.

This integrated system has the potential to scan high volumes of container traffic without significantly impeding traffic flow. The data gathered and provided by the system can help Customs authorities and other relevant parties worldwide. The comprehensive, integrated scanning data on every export container will enable inspectors to identify high-risk containers quickly and efficiently by the differences from expected contents.

The ICIS at the entry gate scans containers on trucks as they pass through the entry gate at speeds of up to 16 km/h. The non-stop drive-through with integrated capability helps avoid any significant delay to traffic flow. In addition, a mobile ICIS system is also being deployed to screen transshipment and export containers as they enter the terminal by barge.

hkskyline

May 8th, 2005, 07:16 PM

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hkskyline

May 11th, 2005, 08:29 AM

Strong Winds In Hong Kong Topple Shipping Containers
9 May 2005

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HONG KONG (AP)--A thunderstorm kicked up typhoon-strength winds in Hong Kong that blew over 23 giant shipping containers, killing a truck driver and injuring two others, officials said Tuesday.

The dead driver's truck was buried under three containers at the container terminal during Monday's storm, which packed gusts of up to 135 kph, said Fire Services Department spokesman Tony Leung.

Another driver was hospitalized in critical condition, said Raymond Wong, a government spokesman.

The other injured man was in stable condition, Wong said.

The stormy weather was caused by a trough of low pressure, the government said.

"It's just like a jet of water hitting the ground but there is no way out," Leung Wing-mo, senior scientific officer at the Hong Kong Observatory, was quoted as saying in the South China Morning Post.

hkskyline

May 13th, 2005, 04:26 AM

South China Morning Post
May 11, 2005
Kwai Chung tragedy highlights vague law
Russell Barling

The fatal toppling of several stacks of shipping containers at Kwai Chung and Tsing Yi had observers demanding answers yesterday and the terminal operators crying out for more space.

The powerful winds that struck on Monday, sending containers hurtling down on unsuspecting workers and killing a truck driver, are normally preceded by several typhoon warnings, which escalate as the storm gathers power.

The warnings give workers time to level the stacks and lash thousands of boxes together before heading for shelter. But Monday's gale came out of nowhere.

Hutchison's Hongkong International Terminals (HIT), lessors and managers of the property where the fatal accident took place, are refusing to comment on operational procedures during investigations.

But what is immediately clear is that the practices at the yard are no different from those employed at most other terminals and ports in the city and across the region, according to senior port executives.

Whether those practices adequately protect workers on Hong Kong's space -constrained docks remains open to question, they say.

The Kwai Chung docks are the busiest in the world, moving 13.4 million containers last year. Handling that many units requires storage space for about 280,000 boxes and, with limited space for storage, they must be stacked.

The containers that fell on Monday, crushing 47-year-old driver Chan Shui -sang, were empty and stacked at least seven high. Regulations don't govern how high boxes may be stacked, but seven high is common at ports from Shenzhen to Singapore.

The Kwai Chung facilities are industrial premises and regulated by the Labour Department. The department sets down guidelines for operators, which are not law and therefore not mandatory.

Failure to follow each one of the guidelines is not in itself an offence, but failure to offer "a safe working environment" is penalised, according to the department.

"Under the general duties provisions of the factories and industrial undertakings ordinance, a duty-holder who failed to provide and maintain a safe system of work in connection with container operations in adverse weather conditions is liable to a fine of $ 500,000 and to imprisonment for six months," a department spokesman said.

Industry veterans said the ordinance's vague guidelines made it hard to know when safety rules had been violated.

But one terminal executive offered a solution. "The government should allow us to have additional yard space," he said.

hkskyline

May 14th, 2005, 07:34 PM

OOIL Shipping group doubles earnings to US$670m
9 May 2005
South China Morning Post

Strong demand for deep-sea transport services produced record earnings for Orient Overseas (International) (OOIL) last year.

The company more than doubled net earnings for the year to US$670.44 million. Revenues rose a comparative 27.7 per cent to US$4.14 billion for the year.

Provisional operating data released by Orient Overseas Container Lines in February showed the average revenue per teu (20-ft equivalent unit) carried last year rose 7.3 per cent to US$1,100.08 per box. Overall volume was up a comparative 21.6 per cent to almost 3.27 million teu.

OOCL generated 44.2 per cent of its revenue, or US$1.59 billion, transporting Asian-manufactured goods across the Pacific last year.

The OOIL board gave former steward Tung Chee-hwa a farewell present in the form of a bonus one-for-10 share issue and a final dividend of 18 US cents per
share.

Company sources confirmed Mr Tung would not return to lead OOIL after stepping down as chief executive of Hong Kong.

Shipping lines have been trying to dispel fears that the expected 13 per cent rise in global box-fleet capacity this year may swamp the market by insisting
that imbalanced trade and port congestion - particularly on the US west coast - will result in underused vessels.

"What isn't being mentioned is that many of those US terminals have expanded their working hours from 16 to 24 hours," an analyst said. "So, whether the lines achieve gains [in freight rates] may come down to whether people buy the story on the congested terminals impacting supply.

"It is certainly the goal of the lines to get everyone as panicked about it as possible."

hkskyline

May 18th, 2005, 07:29 PM

LCQ1: Location of Container Terminal 10
Wednesday, May 18, 2005
Government Press Release

Following is a question by the Hon Leung Yiu-chung and a reply by the Secretary for Economic Development and Labour, Mr Stephen Ip, in the Legislative Council today (May 18):

Question :

The Study on Hong Kong Port - Master Plan 2020 commissioned by the Government has tentatively identified two locations for the construction of Container Terminal 10, one of which involves the formation of an artificial island off Tai O in Northwest Lantau. In this connection, will the Government inform this Council whether:

(a) the consultancy firm has, on its own initiative, consulted residents and resident groups on Lantau as well as the Islands District Council while conducting the study and before tentatively identifying the location off Tai O as the site for the Container Terminal; if so, of the details of the consultation; if not, the reasons for that;

(b) it will conduct public consultation before deciding on the site for Container Terminal 10; if so, of the details of the consultation; if not, the reasons for that; and

(c) it has considered if the construction of a container terminal off Tai O goes against the principle of nature conservation it advocated in the Concept Plan for Lantau?

Reply :

Madam President,

(a) The main objective of the Study on Hong Kong Port - Master Plan 2020 (the Study) is to formulate a competitive and sustainable port development strategy and master plan for the next 20 years. To this end, the Study has considered the programme and scale of constructing new port facilities, and identified two possible sites for the development of Container Terminal 10 (CT10), namely Northwest Lantau and Southwest Tsing Yi. The Administration has not yet made any decision on the location of CT10. As recommended in the Study, we will conduct an ecology study on the Northwest Lantau site to assess its environmental suitability for constructing CT10. In parallel, we will update the Port Cargo Forecast to work out the optimal timing for constructing CT10. We will review the port expansion options when more data are available.

