Boxes stacking up as HK port strike rolls on
The dockers will most probably get their pay rises, but it could hasten the demise of a port that has its best days behind it.
Hong Kong Association of Freight Forwarding and Logistics believes that 120,000 TEUs have stacked up at Hongkong International Terminals during the strike by dock workers that is into its second week.
That’s a lot of boxes that aren’t going some place. Apart from costing the cargo owners money, container ships are being delayed for days and HIT, Hutchison’s terminal operating flagship, claims to be losing US$200,000 a day as a result of the strike.
Adding fuel to the fire, International Transport Workers Federation president and chair of the ITF dockers’ section Paddy Crumlin attended a solidarity meeting with striking dockworkers at the port yesterday.
In true union fashion, Crumlin spoke “candidly” about the issue. “Hutchinson should be ashamed that workers under their contract are being treated little better than caged animals. The abuses must stop and the employers need to show that they are committed to ending the exploitation of outsourced dockworkers,” he said.
Ouch. The traditionally taciturn Hutchison has made little comment on the strike, but when it comes to operational or commercial issues, that's how they've always rolled.
It was only a month ago when the news coming out of HIT’s Kwai Tsing port office was a lot more positive. Hutchison Port Holdings Trust, the Singapore-listed ports arm of the Hutchison Whampoa group that owns HIT, bought Asia Container Terminal from rival operator DP World.
The acquisition sees HIT now owning two-thirds of the 24 berths at Hong Kong port.
Perhaps it was the US$410 million deal that made contract dock workers finally throw down their cranes and storm off the job, demanding a 20 percent salary increase.
The strike has certainly garnered attention up in the rarefied air of government with even Hong Kong Chief Executive CY Leung calling for its swift resolution.
As we mentioned last week, this is not something Hong Kong’s port needs as it struggles to cope with falling trade levels. In fact, most ports in South China have seen volumes drop off. The port of Shenzhen, Hong Kong’s neighbour and chief competitor grew marginally last year with Hong Kong recording a fall in throughput.
Dachan Bay One terminal, an island in the Pearl River just off western Shenzhen, saw throughput fall by almost 20 percent in 2012.
It wasn’t long ago that the South China port cluster was growing like there was no tomorrow. Exports were booming and Hong Kong was even managing to get some of the action.
Those days are sadly over and manufacturing in the Pearl River Delta’s once booming production hubs of Dongguan and Foshan has slowed dramatically. Beijing’s Go West programme to shift polluting factories making low-value goods to inland provinces, higher wages and worker benefits and the rising costs of raw materials have hit the region hard. Many factories have shut down.
The strike is bound to be resolved soon with some kind of compromise being reached between HIT and the contract workers. But even if the dockers manage to secure their 20 percent increase it could turn out to be a Pyrrhic victory.
Some commentators believe that Hong Kong is in the grip of a “hate the rich” mindset that encourages industrial action and marches against the government and tycoons like Hutchison boss Li Ka-shing, finding plenty of support among the territory’s disgruntled residents.
Even Andrew Tung, chief executive of Hong Kong's home grown container line OOCL, was found pondering whether the strike was a "one time event" or a structural issue when reporters caught up with him at Maritime Week in Singapore.
Should this be the start of regular disruptions, it may hasten decision time at the two remaining Hong Kong container port operators, HIT and Modern Terminals. With significant port interests in neighbouring Shenzhen, they could reach for the poles and vault over the fence even sooner than expected.