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Tuesday, April 24, 2018

Maritime Logistics Professional

Inept and out of its depth, HK searches for consensus

Posted to Far East Maritime (by on December 5, 2013

As a bureaucrat, it is important that before making a decision, all role players and stakeholders are consulted with a view to bringing together interested parties to seek common ground before balancing the interests of all concerned.

Margaret Thatcher once said consensus was the absence of leadership. A way to avoid confronting the issues that needed solving. But for Hong Kong’s massively unpopular and increasingly schizophrenic government, the obsessive need to achieve consensus has become a business model.

In most economic sectors, Hong Kong’s unelected government is out of touch, behind the times and stumbling around with few ideas on how to adapt to changing circumstances. And nowhere is this more apparent than in the port and logistics sectors. Well, actually it is apparent in all sectors - housing, education, health, etc - but let’s stick with the place where those big floating things tie up and put stuff on and off.

Hong Kong’s port has always been more expensive than those in Shenzhen just over the fence with its advantage being an ability to offer more efficient services and faster ship turnarounds. It did not take long for the terminals in Shekou, Chiwan, Yantian and Dachan Bay to catch up; hardly surprising considering most of them are run by the Hong Kong operators, anyway.

Facing a more competitive world, however, various studies over the years have shown that the port choices of ocean cargo shippers are largely driven by cost. The Pearl River Delta’s manufacturing areas are closer to the Shenzhen terminals and the cost of sending exports through them vis-à-vis Hong Kong are lower.

Repeated efforts to get the government to streamline the border crossing to enable the faster, and cheaper, trucking of goods have elicited little of substance. All the recommendations of a port masterplan study released midway through the last decade were ignored, despite a warning that it was mission critical for the disparity in cost-per-box between Hong Kong and Shenzhen to be lowered.

Then there is the lack of back-up land for storing containers, an issue that has long frustrated terminal operators in Hong Kong. The terminals point out that increasing back-up land for storing boxes could add 15 percent to the port capacity. Importantly, it would speed up ship and barge turnaround times, crucial considering the port is now largely a transhipment facility having long ago lost market share of South China's direct export containers to Shenzhen.

What it will require is rezoning the land in the port area, something that could push less efficient and costly smaller truck operators and container storage yards out of business. But instead of seeing this as a key part of improving Hong Kong's competitiveness at a time when the port is losing relevance, the bureaucrats at the Transport and Housing Bureau say it will take some time to balance the interests of all stakeholders involved. In other mealy-mouthed words, “achieve consensus”.

This obsessive need to please everyone and avoid criticism is the hallmark of a government that is out of ideas.

A consultant report due for release next month has revealed that a 10th container terminal in Hong Kong, or CT10, will cost around US$12 billion and will be financially unviable considering the declining throughput of the port. This probably comes as a surprise to the government, but the industry has long dismissed the need for a new terminal.

Under the previous administration, the Hong Kong government was able to force through profligate and unnecessary legacy projects, such as the Hong to Macau bridge. But the unpopular incumbents are being held to a higher standard this time around with far less tolerance for white elephants. Hong Kong’s third runway, in the consultation phase but regarded as fait accompli, is sure to be the territory’s final infrastructure spasm.

At least, according to general consensus.

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