In the course of the Study, the consultants had widely consulted the industry, including trade representatives, operators and users of the port, shipping and logistics sectors. After consulting the Hong Kong Port Development Council, Logistics Development Council and Maritime Industry Council, we conducted a briefing for the Economic Services Panel of the Legislative Council in November 2004 and consulted the public. The study findings and recommendations were also presented to the Town Planning Board as well as the Advisory Council on the Environment. We also attended the Islands District Council Environmental Improvement and Food Hygiene Committee meeting to brief Committee members on the findings of the Study and to listen to their views. We have received 25 written submissions from various sectors. We will carefully analyse the views received. I should reiterate that we have not taken any decision on the preferred site for CT10. We need to conduct an ecology study on the Northwest Lantau site and update the Port Cargo Forecast before further assessing the merits of the two proposed sites.

(b) Before the implementation of any decision on the preferred site for CT10 in future, we will consult the public. Container terminal development is one of the designated projects listed under Schedule 2 of the Environmental Impact Assessment Ordinance (EIAO). The proposed container terminal development must, regardless of the location of the preferred site, be subject to feasibility study as well as detailed environmental impact assessment (EIA) to comply with the procedures and requirements stipulated under the EIAO to prove its environmental acceptability. The public can also offer their comments on the Project Profile and the EIA Report. Apart from the EIAO, development of CT10 would also need to comply with the Town Planning Ordinance (TPO) and the Foreshore and Seabed (Reclamation) Ordinance (FS(R)O). In terms of the TPO, a draft Outline Zoning Plan covering the CT10 development would need to be prepared and gazetted for the public to inspect, comment or raise any objections. When container terminal development involves reclamation, the project would also need to be gazetted for the public to comment and raise any objection in accordance with the FS(R)O. The Administration would consult the public on various aspects concerning the preferred site for CT10 development in accordance with established procedures, so that the public would have opportunities to offer their views on the environmental, planning and reclamation aspects.

(c) The Northwest Lantau site is one of the possible options recommended for CT10 development in the Study. Before any decision is taken on the site for CT10 in future, we would need to conduct an ecology study and an environmental impact assessment to ensure the proposal’ s feasibility and acceptability from the viewpoints of the environment, reclamation and planning.

hkskyline

May 20th, 2005, 06:00 PM

HK Port's April Container Traffic Up 5.9% To 1.8M TEUs
Wednesday May 18, 2005

HONG KONG (Dow Jones)--Container shipping traffic through Hong Kong rose 5.9% from a year earlier in April, the government said Wednesday, recovering from a decline of 7.2% in the previous month.

A total of 1.8 million twenty-foot equivalent units, or TEUs, passed through the container terminals and other cargo-handling facilities of the world's busiest port in April, according to preliminary estimates from the city's Port Development Council.

Throughput at the Kwai Chung container terminals, which handle the bulk of Hong Kong's traffic, rose 12.1% to 1.2 million TEUs.

Throughput at other cargo-handling facilities, such as private wharves and anchorages, fell 3.3% on year in the same period to 678,000 TEUs.

The nine container terminals at Kwai Chung have five operators: Modern Terminals Ltd., which is 55% owned by Wharf (Holdings) Ltd. (0004.HK); Hongkong International Terminals Ltd., a unit of Hutchison Whampoa Ltd. (0013.HK); CSX World Terminals Hong Kong Ltd.; COSCO-HIT Terminals Ltd., a joint venture between COSCO Pacific Ltd. (1199.HK) and HIT; and Asia Container Terminals Ltd.

- By Jeffrey Ng, Dow Jones Newswires
- Edited by Sharon Buan

hkskyline

May 24th, 2005, 08:02 AM

Container shipping: Young pretenders worry older kings
Robert Wright
23 May 2005
Financial Times

No other cities have tied their fates so closely to container shipping as Hong Kong and Singapore. Both achieved their rapid economic growth in the 1970s partly through adopting new, cheaper container shipping methods for their exports. Both have also long dominated league tables of world container throughput, with Hong Kong as number one and Singapore number two.

The pair's dominance is reflected in the market positions of their main terminal operators - Hong Kong based Hutchison Ports has long been the world's largest container terminal operator, with Singapore's PSA second. Yet the two ports now face challenges from sophisticated neighbours.

Hong Kong faces competition to handle cargo that currently begins or end its deep-sea journey in Hong Kong. Nearly all the 21.9m 20-foot equivalent units (TEUs) of containers handled in Hong Kong last year were such so-called origin-destination traffic, 95 per cent of which came by barge or truck from China.

Such traffic has increasingly migrated to new ports, such as Yantian in the Shenzhen special economic zone, which charge less and are closer to the cargo's point of origin.

Hong Kong's container throughput grew 7.2 per cent last year, against 28.3 per cent for Shenzhen's ports. A whole terminal in Hong Kong - CT8 West, partly owned by Dubai Ports International - lacks a single regular customer. Terminal operators are pushing for a relaxation of restrictive trucking rules.

In response operators have bought stakes in mainland ports. Hutchison has invested in six in the Pearl River Delta near Hong Kong and another three in the Yangtze River delta around Shanghai. Modern Terminals, Hong Kong's second largest, has stakes in the same regions.

In Singapore, nearly all the 21.3m TEUs of containers handled last year were moved between ships going to or from other destinations. It faced little competition for such trans-shipment business until 2000, when Maersk Sealand, the world's largest container shipping line, took much of its business to the new port of Tanjung Pelepas in Malaysia. Taiwan's Evergreen Shipping followed soon after. The pair took 15 per cent of Singapore's business.

Maersk moved partly for cost reasons and partly because PSA refused to set up a dedicated terminal where the shipping line would have had a shareholding. PSA subsequently slashed its handling fees, and China's Cosco shipping line was granted a joint venture agreement of the kind Maersk wanted.

Singapore's throughput has recovered fast and last year grew 15.9 per cent. Early this year it had higher container throughput than Hong Kong, making it the premier container port.

Yet John Meredith, chief executive of Hutchison Ports, says Singapore is flattered by counting trans-shipped containers as handled twice - on arrival and on departure. It is one of several factors that suggest Hong Kong is not losing ground as fast as might appear. Singapore, points out one shipping line, could see further defections to Tanjung Pelepas. But while Hong Kong might lose market share, shippers are unlikely to rearrange the supply chains that use it.

hkskyline

May 25th, 2005, 06:30 AM

Ecology study to stall Hong Kong terminal
By Mike Grinter in Hong Kong
20 May 2005
Lloyd's List

PLANS to build a new container terminal in Hong Kong will have to wait for the results of an ecological study which will take at least two years, the government said yesterday.

Two locations are being considered, near Tai O on northwest Lantau or southwestern Tsing Yi Island.

The secretary for economic development and labour, Stephen Ip, told the Legislative Council the government would review options for port expansion when up-to-date information was received on port cargo forecasts.

Legislators heard that an ecology study on the northwest Lantau site would take two years and be followed by public consultation.

According to the Hong Kong Master Plan 2020, drawn up by a group of private consultants, the territory’s container traffic will expand from 23.4m teu this year to 27.9m in 2010 and 40.2m in 2020.

Legislators are already expressing concern at the possible environmental damage that would occur and wanted to know whether the construction of a container terminal off Tai O would contravene the principle of nature conservation stated in the Concept Plan for Lantau.

