What does the port contribute to Hong Kong? Global maritime centres - overseas comparators The port relocation debate - reinventing the wheel?

1. Hong Kong Maritime Week – SCLP Mixer 1
CAN HONG KONG REMAIN A LEADING
MARITIME HUB, WITHOUT A THRIVING
CONTAINER PORT - AND WHERE
SHOULD THE PORT BE LOCATED?
Dr Jonathan Beard
23 November 2017
Wharney Guang Dong Hotel
Hong Kong
Hong Kong Maritime Week - Supply Chain & Logistics
Professionals (SCLP) Networking Mixer

2. Hong Kong Maritime Week – SCLP Mixer 2
OUTLINE
What does the port contribute to Hong Kong?
Global maritime centres - overseas comparators
The port relocation debate - reinventing the wheel?
01
02
03

3. Hong Kong Maritime Week – SCLP Mixer 3
Do we really
need the port?
Could the scarce land be put to
better uses?
“Our suggestion is to
relocate the current
container ports away from
Kwai Chung/Tsing Yi
area…..to Kau Yi Chau”

4. Hong Kong Maritime Week – SCLP Mixer 4
What Does the Port Contribute?
What might be lost?
Manufacturers
Traders
Shipping Lines:
- Ship Owners of Sea-going Vessels
- Operators of Sea-going Vessels
- Local representative offices of
overseas shipping companies
Shipyards
Other Support Services to Water Transport
Ship Agents & Managers
Shipbrokers
Bunkering
Terminals
Stevedoring
Services
Haulage of
Containers &
Container Leasing
Land Freight
Transport
PortCoreSector
Sea Cargo Forwarding
Services
Storage
Cargo Inspection,
Sampling & Weighing
Services
Packing & Crating
Services
Inland Water
Freight
Transport
Marine Insurance
Marine Law
Ship Finance
Accounting, Auditing, & other
Business Services
PortSupporting
Sector
Value Added Employment
HK$ bil % of Total Number % of Total
2000
18.1m TEUs
Maritime & Port 30 2.5% 86,000 2.7%
Trading & Logistics 313 25.5% 810,100 25.2%
2012
23.1m TEUs
Maritime & Port 30 1.4% 93,000 2.5%
Trading & Logistics 516 23.4% 765,000 20.4%
 Lower value added per TEU in part reflects shift to
lower value ocean transhipment versus import /
export cargo (“South China Gateway”)
 Would all these economic benefits be lost without a
port located in Hong Kong, as opposed to just over
the boundary in Shenzhen?
Source: HKSAR Government. Numbers not strictly comparable due to differences in data
collection & calculation

5. Hong Kong Maritime Week – SCLP Mixer 5
What About the Wider Maritime Cluster & Higher-
Value Functions?
Do they require physical proximity to a port? Would they be lost?
Source: Singapore MPA; Arcadis
MARITIME IT
MARITIME
LEGAL
SHIP AGENCY
SHIPOWNERS
& OPERATORS
SHIP
MANAGEMENT
MARINE
INSURANCE
SHIP
FINANCE
MARITIME
LOGISTICS
MARITIME
TRAINING
SHIP
BROKING
PORT
OPERATIONS
CLASSIFICATION
SOCIETIES
$$

6. Hong Kong Maritime Week – SCLP Mixer 6
Global Maritime Capitals Compared
Can we Compare with Overseas Maritime Clusters?
Have they lost the port, but retained some of the cluster?
Source: The Leading Maritime Capitals of the World, 2017, Menon Economics, DNV ▪ GL
SINGAPORE HAMBURG OSLO SHANGHAI LONDON
1 2 3 4 5
RANK SHIPPING
FINANCE
AND LAW
MARITIME
TECHNOLOGY
PORTS AND
LOGISTICS
ATTRACTIVENESS AND
COMPETITIVENESS
OVERALL
RANK
1 SINGAPORE LONDON OSLO SINGAPORE SINGAPORE SINGAPORE
2 HAMBURG OSLO SINGAPORE SHANGHAI OSLO HAMBURG
3 ATHENS NEW YORK TOKYO ROTTERDAM COPENHAGEN OSLO
4 LONDON SINGAPORE SHANGHAI HONG KONG HAMBURG SHANGHAI
5 HONG KONG SHANGHAI BUSAN HAMBURG DUBAI LONDON

7. Hong Kong Maritime Week – SCLP Mixer 7
Source: The Leading Maritime Capitals of the World, 2017, Menon Economics, DNV ▪ GL
MARITIME FINANCE & LAW PORTS & LOGISTICS SERVICES
RANK CITY
1 London
2 Oslo
3 New York
4 Singapore
5 Shanghai
6 Tokyo
7 Hamburg
8 Rotterdam
9 Hongkong
10 Copenhagen
11 Athens
12 Dubai
13 Guangzhou
14 Houston
15 Busan
RANK CITY
1 Singapore
2 Shanghai
3 Rotterdam
4 Hongkong
5 Hamburg
6 Dubai
7 Busan
8 Tokyo
9 Guangzhou
10 Houston
11 New York
12 Athens
13 London
14 Copenhagen
15 Oslo
Can we Compare with Overseas Maritime Clusters?
Have they lost the port, but retained some of the cluster?

