Hong Kong’s port is losing ground as exporters shift to mainland China

Hong Kong is losing out to competitors in south-east Asia and mainland China in terms of seaborne cargo volume.

Drewry, a maritime consultancy, says that the container throughput in Hong Kong dropped 14 percent last year and reached 14,3mn Twenty-foot Equivalent Units (TEUs).

The biggest drop in percentage among the world’s largest ports was last year. According to Drewry figures, Hong Kong has now become the 10th largest port in the World by volume. It is closely followed by Malaysia’s Port Klang where volumes increased by 6.4 percent last year.

Hong Kong has been a trading hub for greater China thanks to its deepwater port, located in the Pearl River Delta. Hong Kong’s government data shows that the port was once the busiest in the world. However, as manufacturers have moved to the mainland and the competition from other Chinese ports has increased, the volume of trade has decreased.

Shippers are increasingly choosing mainland China over Hong Kong as the preferred option for transshipping goods from the delta region to Hong Kong by barge or small container ship.

“It was inevitable that Hong Kong will contract as a shipping port,” said Tim Huxley of the Hong Kong-based investment company Mandarin Shipping.

“Manufacturing has moved elsewhere.” “While [Hong Kong’s port] still employs a lot of people, it’s no longer the gateway into southern China, as there are other Ports in the Greater Bay Area that service the manufacturers,” said Huxley referring to the area surrounding the Pearl River Delta.

Analysts say that the agreement between Maersk and Hapag Lloyd to move cargo to Shenzhen’s Yantian Port instead of Hong Kong highlights this trend. The ports of Shenzhen, Guangzhou, and Shanghai have invested in deepwater facilities that allowed them to increase mainline calls and bypass Hong Kong, according to Eleanor Hadland.

Hadland said that the drop in Hong Kong’s throughput last year was due to “improved terminal capacity and capability in Guangzhou, Shenzhen and other nearby cities”, which allows carriers to bypass Hong Kong.

Hutchison Ports Holdings Trust, the major port operator in Hong Kong, said that there has been a “structural shift” in shippers’ preference for “direct shipment to China” instead of “vessel-to-vessel” transshipment.

The company said that “some of the competitors [in the] Greater Bay Area] continue to receive government incentive[s], therefore able to offer attractive price option[s] for shipping lines.”

Five of the other six Chinese ports ranked in Drewry’s top 10 reported an increase in container throughput in 2017. Shenzhen’s container throughput was flat, with a slight drop of 0.5 percent to 29,9mn TEUs.

Hadland said that Hong Kong’s ports are also facing increasing competition, especially from their counterparts in South-East Asia, as more manufacturers move production outside China.

Anoop Singh of Oil Brokerage, global head for shipping research, said that Singapore is the second busiest port in the world after Shanghai. “South-east Asia and Vietnam, in particular, have benefited from the ‘China plus one’ story”, he added.

Andrea Currone is vice-president for Asia operations of Berlin-based freight forwarder Forto. She said that China remains the “strongest producer across all industries” and its production and transportation infrastructure are unmatched by those in most countries of south-east Asia.