Mr Ip deflected the question, saying only that the project was still in its infancy and there was no timetable for construction to start.

DotCom

May 25th, 2005, 11:58 AM

May I ask is there any Top10/50/100 list of world-wide port/container-terminal operators?(CSX, HIT, SeaLand...etc)

Urban Dave

May 25th, 2005, 12:05 PM

That pictures of conainers falling are impressive!

hkskyline

May 25th, 2005, 07:28 PM

Training blitz after fatal cargo terminal accident
Agnes Lam
24 May 2005
South China Morning Post

About 140 cargo safety inspectors and instructors will be trained to observe weather changes and interpret radar data under a new Observatory programme to improve safety at container terminals.

The Observatory has developed the half-day course in response to a fatal accident early this month caused by typhoon-strength gusts of wind. A driver was killed and another two men were injured when the wind toppled empty containers onto their trucks at the Hong Kong International Terminals (HIT).

All cargo terminals are required to employ full-time safety officers and instructors to monitor and train operators in the proper handling of container cargos.

About 40 safety officers and 100 instructors will attend a half-day introductory course about strong winds and how to observe weather changes, this week or next.

Scientific officers from the Observatory and the Labour Department will be responsible for conducting the new safety programme.

"We will give them a tailor-made lecture which covers weather observation and how to make use of the radar information posted on our website," Observatory scientific officer Chan Chik-cheung said.

Legislator Wong Kwok-hing said he thought weather knowledge would help safety officers to judge when to suspend all operations at a container terminal due to weather conditions.

"They will be able to come up with contingency measures in case of bad weather, or they can order all workers to stay indoors to avoid injury and accidents," he said.

Mr Wong has asked the government to authorise safety officers to stop all operations at container terminals without getting prior approval from container terminal owners or senior managers.

The Container Transportation Employee General Union also suggested no more than five empty containers should be piled on top of each other to prevent workers being injured by falling containers.

The Labour Department will finish inspections at all container terminals this month to see if they have observed safety measures, with special attention to the arrangement of empty containers.

"The inspectors will check if all empty containers are tightly secured against strong winds," Mr Wong said.

hkskyline

May 25th, 2005, 07:31 PM

May I ask is there any Top10/50/100 list of world-wide port/container-terminal operators?(CSX, HIT, SeaLand...etc)

Top global terminal operators will control a third of world capacity - Drewry
Source : http://www.tdctrade.com/shippers/vol26_5/vol26_5_ports04.htm

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Sept/Oct 2003 Edition

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Drewry Shipping Consultants of the UK recently announced the publication of a multi-faceted analysis of global container terminal operators. The Annual Review of Global Container Terminal Operators (2003) benchmarks the operators' performance and sets out current and future "league tables".

According to Drewry, growth opportunities for the global operators naturally vary around the world. But the report goes further than merely stating that there are opportunities. The geographic spread has been analysed, and highlighted within the report, amongst other factors, is exactly where these opportunities are, who is pursuing them and the risk profile.

"South America, for example, is a fragmented market whilst the Chinese dragon is presenting a golden opportunity needing to be grasped," said Neil Davidson, Drewry's resident expert and director on the world container port industry.

"Chinese port throughput grew by 30% in 2002 to reach almost 30mn TEU, and some operators are better positioned than others to capitalise on the huge opportunities this exceptional growth offers. Hong Kong-based Hutchison Port Holdings handled over 25% of Far East regional throughput in 2002, more than three times more than China Merchants Holdings--its nearest rival. Other global operators with terminal investments already established in China include Cosco Pacific, PSA Corp, APM Terminals, P&O Ports and, most recently, Dragados."

The report reviews in a multi-dimensional manner the business strategy adopted by global operators, and forecasts the impact that recent acquisitions and new investments will have on their position within the global port capacity league. One of the aspects of Drewry's "league table" analysis in the report is throughput for all terminals in which non-minority shareholdings were held as at 31st December 2002. Global operators appearing within the table include, amongst others, Hutchison, APM Terminals, Evergreen, Hanjin, HHLA, Dragados and Hyundai.

Analysis of confirmed expansion plans reveals that P&O Ports is set to join Hutchison, PSA and APM Terminals at the head of the global port operators league table. Over the course of the next five years the gap between these four companies and the remaining global operators is set to widen further--by 2008, the top four operators will control over one third of total world container port capacity. This figure is set to continue increasing if the current level of acquisition activity continues.

Davidson expands on these findings further: "These companies have established a truly global presence--collectively operating in over 90 ports throughout 37 different countries. Consequently, the coming five years will see these leading operators not just continue to dominate the market, but also to increase the gap between them and the rest of the global operators."

Pursuing a strategy based on organic growth is generally the lowest risk/lowest reward strategy available to container terminal operators. It is only by pursuit of higher risk growth strategies that today's global operators have progressed from being single location / regional players into the global market. Analysis of the investment plans of the world's leading operators shows that this elite band of 25 companies will continue to increase their control of the global ports market.

The top four leading operators handled over 45% of the total North European container throughput in 2002--illustrating the mature and consolidated nature of this market of Northern Europe. EU competition regulations have already affected Hutchison's expansion within North Europe, and it is likely that any future moves by PSA Corp or P&O Ports will also be carefully scrutinised by the regulatory authorities.

Similarly in South Asia, P&O Port's successful operations in Mumbai and Chennai have disqualified the company for bidding for further major port concessions in India due to government concerns regarding, primarily, excessive market power, and secondly, given the company's shareholding in South Asia Gateway Terminal (Colombo, Sri Lanka), potential conflicts of interest. As a result, P&O is now pursuing private investment opportunities at India's minor ports, having bought the Adani Group's interest in the new development at Mundra in 2003, and is reported to be pursuing a private investment opportunity in Bengal.

By contrast, the South American market is fragmented--the ownership of terminals is still generally arranged along national lines and no single company has more than a 7% share of the total market. There are now signs of economic recovery in Argentina, and regional port throughput is forecast to grow by over 8% per annum until 2008. Utilisation levels are also set to rise significantly unless additional investment in new terminals and container handling equipment is undertaken.

Annual Review of Global Container Terminal Operators (2003) is published by Drewry Shipping Consultants Ltd. (www.drewry.co.uk). Contact: Neil Davidson, Drewry Shipping Consultants Ltd, Drewry House, Meridian Gate, 213 Marsh Wall, London E14 9FJ, UK. Tel: +44 (0)20 7536 0191; Fax: +44(0)20 7987 9396; Email: davidson@drewry.co.uk

Individual hard copies or a PDF version (￡845) can be purchased and postage to any part of the world is included.

hkskyline

May 27th, 2005, 07:31 PM

Dubai Ports lays off 148 at CT3 amid declining volumes
Russell Barling
21 May 2005

Dubai Ports International (DPI) has dismissed 148 workers from its business-shy Container Terminal 3 facility just five months after agreeing to buy the firm from American rail giant CSX Corp.

The lay-offs were driven by a need to downsize in the light of CT3's declining container volumes over the past year. DPI acquired the facility as part of CSX's global ports sell-off, which also included a stake in the two berths owned by Asia Container Terminals (ACT).

