The recent government decision to free up 18.54 hectares of land at Hong Kong port for use by container terminal operators will help ease the congestion that is caused mainly by member lines of the alliances. “This is really good news. We are heading in the right direction,’’ said an ecstatic Jessie Chung, chairwoman of the Hong Kong Container Terminal Operators Association (HKCTOA), pointing to a government paper on her table that recommended the release of 18.54 hectares of land at the port to the terminal operators. The back-up land could help ease the congestion that has been haunting the port for the past few years. The main culprits for the congestion are member lines of the alliances. Their various demands are a nightmare for the five container terminal operators – Hong Kong International Terminals Ltd (HIT), Modern Terminals Ltd (MTL), CSX World Terminals HK Ltd, COSCO-HIT and Asia Container Terminals Ltd (ACT). The five operators run nine terminals with 24 berths in the Kwai Tsing-Kwai Chung Basin. “Before the alliances had two or three member lines, now there are up to even six member lines in some major alliances and their demands are increasing and are very different,’’ Chung explained. “For example, a vessel may have committed to go to the HIT terminal and then the next day may ask to move to MTL or COSCO-HIT because certain alliance members want their boxes to be offloaded there for transshipment on another vessel. The mix of containers on alliance vessels creates a problem for the terminals operators.
Aerial view of Modern Terminals Ltd. with the city of Hong Kong in the background.
Aerial view of Modern Terminals Ltd. with the city of Hong Kong in the background.
Clanging of Tiles “This means there is a lot of reshuffling of containers, again and again. It is like playing mahjong. You shuffle, and then reshuffle, and shuffle again to satisfy the various demands of the alliance members. “Adding to this is the increasing number of transshipment containers in the mix of our throughput. Right now more than 70% of Kwai Tsing throughput is transshipment, which stays longer in the yard than import/export containers.” To get around the alliance issue, the HKCTOA is holding talks with the Hong Kong Liner Shipping Association, which comprises most of the shipping lines that are members of the alliances. “We have recommended a community approach to deal with their operations,’’ Chung said. “Previously, Hong Kong was very flexible, if one customer asked whether we could do this we would say Yeah! Yeah! Yeah! And if another customer made a different request, we would still say Yeah! Yeah! Yeah! “We cannot operate like this anymore. With A, B and C customers all working on some sort of standards, it would make life easier for the terminals. “The shipping lines understand the problem. It hurts not only the port efficiency but also their efficiency as well. “We have had several discussions and are trying to come up with a community standard for all these customer requirements. It needs to be more standardized so the terminal operators can work more efficiently.” The proposal to release the land to the terminal operators is a feather in the cap for the chairwoman of the HKCTOA, who has been urging the government for help since she took over the reins of the association in December 2013. Prior to that she was director and chief executive officer of the River Trade Terminal Co Ltd and before that worked at MTL for 20 years, first as public relations manager, then head of the commercial department and finally, chief of the logistics division. Chung recommended consolidation of all the STT (Short-Term Tenancy) sites in a White Paper submitted to the government in December 2003, which could free up about 100 hectares of land. “Of course we don’t expect the government to give us 100% of this land but if we could get as much as possible it would help increase the existing terminal capacity by three to four million TEUs and free up several berths,’’ she said. The White Paper requested 70 hectares of land for integration into the container terminals. Joel Cheung, Corporate Affairs Manager of MTL, welcomed the government’s proposal to free up the back-up land, “as it is consistent with the Hong Kong Port 2030 Report’s recommendations on better use of existing facilities, additional barge berths and improved land use around Kwai Tsing container terminals. These will certainly help improve the competitiveness of our port and secure the employment involved in the trade.” “We, however, encourage the government to expedite the actions that they recommend, as competitiveness is continuing to slip,’’ Chung added. According to the recent government proposal, the land adjacent to the terminals will be released in phases from next year. In the first stage, four sites of 15.2 hectares will be disposed of on a long-term basis in 2016-2017 to CT9S and CT5 belonging to MTL, CT7, (HIT) and CT8W (ACT) as extension to the adjacent container terminals to increase the