Hong Kong’s struggling port is an opportunity in disguise

Hong Kong has slipped out of the top 10 on a list of the world’s busiest ports compiled by shipping industry data provider Alphaliner. The city’s port now ranks 11th, after Dubai’s Jebel Ali port. This marks a significant departure from Hong Kong’s prominence as the world’s top container port during much of the 1980s and 1990s.

While the decline in container traffic at the Kwai Tsing Container Terminal is striking, the pertinent question for a mature economy like Hong Kong amid these challenges is not whether the downward trajectory is irreversible but rather how to seize the moment and turn it into an opportunity for transformation.

As the city faces headwinds, it is important to realise that crises often serve as catalysts for innovation and adaptation. Replicating past strategies in the hope of outcompeting neighbouring ports within the Greater Bay Area, such as Yantian and Nansha, is no longer a viable approach.

These competitors offer lower cargo handling fees and are already integrating advanced technology into their operations, enhancing their efficiency. Hong Kong must embrace technological advancements such as big data analytics, automation and artificial intelligence to enhance our efficiency and competitiveness.

Even if the Kwai Tsing Container Terminal did cease operations, the demise of a single port is not a death knell for the entire shipping industry. Hong Kong’s shipping industry encompasses diverse segments, including service-oriented sectors that are less land-dependent and increasingly technology-driven.

Apart from port and terminal operations, shipbuilding, and ship repair and engineering, the other key components of the industry include ship brokerage and acquisition financing, cargo logistics and storage, vessel management, marine insurance, marine risk management and more.

Leung Chun-ying, former Hong Kong chief executive and a vice-chairman of the Chinese People’s Political Consultative Conference, has suggested that emphasising the service side of the industry could pave the way for the city to become a hub for maritime services.

Leung’s suggestion of establishing Hong Kong as a marine insurance hub is not just visionary but practicable. It is viable because the city is home to a large pool of insurance professionals and companies in addition to having a well-established financial infrastructure.

Moreover, the efforts to build up Hong Kong’s standing as an international arbitration centre could renew the city’s reputation as a shipping hub. In fact, such service providers could find themselves a potentially enormous market by tapping into the Chinese container shipping sector.

A cargo ship passes under a bridge after leaving the Kwai Tsing Container Terminal on April 19, 2021. Photo: Winson Wong

If the container port operations do eventually shut down, Hong Kong must come up with ways to make good use of the vast land resources currently occupied by the Kwai Tsing Container Terminal. The area in question could be as large as several Taikoo Shing housing estates.

When the throughput of the container terminal was slipping in 2017 amid fierce regional competition, there were proposals to convert some of its land for use as housing. The land supply task force formed by the government did consider relocating the terminal or building housing on top of it.

While these ideas did not end up being explored, that they were considered shows a willingness to explore alternative land uses. I foresee an impending public debate over the future of this land given recent developments, and this underscores the need for proactive planning and innovative solutions.

Nintendo characters participate in the opening ceremony of Super Nintendo World at Universal Studios Japan in Osaka on March 18, 2021. Photo: Kyodo News

Apart from the idea of allocating the land for public housing to address shortages, developing theme parks could help invigorate the local economy by giving tourism a boost. This is in light of cities such as Beijing, Osaka, Singapore and Tokyo continuing to rejuvenate their tourism offerings with additions to their attractions such as Super Nintendo World and KidZania.

In addition, setting up a fintech hub on the Kwai Tsing Container Terminal land could capitalise on its proximity to Hong Kong’s commercial and financial districts. This could foster collaboration with Qianhai, which Beijing has tasked with playing a pivotal role in driving innovation and quality development within the Greater Bay Area, though a direct rail link between the two cities will need be built.

The struggles of the container terminal present an opportunity for transformation whereby Hong Kong can redefine its role in the global shipping industry and diversify its economic landscape. Hong Kong’s ability to adapt and innovate will ultimately determine its future prosperity.

Ken Chu is group chairman and CEO of Mission Hills Group and a national committee member of the Chinese People’s Political Consultative Conference



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