Speech by STH at the Hong Kong Container Terminal Operators Association Luncheon (English only)13 June 2017

Following is the speech by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the Hong Kong Container Terminal Operators Association Luncheon on 13 June 2017:

Jessie (Chung), distinguished guests, ladies and gentlemen,
It is my great honour to be invited to join the Hong Kong Container Terminal Operators Association’s (HKCTOA) luncheon. I am really delighted to see so many friends from the port and logistics industries here today. We have been working closely together in the past five years to make the Hong Kong Port competitive and efficient. Today presents an opportunity for us to take stock of our achievements and explore the way forward.

Hong Kong Port: A Major Hub Port in the Region
Hong Kong has a longstanding maritime tradition with over 150 years of history. With our strategic location on the Far East trade routes, Hong Kong is the gateway to China and an international business hub. The Hong Kong Port has played an important part in our economy. Our port, shipping and maritime-related sectors together contribute 1.3% to our GDP and employ around 88 000 people, about 2.3% of our working population.

With an annual cargo throughput of around 20 million TEUs, the Hong Kong Port is one of the busiest ports in the world, enjoying excellent connectivity underscored by some 330 scheduled liner services per week to around 470 destinations worldwide.

It is not by sheer coincidence that the Hong Kong Port can achieve such an impressive performance. Indeed, what sets Hong Kong apart from most other ports in the region, including ports with cargo volume larger than ours, is its high efficiency and flexibility – particularly in terms of speediness in arranging cargo transfer within a small area of land (around 279 hectares). The average turnaround times of ocean-going vessels and external trucks at Kwai Tsing Container Terminals (KTCT) are about 11 hours and 35 minutes respectively in 2016, which compare very favourably with other major ports. This is in no small measure due to the astute management and sterling efforts made by different parties operating the terminals, therefore each and every one of you. Without your contribution and support, Hong Kong Port would not have been able to gain the reputation of being a “can-do port”.

Yet, maintaining the competitiveness of the Port is never an easy task. Externally, we are facing challenges brought about by the sluggish international trade and fierce competition from other ports in the region, as well as uncertainties arising from the merging and formation of alliances of major shipping lines. Internally, constraints in land and manpower supply are the other challenges the Port is facing. To overcome these challenges and bring the industry to reach new heights, the Government has been working with the industry to enhance the capacity and competitiveness of the Hong Kong Port through a number of measures.

Measures Taken by the Government to Enhance Hong Kong Port
In 2015, we completed a 2-year review on the use and management of the port back-up land in the vicinity of KTCT to optimise the utilisation and efficiency of the land for meeting the future development needs of the port and logistics industries. Taking forward the improvement measures in phases, we are actively working with government departments concerned to release six port back-up sites of about 18 hectares as soon as practicable, so as to expand the terminal yard space and provide additional barge berths for enhancing cargo handling efficiency. A sea frontage of 120 metres at the Stonecutters Island Public Cargo Working Areas has also been released for port back-up use, particularly to provide additional barge berths, to enhance the operational efficiency of KTCT.

At the same time, we have undertaken a $490 million project to dredge the Kwai Tsing Container Basin and its approach channel from a navigation depth of 15 metres to 17 metres. The deepened Kwai Tsing Container Basin would allow ultra-large container vessels to access the container terminals at all tides, thereby enhancing the operational efficiency of the Hong Kong Port. In April this year, thanks to our newly-dredged approach channel, one of the largest container vessels in the world, the MOL Triumph, called at the Hong Kong Port during her maiden voyage. The container vessel measures 400 metres in length and can carry 20 170 TEUs. The call of the MOL Triumph showcases Hong Kong’s prominence in the global maritime and port industry. We look forward to receiving more mega vessels in future.

High frequency and extensive coverage of liner services are Hong Kong’s main attractions, but these advantages are much dependent on liners continuing to use Hong Kong as a transshipment hub. Hong Kong is an externally-oriented economy with no manufacturing base to generate strong domestic demand for shipping services. We therefore heavily rely on re-exports and trans-shipment business to sustain our growth in international trade.

With quite a number of competing ports possessing considerable spare capacity in the region, Hong Kong is obviously not the only port of choice to the liners. The Cabotage Rule implemented by the Mainland authorities, which disallows foreign shipping companies from undertaking domestic transportation, is therefore vital to sustaining Hong Kong's trans-shipment business, accounting for around 60% of our throughput. The Government fully shares the industry’s concerns and has reflected their views on the importance of Cabotage Rule to Hong Kong’s port and maritime development to the Central Government.

Apart from strengthening our port and transport infrastructure, the Government is also dedicated to nurturing our maritime and shipping talent. We set up a $100 million Maritime and Aviation Training Fund in 2014 to assist and encourage young students and practitioners of the maritime sector to receive maritime education and training, thereby enhancing the overall competitiveness and professional competency of the industry. Since the Fund’s inception in April 2014, some 1 170 students and nearly 1 300 in-service maritime practitioners have benefitted from it. I am delighted to note that 55% of the beneficiaries are still serving in the maritime or aviation industries upon completion of their programmes.

Hong Kong Port is an anchor to our success as an international maritime centre and a regional hub. Despite strong competition from other ports in the region, we must not under-estimate our port’s efficiency or importance in international trade, even within the Pearl River Delta region. With the support of the Port, a cluster of maritime services has developed, ranging from marine insurance, maritime legal and arbitration services, ship finance, shipping agency and ship management, etc. The Government is spearheading deeper efforts to grow and consolidate these maritime services. An efficient and active port and a strong cluster of maritime services are two sides of our international maritime centre coin.

Business Potentials from the Mainland’s New Development Strategies
Before closing, I would like to highlight the opportunities to be brought about by the national “Belt and Road Initiative” to our maritime and port sectors. Seeking to promote closer economic, infrastructure and cultural cooperation, the “Belt and Road Initiative” will certainly strengthen connectivity among some 60 economies along the Belt and Road corridors. As such cooperation advances, fresh demands for quality maritime, shipping and port services will no doubt emerge. Given Hong Kong’s globalness and its strategic geographical location at the heart of East Asia, the Hong Kong Port will no doubt play an important role under the “Belt and Road Initiative” and capture the new opportunities it unleashes.

Ladies and gentlemen, we do face challenges and threats but the maritime and port industries remain a vital pillar of Hong Kong’s economy. Competition should bread new determinations and suppress complacency. We should strive to turn challenges into opportunities (有「危」便有「機」) and to leverage on our existing strengths to take advantage of new opportunities such as the Belt and Road Initiative.

As one often says, “no road is long with good company”. With the close Government-Industry collaboration now embarked on, I am sure that our industry will be able to sail through the rough sea together and make new milestones. As I am about to leave Government at the end of this month, I wish you all success in your work. Our paths will no doubt cross again in future. Thank you.