New Hong Kong Seaport Alliance Under Scrutiny

MOL Triumph calls at Hong Kong in 2017.

By The Maritime Executive 01-10-2019 07:15:51

Hongkong International Terminals, Modern Terminals, COSCO-HIT Terminals (Hong Kong) and Asia Container Terminals formed the Hong Kong Seaport Alliance on January 8 - a move already under investigation by local authorities.

The Alliance is a joint operating agreement designed to deliver more efficient service offerings to carriers that call Hong Kong and to therefore enhance the competitiveness of the Port of Hong Kong. The Seaport Alliance will offer 23 berths using a common terminal operating system across Terminals 1, 2, 4, 5, 6, 7, 8 and 9 of Kwai Tsing, New Territories, Hong Kong.

The collaboration is in direct response to a rapidly changing business environment, say the Alliance members, including the formation of new carrier alliances and the dramatic increase in vessel size over the last few years.

However, Hong Kong’s Competition Commission is investigating the move which involves four of the five operators at what is one of the world’s busiest container ports. The Hong Kong Seaport Alliance would hold a 95 percent market share at the port; Dubai Ports International, which operates one berth, is not participating in the Alliance.

The South China Morning Post reports Stanley Chiang Chi-wai, chairman of the Lok Ma Chau-Hong Kong Freight Association, saying the Alliance was a step backwards. He warns that the Alliance could squeeze Dubai Ports out and that business might be diverted to mainland ports if shipping companies found Hong Kong too expensive because of cartel-like behavior.

Hong Kong's port and logistics sector currentlyl accounts for 3.2 percent of the GDP of Hong Kong and provides more than 174,000 industry related jobs. However, Kwai Tsing’s throughput shrank 4.9 percent in the first 11 months of 2018, possibly as a result of the trade war with the U.S.

“The Seaport Alliance will improve the value proposition of Hong Kong to customers, while reducing emissions and enabling Hong Kong to more effectively compete within the region,” said Peter Levesque, Group Managing Director of Modern Terminals. “For almost two centuries Hong Kong has played a vital role in the facilitation of global trade. The Seaport Alliance, and the application of new technologies, will enable Hong Kong to thrive as an international shipping hub for decades to come.”

The four companies plan to commence the joint operations of the Seaport Alliance progressively within 2019.