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Tuesday, June 27, 2017

Shenzhen unveils plans for the heavyweight champion of logistics parks

Posted to Far East Maritime (by on January 10, 2012

It is amazing what you can get for a few billion dollars in south China these days.

How about this for a profligate project: The Shenzhen municipality this week whipped the sheet off its plans for the creation of a US$45 billion logistics centre in the Shenzhen area of Qianhai.

By 2015 they reckon it will be the largest logistics centre in the world, a 15 square kilometer development zone near the terminals of Chiwan and Shekou that will boost the Pearl River Delta’s competition with Shanghai.

The Shenzhen officials are calling for Hong Kong to support the project, saying the two shipping centres should work together in a “division of labour”. More like looking for someone to help divvy up the bill.

Asking Hong Kong to support the development is like asking the city to help pay for the bullet that will be used in its execution.

But US$45 billion! Stone the crows. If you added the funding wanted by the ports of Savannah and Charleston to deepen their waterways to the money required to raise New York-New Jersey’s Bayonne Bridge, and then threw in the entire Army Corps of Engineers’ 2012 water resources and environment budget for good measure, you would still have US$38 billion left over.

Using competition from Shanghai as a justification merely reveals the hand-wringing dishonesty of the officials. They must have been sniggering and nudging each other while drafting the proposal.

Shanghai serves a different region and is on a different river delta. It competes with Busan and the Japanese ports for transshipment cargo, but has little to do with Hong Kong.

Hong Kong’s real competitor is much closer to home, and for most of the last decade Shenzhen has been stealing its lunch.

Despite terminal operators having their investment fingers in pies on both sides of the fence separating Hong Kong and Shenzhen, the two south China shipping centres are very much in competition for ocean cargo. A competition that Hong Kong is steadily losing.

Hong Kong will only just manage to hold off Shenzhen in global annual throughput terms in 2011, but no one doubts it will lose its third place to its mainland neighbour next year.

The announcement of the giant logistics park came as the governments of Hong Kong and Guangdong held their annual meeting. Both sides made the usual pledge to cooperate, work together to create mutual harmony, blah blah, but we hope helping to pay for the Shenzhen boondoggle is not in Hong Kong’s plans.

Because when it comes to the export of ocean containers from south China, shippers are driven by cost when they make their port choices. That’s why Shenzhen is growing and Hong Kong is slowing.

If the Qinghai Money-is-no-Object Park helps increase the movement of cargo, maybe Hong Kong can benefit in the offering of logistics services. But there is no need for the city to help pay for players on the opposing team.

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