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Wednesday, February 1, 2023

Maritime Logistics Professional

Low emission scheme could hurt Hong Kong

Posted to Far East Maritime (by on November 20, 2013

Sometimes doing the right thing can lead to an uncomfortable place, as Hong Kong is finding out.

In the first nine months of this year, Shenzhen port handled almost a million boxes more than Hong Kong. There is little doubt that it will move past its neighbour into the world's third busiest container port by the time the New Year bubbly is raised.
The port operators often point out that the only people that really give a hoot about the busy port list are the media, unless they are in the number one spot. Then it is a big deal, of course.
But the real benefit of the list is that it chronicles the growth or the decline in a port and measures how it stacks up against competitors. Throughput rises and falls, but over a few years trends emerge that gives a clear picture of whether a port is heading up or going down.
Hong Kong has seen its growth slipping over the past few years while Shenzhen's has grown steadily. That is a trend that will continue and even though the Hong Kong operators talk up the port, they have all established sizeable operations in Shenzhen and have little to lose either way.
So it is in this environment of slowly declining relevance that the Hong Kong government will become the only Asian city to pass legislation requiring ships calling at Kwai Chung container terminal to switch to low sulphur fuel while in port.
That will add between US$600,000 and $1.5 million to the fuel bill of each carrier per year. An incentive scheme that subsidised the additional fuel bill will not be continued and each carrier will have to foot the extra costs.
It is the right thing to do as ship emissions in Hong Kong have a deadly effect on the high density population that lives near the terminals. The problem is that Hong Kong is alone in this initiative. Shenzhen is talking about joining in a scheme to make the Pearl River Delta a low emission zone but that won't happen until 2016 at the earliest. In the meantime, Hong Kong will become an even more expensive port of call.
At a time when shipping lines have, to quote a Maersk Line exec, "a maniacal focus on costs", the additional financial burden will not be appreciated. Lines have little loyalty to a port - they go where the cargo is and if it is too costly to collect it there, they will go somewhere else.
So by doing the right thing, Hong Kong will put itself under further competitive pressure at a time when volumes are slipping and it is being overtaken by its busier neighbour.

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