JUN 2016 EDITORIAL – OPTIMIZATION OF BACK-UP LAND: REVIVAL OF MARITIME LOGISTICS

In a public consultation paper, “Proposals for Enhancing the Use of Port Back-up Land in Kwai Tsing,” published a year ago by the Transport & Housing Bureau, many of the pressing issues faced by the port and logistics industry, in particular the severe shortage of land and dedicated barge berths, were clearly identified. It was a positive first step in responding to the challenges operators of Hong Kong’s global shipping business have had to endure as a result of the growing problem of port congestion in recent years.

There are a number of reasons for the congestion: one is the rising share of transhipment throughput of containerized cargo in Hong Kong (from 44.9 percent in 2005 to 60.2 percent in 2014) for which port operators are required to have sufficient facilities in order to handle a large number of ocean-going vessels (OGVs) and to transfer containers in and out of nearby terminals; another is a shift from land- to river-based container traffic in the Pearl River Delta (2 million TEUs in 2005 to 3.1 million TEUs in 2014).

The Port of Hong Kong – which includes Kwai Tsing’s nine privately-run container terminals where nearly 80 percent of all containerized cargo in Hong Kong are handled – is praised one of the most competitive in the world, with an average annual throughput of 23.1 million twenty-foot equivalent units (TEUs) over the past decade. The port and related sectors, more importantly, are directly responsible for 1.1 percent (HK$24   billion) of Hong Kong’s GDP and 2.4 percent (88,000 jobs) of the total employment.      

As containerized cargo in Hong Kong is estimated to increase by 1.5 percent yearly up to 2030, there is an urgent need for additional terminal yard space and barge berths as operational efficiency can drop quickly without further optimization. In fact, Hong Kong’s competitiveness as a port has already dropped significantly –   from the world’s number one in the early 2000s to fourth place in recent years. The ports of Shanghai, Singapore and Shenzhen – all within the region – have “outgunned” Hong Kong and are the top three today.

Yard area is a critical component in the operation of container ports, and it is an important factor in the efficiency of any cargo terminal.   For one, yard area is needed for installation of crane and quayside equipment, and there must be sufficient room to accommodate trucking, loading and unloading of containers. Once containers are unloaded onto the shore side, it is necessary to be able to move – and often times store – them before they are loaded again for their ultimate destination. Hence, more port back-up land for container stacking is key.

The use of port back-up land by integrating such land in the proximity of the Kwai Tsing Container Terminals (KTCTs) could enlarge the total storage area, and it could increase the annual capacity by 3-4 million TEUs. The result is estimated to be the equivalent of an additional capacity of three or four new container berths.

And it needs to be on a long-term basis because the procurement and installation of purpose-built equipment and rail tracks are expensive – it is simply not viable under short-term tenancies.

In the implementation of recommendations outlined in the consultation paper, cargo terminal operators could make use of vacant land nearby on a short-term basis as a way to alleviate the pressure of congestion while more permanent solutions are being put to action.   Rationalization of Hong Kong’s Port through more effective use of land in the vicinity will benefit the industry and the city as a whole by reducing the costs and pollution created from inefficiency, delays and idling engines of shipping lines, barge operators, truckers and port operators.

It is important that not only the current proposals are expedited but that an ongoing dialog between the government and industry continues on how to maintain this momentum and proceed with the full implementation of the recommendations. The overall rehabilitation of Hong Kong’s Port, particularly in the KTCTs, and the recovery of Hong Kong’s competitive position in maritime logistics depend on what the city does today. Shipping lines will only feel confident in returning to Hong Kong if there is sufficient capacity to handle cargo efficiently.

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