"Retrenchment is an option of last resort, but is sometimes necessary along with adopting new systems and processes to ensure that we are competitively positioned for the future," Ruffin Mak Bing-leung, the managing director of CSX World Terminals (Hong Kong), said in a statement yesterday.

Mr Mak said the lay-offs, which took effect on May 9, would put CT3 "into line with industry norms at Kwai Chung".

DPI acquired majority control of CT3 and a stake in ACT late last year, but the facilities remained largely idle while DPI revamped its management structure and negotiated a revenue-sharing model with its new partner in both companies, Singapore's state-owned PSA International.

CT3 and CT8 West, which have identical shareholders, need to be merged, managers at both companies privately admit. But because the two companies have vastly different shareholding structures - PSA owns a direct 33.34 per cent share in CT3 and an effective 54 per cent interest in ACT through direct and indirect stakes - a merger will be a long, complex process.

"CT3 is currently facing a very challenging time," Mr Mak said in the statement on the lay-offs. "In recent months, we have undertaken a detailed review of our processes and systems and are now implementing an operational restructuring that is a vital step for it to become a competitive and viable player."

Having paid a very full price for three berths at the world's busiest port - December's deals valued CT3 at $3.29 billion and ACT at $6.05 billion - the partners are eager to get operations up and running as soon as possible and have decided to run the companies separately for the interim.

This has presented a new set of problems, according to insiders, concerning the creation of an interim revenue-sharing mechanism and how to bid for new business without undercutting associates.

As a stopgap, they are setting up a steering committee chaired by DPI veteran John Fewer to oversee and co-ordinate the companies' commercial activities.

Business at the port itself has hit the doldrums of late, growing a marginal 0.3 per cent to 6.97 million boxes in the first four months of the year, with incumbent operators cannibalising the midstream to maintain their growth momentum.

hkskyline

June 2nd, 2005, 04:53 PM

LCQ11: Safe storage of containers in container yards
Wednesday, June 1, 2005
Government Press Release

Following is the question by the Hon Kwong Chi-kin and a written reply by the Secretary for Economic Development and Labour, Mr Stephen Ip, in the Legislative Council today (June 1):

Question :

Two accidents caused by strong gales toppling empty containers occurred on the 9th of last month, resulting in casualties. Regarding industrial safety at yards for loading, unloading and storage of containers ("ontainer yards"), will the Government inform this Council:

(a) how it supervises the responsible persons of container yards to have the storage, stacking and unstacking of containers carried out in accordance with the safety requirements laid down by the Government; whether the Labour Department conducts regular inspections at container yards; if so, of the details of the inspections;

(b) of the numbers of cases in which the Labour Department detected breaches of the safety requirements each year since 2000, the locations of the container yards concerned, the safety requirements breached, and the numbers of persons injured as a result of the breaches;

(c) of the penalties imposed on the persons responsible for container yards for breaching the safety requirements; if no penalties were imposed, of the reasons;

(d) whether the Government will consider requiring persons responsible for container yards to take special safety measures during rainstorms and typhoons, and whether the Hong Kong Observatory will consider announcing the maximum wind speeds in various areas during inclement weather, to assist persons responsible for container yards to take contingency measures; if not, of the reasons; and

(e) whether the Government will formulate more stringent safety requirements on handling containers, such as requiring persons responsible for container yards or the Government authorities to arrange for designated persons to observe changes in the weather at the container yards, setting up a warning system against strong winds, and stipulating a height limit on the container stacks, to prevent recurrence of such accidents; if not, of the reasons?

Reply :

Madam President,

(a) The safe storage and stacking of containers in container yards are mainly regulated by the Factories and Industrial Undertakings (Cargo and Container Handling) Regulations ("the Regulations") and the Factories and Industrial Undertakings Ordinance ("the Ordinance") administered by the Labour Department ("LD").

Under the Regulations, the proprietor of a container yard shall ensure that the storage and stacking of containers are done in a safe and secure manner. The Ordinance requires every employer to ensure, so far as is reasonably practicable, the safety and health of his employees at work, by providing and maintaining a safe system of work. To provide practical guidance to proprietors of container yards on compliance with the requirements of the Regulations and the Ordinance, LD has published a "Code of Practice on Mechanical Handling Safety in Container Yards".

Occupational Safety Officers of LD conduct regular inspections to container yards to ensure compliance with the work safety provisions. On average, container yards are inspected once every six to twelve months. In addition, LD also launches special enforcement exercises, targeting at high-risk operations and equipment in container yards.

(b) Between January 2000 and May 2005, Occupational Safety Officers of LD made 1 963 inspections to container yards. Arising from these inspections, 471 warning letters were issued requiring the proprietors to rectify the irregularities found in their yards (see Table 1). Most of the yards are located in Kwai Chung, Tsing Yi, Tuen Mun and Yuen Long. The common unsafe conditions are : unsatisfactory traffic and pedestrian control; unsafe use of mechanical equipment; and working at height.

Table 1

Year No. of inspections made Number of warnings issued

2000 261 80

2001 235 67

2002 319 38

2003 299 63

2004 513 95

January- 336 128

May 2005

Between 2000 and 2004, altogether 420 industrial accidents occurred in container yards (see Table 2). These accidents were mainly due to falling from height, slip or trip on the same level and striking against objects. None of these accidents was related to the fall of containers under high wind conditions.

Table 2

Year 2000 2001 2002 2003 2004

No. of accidents 103 92 63 84 78

(c) Between January 2000 and May 2005, arising from inspections and accident investigations, LD took out 36 prosecutions against the proprietors of container yards for failing to comply with safety provisions. These provisions carry a maximum penalty of a fine of $500,000 and imprisonment for six months. LD will continue to take enforcement action to secure the safety and health of persons at work in container yards.

(d) The Code of Practice on Mechanical Handling Safety in Container Yards has already set out the safety precautions that should be adopted to ensure the safety of persons at work in container yards during high wind conditions. These safety precautions include -

(i) special consideration should be given to the high wind condition and the wind-induced funnel effect which may lead to the sliding or toppling of containers;

(ii) in order to reduce the wind effect on containers, factors such as limiting the stacking height; block stowage; stacking on ground with sound condition; block stowage with loaded containers in the uppermost tier; and use of stacking fittings or lashings (in particular the exposed rows), should be taken into consideration;

(iii) containers should be stacked so that the longitudinal axis is in line with the predominant wind direction. In the case of a storm or typhoon warning, the containers at the corners of the block should be secured;

(iv) no person should be permitted to enter or remain in a container stacking area if there is a reason to anticipate container movement due to wind; and

(v) containers should be lashed in strong winds and container lifting operations should be suspended in adverse weather conditions.

Failure to observe any guidance contained in the Code may be taken by a court in criminal proceedings as a relevant factor in determining whether a person has breached any of the safety provisions to which the guidance relates.

The Hong Kong Observatory currently provides the average wind speed and direction measured at 18 local automated weather stations through its website and "dial-a-weather system".