8. Hong Kong Maritime Week – SCLP Mixer 8
How does HK Compare as a Global Maritime
Capital?
Source: EU Shipping Competitiveness Study – International Benchmark Analysis; Feb 2017, European Community Shipowners’
Associations; Monitor Deloitte
Global Maritime Capitals Compared
Total weighted benchmark score
Total unweighted benchmark score
8.0
7.1
6.0
5.8
3.2
8.1
7.4
5.6
5.5
3.2
Singapore Hongkong Dubai Vancouver Shanghai
Taxation and
Fiscal Incentives
Competitiveness factors and Weighting
Availability of
Professional Services
Skills Regulatory, economic
and political factors
Flag Attractiveness Ease of doing business
Legal framework for
vessel exploitation
Availability of
Finance
30%
15%
12.5%
5%
15%
12.5%
7.5%
2.5%

9. Hong Kong Maritime Week – SCLP Mixer 9
What about moving it?
…and re-use a prime waterfront site
with excellent connectivity
“Our suggestion is to
relocate the current
container ports away from
Kwai Chung/Tsing Yi
area…..to Kau Yi Chau”

10. Hong Kong Maritime Week – SCLP Mixer 10
Move it......but where?
Other potential sites have been assessed under previous studies – re-inventing the wheel?
TO SHENZHEN AIRPORTTO GUANGZHOU AIRPORT
TO ZHUHAI AIRPORT
HKP2020
Expansion Option
Container Terminals
River Trade Terminals
Airports
Public Cargo Working Area
HKZMB (Under construction)
TMCLKL (Under construction)
TO GUANGZHOU /
NANSHA PORT
Assessments for:
− Economics &
finance
− Sustainability
− Engineering
− Environmental
− Transport
− Land-use
compatibility

11. Hong Kong Maritime Week – SCLP Mixer 11
Source: ICF; Arcadis
Nansha
Humen
Yantian
Gaolan
Dachan
Bay
Huizhou
Guangzhou
Shekou
Chiwan
Mawan
HKZMB
0 1,000 2,000 3,000
Via Hong Kong
Via Yantian (Shenzhen)
USD
Ocean freight &
surcharges
Trucking
Port
(THC, etc)
E.g. Transportation Costs: South China Export to N America
New Sites Provide Some Additional Competitiveness
But certain weaknesses remain, including S China hinterland connectivity

12. Hong Kong Maritime Week – SCLP Mixer 12
Hinterland Connectivity
High cost of cross-boundary trucking severely damaged HK Port (HKP) competitiveness
 HK S China volume loss obscured by
modal shit to barge (double / triple counted)
and growth of ocean transshipment (double
counted)
 Higher terminal and THC costs for HKP, but
higher trucking costs were critical
 Once Mainland competitors narrowed the
service gap, loss of HK market share was
sharp
 Higher trucking costs were / are primarily
regulatory, NOT geographical
 Barging did not face such regulatory costs,
hence HKP has been more competitive for
this modal segment
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
30
35
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
MIL TEU
TEU via HK Port TEU via Shenzhen & Other Guangdong Ports HK Share
S. China Import/Export Market
Source: Port Authorities; HKSAR Government; ICF; Arcadis

13. Hong Kong Maritime Week – SCLP Mixer 13
Wrap – HKP Remains a Key Economic Asset
And HK’s existing market based approach should frame any discussion of future options
 HKP is still one of the world’s largest container ports
 If HKP eventually becomes redundant due to market forces, then re-use might be an option – and
history suggests economy would adjust
 However, is forced closure (with or without a relocation option), really the best option for HK’s
urgent property needs?
 New port sites alone will not redress the competitiveness deficit, but will be prohibitively expensive
and unlikely to be financially viable given the focus on lower yielding ocean transhipment
 Under HK port development model, private sector funds and takes risk for developing new facilities
 Would relocation involve switching to the “Singapore” (or “Nansha”) model where government leads
in the development (and funding) of facilities? What’s the rationale?
 The increase in land values for space released at Kwai Tsing is not economic justification for
subsidised development of a new facility nor necessarily a solution to HK’s property woes
 Brownfield sites, measures to reduce land-banking, changes to land
taxation, etc. should all be considered holistically to address HK’s
property issues…
 …“It’s too hard! Reclamation, country parks, relocating the port, etc.
are easier.”
 But whoever said policy and governing was easy?

14. arcadis.com
T +852 2263 7300
M +852 6095 8434
E jonathan.beard@arcadis.com
Arcadis
38/F AIA Kowloon Tower
Landmark East
100 How Ming Street
Kwun Tong, Kowloon
Hong Kong
DR JONATHAN BEARD
Executive Director; Head of Transportation & Logistics, Asia;
Co-chair Belt Road Alliance
Thank you – Any Questions?

15. Hong Kong Maritime Week – SCLP Mixer 15
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16. Hong Kong Maritime Week – SCLP Mixer 16
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