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Old October 24th, 2004, 12:23 AM   #41
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More roads around the container port from a Hong Kong transport forum :








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Old October 24th, 2004, 03:03 AM   #42
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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.
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Old October 27th, 2004, 12:42 PM   #43
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Quote:
Originally Posted by hkskyline
More roads around the container port from a Hong Kong transport forum :




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.
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Old October 29th, 2004, 10:10 PM   #44
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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.
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Old November 2nd, 2004, 04:37 AM   #45
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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.
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Old November 2nd, 2004, 11:22 PM   #46
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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.
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Old November 3rd, 2004, 05:06 AM   #47
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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.
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Old November 9th, 2004, 04:27 AM   #48
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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.
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Old November 10th, 2004, 06:44 AM   #49
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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.
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Old November 13th, 2004, 02:22 AM   #50
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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."
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Old November 13th, 2004, 05:27 AM   #51
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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.
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Old November 13th, 2004, 08:23 AM   #52
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Old November 13th, 2004, 10:14 AM   #53
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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.


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
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Old November 13th, 2004, 07:59 PM   #54
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Old November 14th, 2004, 05:37 AM   #55
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Hong Kong port: Dealing with the issues


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."
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Old November 17th, 2004, 09:34 AM   #56
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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.
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Old November 17th, 2004, 10:48 AM   #57
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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.


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Old November 17th, 2004, 10:16 PM   #58
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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 ."
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Old November 18th, 2004, 05:34 AM   #59
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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.
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Old November 19th, 2004, 01:21 AM   #60
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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.
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