(e) In the light of the two accidents on May 9, 2005, LD is exploring with the industry possible ways of preventing the recurrence of similar incidents. These include enhancing the existing inclement weather alert system for container yards and providing training on weather observation for safety officers and safety supervisors working in container yards. LD and the Hong Kong Observatory will organise safety seminars to brief the industry on how to watch out for bad weather and the safety precautions that should be taken under such circumstances.

hkskyline

June 4th, 2005, 05:30 PM

Shipping company sets new course for Hong Kong
2 June 2005
South China Morning Post

FINAVAL'S FAR FLUNG operations direct tankers, laden with crude oil and chemicals, from one end of the world to the other. The Italian shipping company runs a truly global operation, co-ordinating logistics from offices located in Rome and Monte Carlo, with a new hub planned soon in Hong Kong.

The company is among the leaders in the transport industry for the clean and dirty cargo markets. The roster of its customers includes most of the major international names in the energy and chemical industries, such as BP, Chevron, Texaco, Vitol, Odjfell, Valero, Shell and Total. Finaval manages 24 vessels, 20 of which it owns. The firm produces worldwide turnover of more than {euro}140 million ($1.37 billion), generated by a headcount of 450 crew members and staff.

"In the field of logistics, it is important to work with specialised organisations like ours, which really understand the product they are handling," said Giovanni Fagioli, president and chief executive of Finaval. His company's mission is centred on the delivery of efficiency and quality. At the same time, it never loses sight of its commitment to policies that promote health, safety and the protection of the environment.

The new Hong Kong office, which is scheduled to open this year, will help to strengthen and expand the global network. Hong Kong has already been serving as a hub for Finaval's Asian operations. The company functions with only 15 brokers here, whose role is to arrange for the vessels to meet the needs of major customers. "Our new office will become the focal point for the entire interAsia market," Mr Fagioli said.

Finaval has established relationships with Sinochem and several private Chinese ship owners, whom it hopes to attract as customers once the new office is open. Its executives travel on a daily basis between the ports of Shanghai, Singapore and Hong Kong, laying the groundwork for a new customer base.

"The Asian markets - both China and India - will ultimately be more important than anywhere else in the rest of the world," Mr Fagioli said.

hkskyline

June 9th, 2005, 07:46 AM

Shippers balk at suggestion of 'security' charge

http://www.tdctrade.com/shippers/img/vol28_2.jpg
Vol.28#2
Mar/Apr 2005

Recent reports in the industry and mentions in the media indicate that an on-going discussion between shipping lines and terminal operators has not resolved the issue of a Security Charge to be levied by Shenzhen CTOs at a cost of RMB50 per box, both on imports and exports from March 1. Furthermore, Hong Kong CTOs have likewise informed their customers that starting May 1, they will be charging HK$50 for every TEU (loaded) and HK$20 for intra-Asia boxes.

What strikes me most is that security is a basic item that comes under every operator's list of services to customers. From terminal operators to shipping lines, we expect them to be offering us secure services when we pay them to handle the shipping of our goods from Point A to Point B. For anyone in this transportation chain to be adding a 'security charge' is not justifiable.

If the CTOs and the shipping lines have not been providing the services that this so-called Security Charge is supposed to cover, then their trustworthiness is in question. How did they conduct their operations before they imposed the charge?

Moreover, when CTOs speak of transparency, we would like to know how they have come to such a sum D per box? Based on some lose calculations, Hong Kong and Shenzhen CTOs would be collecting some half-billion dollars a year at their proposed rate. The trade would certainly want an accounting of where every cent is going, which I don't believe we shall ever see.

There have also been suggestions that shipping lines intend to pass on the charge to their customers, i.e. the shippers. This is totally unacceptable. Shippers are asked to underwrite all new measures that should be in the basic service offering of a carrier to the customer, or of a terminal operator to the shipping line. It is most often the shipper who takes the brunt of these measures anyway, experiencing cargo delays during their implementation and suffering the consequences of delays or non-shipment of cargo. But are we ever compensated? Hardly. If the CTO or the shipping line wants to prove his respectability and trustworthiness in the trade, then he should voluntarily offer to upgrade his facilities and products without having to ask his customer to share the cost.

Hong Kong's competitiveness has come to be the focus these past few years, mainly because its high costs tend to erode that edge we have for service quality and efficiency. We expect nothing short of the best and speediest service from all our operators in Hong Kong and competition among the operators is a way to ensure good service at reasonable prices. However, if a certain group tends to act as a cartel and impose charges collectively, then where is the free market scenario that Hong Kong is so proud of? It's better that we put a stop to this one charge now before it grows into an unresolved, constant menace as THC has been on Hong Kong's competitiveness.

hkskyline

June 13th, 2005, 11:07 PM

Shipper tips rally after 60pc fall in charter rates
9 June 2005
Hong Kong Standard

Pacific Basin Shipping, a Hong Kong- listed dry bulk carrier company, expects charter rates to recover in the fall when demand picks up, after a seasonal slide of up to 60 percent on some routes in the first quarter.

The spot daily charter rate of the company's Pacific routes dropped from US$50,000 (HK$390,000) to around US$20,000 per vessel in the first quarter, Pacific Basin group chief executive Mark Harris said after a special general meeting Wednesday.

However, since the company's main focus is Atlantic routes, which suffered a smaller decline in the same quarter, from US$20,000 to US$15,000, the impact on overall income has been limited, he said.

Pacific Basin's rate has been affected by the Baltic Dry Index, an industry benchmark for dry bulk rates, which has slumped by almost one-third since the beginning of this year.

Market watchers are concerned that demand from China will slow because of the government's policy to cool economic growth and lingering uncertainty created by trade disputes between China and the United States.

Harris said Pacific Basin is chartering its vessels under longer terms to shield itself from any market downturn and expects overall demand and rates in 2005 will remain more or less the same as last year. The company has signed contracts to cover 69 percent of its vessel revenue days this year, 30 percent next year and 15 percent in 2007. He said rates will probably return to normal in September or November.

hkskyline

June 15th, 2005, 06:15 PM

HK Port's May Container Traffic Up 1.8% To 1.9M TEUs
Wednesday June 15, 2005, 8:48 pm

HONG KONG (Dow Jones)--Container shipping traffic through Hong Kong rose 1.8% from a year earlier in May, the government said Wednesday, reflecting a slowdown from the 5.9% growth recorded in April.

A total of 1.9 million twenty-foot equivalent units, or TEUs, passed through the container terminals and other cargo-handling facilities of the world's busiest port in May, according to preliminary estimates from the city's Port Development Council.

Throughput at the Kwai Chung container terminals, which handle most of Hong Kong's container traffic, rose 4.9% on year to 1.2 million TEUs.

Meanwhile, throughput at other cargo-handling facilities fell 3.2% on year in the same period to 680,000 TEUs.

