Hong Kong’s port loses ground as exporters pivot to mainland China

Apr 1, 2024 11:59 am | News

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Hong Kong has been hit by an accelerating decline in seaborne cargo volumes, as it loses out to rivals in mainland China and south-east Asia.

Container throughput in Hong Kong fell 14 per cent last year to 14.3mn twenty-foot equivalent units (TEUs), according to figures from maritime consultancy Drewry.

This was the biggest percentage drop among the world’s biggest ports last year. Hong Kong is now the 10th-largest port in the world by volume, Drewry figures show, closely followed by Malaysia’s Port Klang, where volumes rose 6.4 per cent last year.

Hong Kong’s deepwater port at the heart of the Pearl River Delta has long made it a desirable trading gateway to the greater China region. Once the world’s busiest port, according to Hong Kong government data, volumes have fallen as the city’s manufacturers shift to mainland China and competition from other Chinese ports rise, analysts said.

Shippers have come to regard facilities in mainland China as a more attractive option than Hong Kong, to which goods manufactured in the delta region need to be trans-shipped by barge, small container ship or road.

“It is always inevitable that Hong Kong would contract as a port,” said Tim Huxley, chair of Hong Kong-based shipping investment company Mandarin Shipping.

“Manufacturing moved elsewhere. Whilst [Hong Kong’s port] is still a big employer, it is no longer the gateway to southern China as there are other ports in the Greater Bay Area which service the manufacturers there,” said Huxley, referring to the area around the Pearl River Delta.

Maersk and Hapag-Lloyd’s agreement this year to shift cargo to Shenzhen’s Yantian port instead of Hong Kong underlines the trend, according to analysts. “The ports of Shenzhen and Guangzhou have invested in deepwater terminal facilities which facilitated an increase in mainline calls, in other words bypassing Hong Kong,” said Eleanor Hadland, Drewry’s senior analyst of ports and terminals.

Last year’s drop in Hong Kong throughput was due to factors including “improved capacity and capability of terminals in Guangzhou and Shenzhen”, which allow carriers to bypass the territory, Hadland added.

There has been a “structural change” in shippers’ preferences to “direct shipment in China instead of vessel-to-vessel transshipment” through Hong Kong, the territory’s major port operator Hutchison Ports Holdings Trust said in its earnings report in February.

“Some of the competitors in [the] Greater Bay Area continue to receive government incentives, hence able to offer attractive lower price option[s] to shipping lines,” the company added.

Of the six other Chinese ports in Drewry’s top 10, five reported a rise in container throughput last year. Shenzhen remained flat with a slight 0.5 per cent drop to an annual 29.9mn TEUs.

Hong Kong’s port also faces increasing competition from counterparts in south-east Asia, Hadland added, as manufacturers increase production outside of China.

Singapore, the world’s second-busiest port after Shanghai, has benefited “because south-east Asia, and Vietnam in particular, has picked up lots of the ‘China-plus-one’ story”, said Anoop Singh, global head of shipping research at Oil Brokerage.

China still remains by far the “stronger producer across all industries”, and its production and transport infrastructure is unmatched compared with those in most south-east Asian countries, said Andrea Currone, vice-president of Asia operations at Berlin-based freight forwarder Forto.

Additional reporting by Robert Wright in London

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