yard area. In the second stage, two sites of 3.34 hectares will be disposed of on a long-term basis in 2017-2018 to CT9S (MTL) and CT9N (HIT) as extension to the adjacent container terminals and for barge berthing use. The Kwai Tsing terminals handled 79 percent of the container throughput in 2014. (in blue on map) The land areas are currently Short-Term Tenancies used by individual depot operators, some for container storage and some for multipurpose facilities. There is also some vacant land. Chung also launched an initiative to get the barges to carry more containers to ease the congestion. The barges carry containers down the Pearl River from terminals in Southern China. The river trade accounts for 25 percent of the throughput of Hong Kong port. “Many years ago there was no minimum number of containers for a barge to carry,’’ Chung noted. “There used to be barges carrying two to three containers and we had to give them a berth anyway. Two containers may be easy to unload but berthing and unberthing takes the same time for a barge with two containers or 10. “In an effort to ease the berthing problem we set a minimum of 15 containers for a barge to carry and now we are considering raising that to higher numbers. We are also considering getting information more in advance when the barges berth.” To speed up the offloading of containers from barges, HIT recently put into operation two new cranes, the first of their kind in southern China. HIT’s assistant general manager, operations, Franco Ning, said, “We have witnessed an average annual increase of 5-6% in barge transshipment traffic from the Pearl River Delta region over the last three years. The new barge cranes have greater handling stability and will boost productivity by approximately 30-40% when compared with traditional jib cranes. Each crane can handle at least 400 containers a day.” The cranes are capable of handling containers stacked seven rows across, with a lifting height of 18m, and a maximum loading weight of 35 tonnes, allowing HIT to handle the largest barges currently in service. In an effort to further ease congestion at the port, Hong Kong has been also offloading containers at sea. Mid-stream operations near Lamma Island involve unloading containers from ships while at sea, with barges or dumb steel lighters performing the transfer, and then distributing or landing the containers to piers nearby. Due to high handling fees at the container terminals, Hong Kong has become the only place in the world with at-sea unloading operations. Currently, there are 11 different yard sites solely for mid-stream operations, occupying a total land area of 27.5 hectares and quay frontage of 3,197m. Asked if Hong Kong was going to lose out to Shenzhen this year again just as last year, Chung laughed. “Not only Shenzhen, we will be even losing out to Ningbo I think,’’ she quipped. Neighbouring Shenzhen, which has four ports – Yantian in the east and Da Chan Bay and the sister ports of Shekou and Chiwan in the west ousted Hong Kong last year from third position. Shanghai was the leader followed by Singapore and Ningbo was fifth on the list of top 10 ports in the world. Port Congestion Chung explained that because of last year’s congestion many of the service providers have not come back to Hong Kong. “The terminal operators are talking with the shipping lines to return to Hong Kong but it may take time for them to change their port of call. This year, we expect to face congestion again so the tonnage situation may be the same as last year.’’ Terminal operators are not the only ones seeking more land from the government. “Logistics companies have been also crying out for more land near the port to set up logistics parks,’’ said Chung. “It would be good if the logistics companies were near the port but land is scarce near the port and the government is trying to find every piece of site free for use of logistics companies.’’ Recently, the government recommended a site in Tuen Mun for setting up a logistics cluster. But the companies complained it was too far away from the port. Tuen Mun is about 28 km from the Port of Hong Kong. “I believe the logistics park does not need to be really close to the port, but the terminals have to be and there need for land is greater than that of the logistics companies,’’ said Chung. Asked about plans for setting up Terminal 10, Chung said with the current situation it is not on the drawing board. “That could be a longer term issue. We still don’t know which place we can build Terminal 10. We don’t have space at the current port and if we have to reclaim land it would be very expensive.’’ Asked about building the terminal at Lantau, which has natural deep water, she said, “Then there will be split terminals. How do you do the shuffling of containers of the alliances? Unless you move the whole port over there, like [in] Singapore. But then that will be a huge, huge cost. Not that we do not agree with that concept, but we have to consider the cost issue.’’