The nine container terminals at Kwai Chung have five operators: Modern Terminals Ltd., which is 55% owned by Wharf (Holdings) Ltd. (0004.HK); Hongkong International Terminals Ltd., a unit of Hutchison Whampoa Ltd. (0013.HK); CSX World Terminals Hong Kong Ltd.; COSCO-HIT Terminals Ltd., a joint venture between COSCO Pacific Ltd. (1199.HK) and HIT; and Asia Container Terminals Ltd.

hkskyline

June 15th, 2005, 06:17 PM

Hutchison Whampoa Shedding HK Port Stake
Sun Jun 12, 7:27 PM ET

HONG KONG (AP) - Conglomerate Hutchison Whampoa Ltd. is selling its stake in Hong Kong's port operations to Singapore's PSA International Ltd. for $925 million cash.

The company, controlled by billionaire tycoon Li Ka-shing, is shedding its 20 percent stake in Hongkong International Terminals and a 10 percent stake in COSCO-HIT, a joint venture with COSCO Pacific Ltd. that runs the No. 8 terminal in Hong Kong's Kwai Chung port. Hutchison still owns significant stakes in both companies.

It will use net proceeds from the sale, which is expected to be completed on or before June 22, for general corporate purposes.

"We are happy that this transaction will create a strong alliance in the Group's port operations, and will put us in a position to have strategic cooperation resulting in further value creation for all parties," Hutchison Group Managing Director Canning Fok said in a statement.

John Meredith, Group Managing Director of Hutchison Port Holding Ltd., Hutchison Whampoa's port arm, added that the strategic alliance will make Hutchison International Terminals and COSCO-HIT even stronger players in the highly competitive container terminal market.

Hutchison is one of the world's largest private port operators, operating 39 ports in 19 countries. In Hong Kong, Hongkong International Terminals operates container terminals No. 4, 6, 7, 9 and No. 8 through COSCO-HIT.

For the first half of 2005, Hutchison is expected to book a $1.2 billion profit from the completion of acquisition of stakes its third-generation unit in the United Kingdom from KPN Mobile N.V. and NTT DoCoMo Inc. The profit is a result of the elimination of liability on its balance sheet for DoCoMo's and KPN's minority interests in Hutchison 3G UK Holdings.

PSA, which already has stakes in two container terminals in Hong Kong, has interests in 18 projects in 11 countries, including the world's second biggest container port in Singapore. It is owned by the Singapore government's investment arm Temasek Holdings.

hkskyline

June 16th, 2005, 06:38 AM

Port enters terminal decline
Users lose out in the Kwai Chung sale to PSA
9 June 2005
South China Morning Post

Hutchison Whampoa's disposal of prime terminal assets at Kwai Chung should bolster its bottom line, but will also dampen any competitive urges awakened by the recent injection of new blood into Hong Kong's tight-knit group of port operators.

PSA Corp and Hutchison - by far the world's two biggest terminal owners - may seem strange bedfellows, but the combined effect of inflated terminal asset prices, a deteriorating operating outlook for Hong Kong port and the Singapore firm's ambitious expansion mandate made Hongkong International Terminals a tradable asset.

The joker in the pack is Hutchison's need to generate one-off gains to maintain bottom-line growth despite mounting third-generation telecommunications losses.

Selling an asset once considered a crown jewel will have been made easier by the fact that Hong Kong's status as the world's pre-eminent container port is threatened by Guangdong-based operators - the Hutchison and Wharf Group duopoly among them - that are increasingly capturing the gargantuan export volumes flowing from south China's factories.

In 2000, Kwai Chung operators handled 78 per cent of the 13.29 million 20-foot containers of manufactured goods that moved directly through south China. By last year, the proportion had dropped to half of the 26.6 million boxes of direct trade; this year, they will be lucky to see 45 per cent.

Such trends have resulted in allegations that vested corporate interests are taking precedence over Hong Kong's wider interests, given the absence of a clear strategy to arrest the decline in market share.

Some industry watchers lay the blame squarely at the feet of the administration of former chief executive Tung Chee-hwa. They say that with his family in control of Hong Kong's biggest shipping line, Mr Tung bent over backwards to avoid the perception of a conflict to the clear detriment of the port and transport sector in general.

Pragmatists, however, argue Hong Kong's demise is part of a broader global trend for maritime trade which always sees trade infrastructure cluster around production centres. Simply put, Hong Kong no longer produces cargo and is not close enough to the factories that do.

The result has been shrinking profit margins for the operators, which have kept expanding the volume of their trade by cutting handling prices to siphon off lower value transshipment trade from the midstream operators.

Throughput in Kwai Chung was up a comparative 13.1 per cent in the first four months at the expense of the midstream and river trades, which fell 16.3 per cent.

But the port's decline may not have been enough to tempt Hutchison to sell to its arch-rivals if recent acquisitions had not placed such a strain on its books.

Asset trading has become a common way for Li Ka-shing's flagship to fill the earnings gaps arising from astronomical losses in its 3G mobile ventures. With the salaries of the company's top executives heavily weighted towards annual performance bonuses, that strategy seems unlikely to change.

Hutchison is committed to investing most of its budgeted US$25 billion in rolling out 3G services in 10 countries. In the past two years, the group recorded 3G operating loss of nearly $56 billion, or half of the proceeds it received from selling Orange in 1999.

It has relied on creating exceptional gains to boost its bottom line. Last year, Hutchison sold its 20 per cent stake back to Procter & Gamble, its mainland partner, for $13.7 billion to offset its $37.49 billion 3G losses.

It also spun off Hutchison Telecommunications International Ltd and sold a substantial stake in Hutchison Global Communications Holdings for a quick profit.

This year, Hutchison secured an accounting profit of $9.4 billion by buying back from British joint-venture partners NTT DoCoMo and Royal KPN 10 per cent of its initial investment.

It also expanded rapidly in the European retail arena, acquiring French perfume retailer Marionnaud Parfumeries and British perfume-seller Merchant Retail Group for a total of $8.5 billion.

While the Hongkong International Terminals deal may be one whose time had come, it will nevertheless squash the hopes of shipping lines and traders who thought that when PSA paid top dollar to buy its way into Kwai Chung's gated community, some full-blooded competition may rekindle Hong Kong's lagging fortunes.

"This level of partnership strengthens both parties," said a source close to the deal.

hkskyline

June 16th, 2005, 07:25 PM

http://www.pdc.gov.hk/eng/images/The-Port-of-HK.jpg (http://www.pdc.gov.hk/eng/images/The-Port-of-HK_big.jpg)

hkskyline

June 18th, 2005, 09:40 PM

World-Wide flips open its books
Trond Lillestolen, Oslo
17 June 2005
Tradewinds

A Hong Kong-based group is cozying up to more openness and transparency.

The World-Wide group is for the first time in its 50-year history releasing financial figures. The push for greater transparency comes as a new generation gains influence in the organisation.

TradeWinds understands that Andreas Sohmen-Pao, managing director of World-Wide Shipping, is in favour of more openness and transparency in the company's affairs.

Holding company Bergesen World-Wide Ltd of Bermuda logged a profit of $350m last year. The operating result for Bergesen World-Wide was $390m, while the operating revenue came to $1.25bn.

The company paid a dividend of $150m last year.

Historical comparisons for the Bergesen World-Wide group were not available as 2004 marked its first full year of operations.

The group is one of the largest tanker owners. As a comparison, New York and Oslo-listed Frontline had revenues of $1.86bn last year.

