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New terminal alliance in Hong Kong will control 80% of container throughput

The Port of Hong Kong.) Photo credit: Shutterstock.com.

Cosco Shipping launches alliance with three Hong Kong terminal operators to improve competitiveness

Peter Stewart, PortandTerminal.com, January 9, 2019

Hong Kong – Four of the five container companies operating at Hong Kong’s Kwai Tsing Port have joined forces to create the “Combined Terminal Facilities” alliance.

Together, the new alliance controls 23 of the port’s 24 berths and 80% of its container throughput.

The four companies involved in the new alliance are:

  1. Cosco-HIT Terminals Ltd
  2. HongKong International Terminals Ltd
  3. Asia Container Terminals Ltd
  4. Modern Terminals Ltd

The one company not participating in the new alliance is Goodman DP World.

Why the new terminal alliance?

The new alliance is intended to increase the port’s competitiveness by reducing its operating complexity.

In recent years, Kwai Tsing Port has faced increasing competition and a changing business environment that has continued to undermine its competitive position as one of the world’s leading container shipping hubs.

Hong Kong used to the be the world’s largest container port. It lost that mantle in 2005 to Singapore. Today, Hong Kong is still the 5th busiest container port in the world but is under pressure.

The alliance reshuffle in 2017 cost Hong Kong dearly with the loss of five calls on northern European and Mediterranean loops, while key competitor Singapore gained seven more weekly calls.

In 2017 Hong Kong had total container volume of 20.76 million TEUs. That’s almost 15% less than they had in 2008, their busiest year.

Meanwhile, other mainland China ports have raced ahead of them to occupy the top spots. The world’s largest port, Shanghai, had container volume of 40.23 million TEUs in 2017.

That’s almost double that of Hong Kong’s size today.

What happened?

Increased competition and a changing business environment undermined Hong Kong’s competitive position.

The deployment of larger vessels and larger alliances, combined with the historical structure of the port, is leading to a critical rise in the number of inter-terminal transfers (ITTs), resulting in higher charges to shipping lines; extra handling time for shipments; and increased burden on the port’s resources and roads.

Hong Kong is no longer the world’s largest port, but it does still rank as the 5th largest

This is a disadvantage for Hong Kong compared with competing ports because a handling charge is levied on shipping lines for each ITT, and the practice consumes available facilities and resources.

In addition to reducing operating complexity, the partnership will create additional capacity at the port.

By increasing the flexibility in the overall berth and yard planning among the 23 berths across the Combined Terminal Facilities, the new alliance will be able to better accommodate the need of shipping alliances and optimise utilisation of its assets.

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