At the end of 2004, Bergesen World-Wide operated a fleet of 125 owned, part-owned or controlled vessels.

Chairman of the group Helmut Sohmen, who is Sohmen-Pao's father, writes in a 37 page document called Market and Operational Report 2004 that "by any standards, 2004 was an exceptional year for the shipping industry at large and this is reflected in the company's results for the year".

The document states that the group typically maintains gearing below 50% to maintain financial strength and flexibility.

The company's board is expecting an operating profit for 2005 in line with 2004.

Jan Haakon Pettersen, managing director of Bergesen DY, says the result for the Norwegian subsidiary will also be very good in 2005. Quite a big part of the company's gas-carrier fleet, which includes 55 ships, are covered by contracts.

World-Wide Shipping in Singapore is a major player in the VLCC market and about half of that company's fleet are on long-term charters. The fleet totals 27 units plus two newbuildings.

Bergesen is chaired by Helmut Sohmen. The other two board members are Sir William Purves, who served for 44 years at Hong Kong and Shanghai Banking Corp, and William D Thomson, previously a director of the Bermuda Monetary Authority.

hkskyline

June 25th, 2005, 06:18 PM

Statistics on Vessels, Port Cargo and Containers for the First Quarter of 2005
Thursday, June 9, 2005
Government Press Release
http://www.info.gov.hk/gia/general/200506/09/06090145.htm

The Census and Statistics Department (C&SD) today (June 9) released statistics on vessels, port cargo and containers for the first quarter of 2005.

In the first quarter of 2005, total port cargo throughput decreased by 3% over a year earlier to 53.6 million tonnes. Within this total, inward port cargo decreased by 2% to 33.5 million tonnes, while outward port cargo decreased by 6% to 20.1 million tonnes.

The decrease in total port cargo throughput in the first quarter of 2005 should be seen against the background of a high base of comparison, as total port cargo throughput reached a peak in the first quarter of 2004 with a year-on-year increase of 12%.

On a seasonally adjusted quarter-to-quarter comparison, total port cargo throughput rose by 2% in the first quarter of 2005. Within this total, inward port cargo was up by 6%, while outward port cargo decreased by 5%. The seasonally adjusted series enables more meaningful shorter-term comparison to be made for discerning possible variations in trends.

Port cargo

Within port cargo, seaborne and river cargo decreased by 4% and 3% over a year earlier to 38.0 million tonnes and 15.6 million tonnes respectively in the first quarter of 2005.

Within inward port cargo, imports decreased by 5% over a year earlier to 20.4 million tonnes in the first quarter of 2005, while inward transhipment went up by 5% to 13.1 million tonnes. For outward port cargo, exports (including domestic exports and re-exports) and outward transhipment decreased by 11% and 3% to 7.9 million tonnes and 12.2 million tonnes respectively.

The detailed port cargo statistics are summarised in Table 1(text version of table 1).

The main countries/territories of loading for inward port cargo and countries/territories of discharge for outward port cargo are shown in Table 2(text version of table 2) and Table 3(text version of table 3) respectively.

Comparing the first quarter of 2005 with the first quarter of 2004, double-digit increases were recorded in the tonnage of inward port cargo loaded in Indonesia (+33%) and Singapore (+20%). On the other hand, double-digit decreases were recorded in the tonnage of inward port cargo loaded in Australia (-42%), the Republic of Korea (-38%), Taiwan (-20%) and Malaysia (-15%). Over the same period, double-digit increases were registered in the tonnage of outward port cargo for discharge in Thailand (+20%), Japan (+19%), Macao (+15%), and Australia (+11%). On the other hand, double-digit decreases were recorded in the tonnage of outward port cargo discharged in Taiwan (-17%), Germany (-14%) and the mainland of China (-14%).

The principal commodities for inward and outward port cargo are shown in Table 4(text version of table 4) and Table 5(text version of table 5).

Comparing the first quarter of 2005 with the first quarter of 2004, double-digit increases were recorded in inward port cargo of "pulp and waste paper" (+53%), "bricks, ceramic tile and refractory construction materials" (+30%) and "coal, coke and briquettes" (+17%). On the other hand, double-digit decreases were recorded for "metalliferous ores and metal scrap" (-25%), "iron and steel" (-23%), and "paper and paper products" (-22%). As for outward port cargo, double-digit increases were recorded for "pulp and waste paper" (+45%), "tools, cutlery, metal household ware and manufactures" (+16%) and "articles of apparel and clothing accessories" (+13%). On the other hand, double-digit decreases were recorded for "metalliferous ores and metal scrap" (-31%), "paper and paper products" (-18%), "furniture and parts thereof" (-13%) and "iron and steel" (-11%).

Containers

In the first quarter of 2005, the port of Hong Kong handled 5.1 million TEUs of containers, representing a slight decrease of 1% over a year earlier. Within this total, laden containers decreased by 4% to 4.2 million TEUs, while empty containers went up by 15% to 0.9 million TEUs. For laden containers, both inward and outward containers amounted to 2.1 million TEUs in the first quarter of 2005, with inward containers recording virtually no change and outward containers decreasing by 8% over a year earlier.

On a seasonally adjusted quarter-to-quarter comparison, laden container throughput decreased by 1% in the first quarter of 2005. Within this total, inward laden containers were up by 3%, while outward laden containers decreased by 4%.

Seaborne laden containers decreased by 6% in the first quarter of 2005 over a year earlier to 3.1 million TEUs, while river laden containers decreased by 1% to 1.1 million TEUs.

Within inward laden containers, imports decreased by 7% to 0.9 million TEUs, while inward transhipment rose by 5% to 1.2 million TEUs in the first quarter of 2005 over the same period in 2004. For outward laden containers, exports and outward transhipment decreased by 10% and 6% to 1.0 million TEUs and 1.1 million TEUs respectively.

The detailed container statistics are summarised in Table 6(text version of table 6).

Port cargo and laden container statistics are compiled from a sample of consignments listed in the cargo manifests supplied by shipping companies or agents to the Census and Statistics Department.

Vessel arrivals

In the first quarter of 2005, the number of ocean vessel arrivals was up by 3% over a year earlier to 9 120, with the total capacity decreasing by 2% to 75.9 million net registered tons. Over the same period, the number of river vessel arrivals recorded virtually no change to 45 540, with the total capacity increasing by 6% to 22.9 million net registered tons.

The statistics on vessel arrivals in Hong Kong are given in Table 7(text version of table 7).

Vessel statistics are compiled by the Marine Department primarily from general declarations submitted by ship masters or authorised shipping agents. Pleasure vessels and fishing vessels plying exclusively within the river trade limits are excluded.

Further information

More detailed statistics on vessels, port cargo and containers are contained in the bilingual quarterly report "Hong Kong Shipping Statistics".

The January-March 2005 issue of the report will be on sale by the end of June, at HK$49. Both print version and download version of the publication can be purchased online at the "Statistical Bookstore, Hong Kong" (http://www.statisticalbookstore.gov.hk). Download version of the publication can be purchased at 75% of its original price exclusively at the online Statistical Bookstore. Print version if purchased online is also offered a discount, at 85% of its original price at the Statistical Bookstore as well as the Government Bookstore (http://www.isd.gov.hk/eng/bookorder.htm).

For purchase of print version, this can be done through mail order by returning a completed order form which can be downloaded from the C&SD website (http://www.info.gov.hk/censtatd/eng/prod_serv/forms_index.html). Purchase can also be made in person at the Publications Unit of the C&SD (19/F, Wan Chai Tower, 12 Harbour Road, Wan Chai; Tel: 2582 3025).

Enquiries on port cargo and container statistics may be directed to the Shipping and Cargo Statistics Section of the C&SD at 2582 4889. For enquiries about vessel statistics, readers may contact the Statistics Section, Planning, Development and Port Security Branch of the Marine Department at 2852 3661.

hkskyline

June 27th, 2005, 06:36 AM

Pacific Basin orders new US$27m vessel on upbeat outlook
21 June 2005
Hong Kong Standard

Pacific Basin Shipping, a Hong Kong- listed dry bulk carrier, has ordered the building of a new vessel for US$27.8 million (HK$216.84 million), as it expects demand to keep growing despite a slowdown in the first half.

The new handysize dry bulk vessel, with capacity of 28,100 deadweight tonnes, is 29 percent more expensive than two similar vessels the firm ordered last year for US$21.5 million each.

Pacific Basin said its fleet expansion will enhance its scheduling flexibility and maintain its operational efficiency. The new vessel is "in line with the current customer requirements," it added.

Demand for cargo ships slowed in the first half, sparking concerns the sector has peaked and will continue to slide.

The Baltic Dry Index, a benchmark for dry bulk rates, has slumped by almost one-third since early this year.

"Rates are likely to strengthen again in September due to the Northern Hemisphere grain harvest and peak in winter when thermal coal shipments for the northern winter tighten ship supply," Goldman Sachs said in a report.

Pacific Basin said the new vessel will be built in Japan and is expected to be delivered in the first half of 2007. The company will fund 40 percent of the cost from cash and the remainder through bank borrowings.

It now has a fleet of 47 vessels, of which 33 are owned, 10 are chartered and it manages the remaining four. It has ordered six vessels, including the latest one, which are under construction.

Pacific Basin reported a 2004 net profit of US$103 million and Goldman Sachs forecasts profit to grow to US$138.4 million this year and US$146.4 million in 2006. It also expects the company to pay 55 percent of earnings as dividends this year.

"While the equity markets do not seem to factor in Pacific Basin's young fleet age [five years average] and high payout ratio, we believe the asset markets will, and in light of the consolidation in the sector, we see Pacific Basin as a potential takeover target," the investment bank said.

hkskyline

June 30th, 2005, 04:39 PM

By "3ASV305" from a Hong Kong transport forum :

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hkskyline

July 2nd, 2005, 05:46 PM

http://www.tdctrade.com/Photo/cms/article/shippers/30898.JPG

Manu84

July 2nd, 2005, 06:16 PM

Do somebody have a plan of the complete port?

hkskyline

July 4th, 2005, 05:00 PM

Do somebody have a plan of the complete port?
Here is some information on port-related development documents from the government :

http://www.legco.gov.hk/database/english/data_es/es-port-and-logistics-development.htm

The second last link leads to the port development plan up to 2020. Currently, discussions are under way to develop CT10. Some articles in this thread talk about this project.

hkskyline

July 17th, 2005, 07:11 PM

Thrown a bone, left in the doghouse
8 July 2005
South China Morning Post

It is never easy being the new kid on the block, and Kwai Chung is proving to be a tough neighbourhood for Dubai Ports International (DPI).

That is why, six months after agreeing to pay more than US$1.4 billion in cash, tax and assumed liabilities for the global port assets of CSX Corp, the paymasters in Dubai must have been relieved this week to see some business thrown their way courtesy of Hong Kong's main terminal operators.

DPI was a late entry in the CSX ports sweepstakes, and people involved in the process say the management problems the company has experienced at Asia Container Terminals (ACT) were the direct result of not having time to perform the requisite due diligence before signing on the dotted line.

But sign it did before spending the next three months wondering who its partners would be as ACT's fleeing shareholders exercised their rights to squeeze every last penny out of PSA International, Singapore's state-funded international port investment arm.

When the dust from all the gamesmanship had settled, the valuation of the two berths at ACT - a port whose best days are behind it - had soared to $6.05 billion and DPI found itself in an uncomfortable new partnership with PSA, as well as huge bills and no customers. And then things got worse.

Last month, PSA paid Hutchison US$925 million for 20 per cent of Hongkong International Terminals (HIT), the port's biggest operator, isolating DPI as the odd man out in Kwai Chung's cosy little port community.

Despite Hong Kong's declining fortunes, business is good for HIT and the port's No2 operator, Modern Terminals Ltd. In fact, during peak periods they often cannot find a berth on demand for the incoming vessels of their priority customers, which they are contracted to do.

So a spillover contract with ACT was signed last week, which will send about a million boxes through DPI's majority-owned dock this year.

However, the deal should not be seen so much as an act of benevolence as for what it is - throwing the dog a bone, and a rather lean one at that.

According to liner and port sources, the agreement was for about $540 per box, half the market rate but more attractive than ACT having to court mid-stream cargo.

In other words, the operators who signed the spillover contract with ACT - HIT and MTL - will generate about as much revenue per unit as ACT without having to lift a box.

It also came just before the expiry of the current contracts for huge port customers such as the Grand Alliance and Maersk Sealand, which would have been sympathetic to offers of lower handling rates.

DPI has gone to some length since it bought its way into the port to say it will not rock the boat in Kwai Chung in terms of price competition. But even the most loyal dog can turn on its owner when it is starving.

The spectre of withholding revenue also has its uses, as illustrated by the goings-on at DPI's other December acquisition, Container Terminal 3.

CT3 is part of "old" Kwai Chung - CTs 1, 2, 3 and 4 - which was built before the terminal operators realised how big the mammoth vessels currently being built could get. At 305 metres, CT3 is too short to handle most modern deep-sea vessels without its neighbours - HIT on one side and MTL on the other - agreeing to allow a little overhang.

Without that co-operation, the berth has little revenue potential other than low-value intra-Asia transshipment and local barge traffic - not exactly what DPI had in mind when they paid top dollar for it.

Hutchison and MTL, on the other hand, would both love to have CT3, as part of their plan to reconfigure the berthing arrangement at "old" Kwai Chung, in order to prepare it for the mega-ship era.

CTs 1 through 4 all offer about 300 metres of berth space, or just over 1,200 metres in total. The port's dominant duopoly would like to see just three 400m berths across that quay.

The problem until recently was that DPI, which owns 67 per cent of CT3 (PSA owns the remainder) did not want to sell. However, DPI has come to realise it has little choice, given that HIT and MTL can and would make things very difficult at CT3.

Lawyers for Hutchison and DPI are hammering out the details of the sale. Both companies declined to comment. PSA agreed to sell its CT3 stake to HIT during last month's negotiations.

In their rush, however, they appear to have forgotten to put out the welcome mat for our new friends from Dubai.