Hong Kong, once the number one port in the world, has dropped steadily in recent years and is now only ranked ninth in the world. With the success of the COVID-19 pandemic creating online shopping and logistics opportunities, the Kwai Tsing Container Terminal, which mainly handles large import and export containers, Last year's throughput dropped by 11.7%, the largest drop since the financial tsunami.
Earlier (January 18), the Legislative Council passed a non-binding motion on "Consolidating Hong Kong's status as a regional logistics hub", urging the SAR government to formulate long-term policies that are conducive to the overall development of the logistics industry.
In fact, in recent years, there have been voices concerned about the decline in the ranking of ports and advocating the transformation and upgrading of the logistics industry, but it has not yielded results. Can this meeting find a new way out for the logistics industry?
Legislative Council Members' Bill Policy Analysis Series
Hong Kong, which once ranked first in the world's container port rankings, has seen a steady decline in port cargo throughput in recent years, and has now dropped to ninth place in the global ranking.
(Visual China)
The myth of "shop in front and factory in back" no longer exists
Li Jiachao, Chief Executive of the Legislative Council, happened to attend the Legislative Council a few hours before discussing the proposal of "Consolidating Hong Kong's Regional Logistics Hub Status" proposed by the Liberal Party's shipping and transportation sector Yi Zhiming and amended by the Democratic Alliance for the Betterment of Hong Kong's import and export sector Huang Yinghao and the Hong Kong Federation of Trade Unions election committee member Lu Songxiong. The question-and-answer session will also respond to the development of logistics - he said that with the comprehensive customs clearance between Hong Kong and the mainland and the world, the flow of people and logistics by sea, land and air will soon return to normal, and he believes that the export volume of goods will stabilize.
However, according to the latest data released by the Hong Kong Maritime and Port Bureau, the container throughput of Hong Kong’s ports fell by 6.9% last year to 16.57 million standard container units (TEUs), only reaching 72% of 10 years ago; among them, it mainly handles import and export of large containers The container terminal in Kwai Tsing has experienced a heavy decline, with a sharp drop of 11.7% relative to 2021, to only 12.87 million TEUs.
To support Hong Kong's shipping and logistics industry, we must first know where the problem lies before we can prescribe the right medicine.
The glory of the Hong Kong port is inseparable from the vigorous development of the Pearl River Delta processing and export industry in the 1990s. In order to export low-priced goods, the Pearl River Delta goods are transshipped to the world through Hong Kong, thus forming a "transportation point" using Hong Kong as a transit point. "Shop in front and factory in back" mode.
However, after 2005, the ports in the mainland have been catching up, and the ports in Hong Kong have taken a sharp turn for the worse. The ports in cities such as Shenzhen, Guangzhou, and Shanghai already have cost advantages, coupled with the gradual improvement of infrastructure, and a strong momentum of development; The role of a foreign trade transfer station does not have the awareness of being prepared for danger in times of peace.
In 2013, the throughput of Shenzhen port surpassed that of Hong Kong, and Guangzhou and Qingdao also ranked ahead of Hong Kong in 2018 and 2019 respectively, while Shanghai has been ranked first for many years in a row.
It is worth mentioning that the mainland is gradually relaxing restrictions on coastal shipping rights. If Hong Kong continues to respond to changes without change, it may make things worse.
According to the "Maritime Law of the People's Republic of China", only cargo ships flying the flag of the People's Republic of China can carry out maritime transportation in mainland ports; after the restrictions are relaxed, Chinese-funded non-five-star flag cargo ships can also transport goods between mainland free trade ports. There is no need to transit through Hong Kong.
In the long run, Hong Kong's maritime role may be further marginalized.
Where is the way out for transformation?
Trade and logistics, financial services, tourism, and professional and business support services are known as Hong Kong's "four pillar industries"; during the motion debate on "Consolidating Hong Kong's status as a regional logistics hub", Members expressed their support for the logistics industry The emphasis on and the regret of its decline in recent years, but how to make up for it, their focus seems to be different.
Yi Zhiming emphasized that the government should take action especially in terms of land planning. "No matter the development of any industry, land supply is an important issue," because the port's logistics land, containers, warehouses and automatic racking systems all require considerable land space; However, the way the government provides land is like "squeezing toothpaste". In the past 10 years or so, the land provided successively has only been about 20 hectares in total.
Many members of parliament are also concerned about the shortage of land for logistics, calling on the government to fulfill its commitment to provide 100 hectares of land for logistics. Some members also proposed to reserve land on Lantau Island and the Northwest New Territories for logistics storage.
Ye Wenqi, director of land and housing research of the "Unity Hong Kong Fund" led by the first chief executive Tung Chee-hwa who is about to be the vice chairman of the National Committee of the Chinese People's Political Consultative Conference, once wrote an article pointing out that modern logistics with high cargo volume and high turnover require high ceilings, heavy floor loads and The modern logistics space designed by the access ramp directly to the upper floor, while general warehouses and multi-level factory buildings can no longer meet the market requirements. In addition, data analysis and cloud computing are indispensable for the development of modern logistics, and more high-quality space is needed for the construction of data centers.
The Hong Kong Maritime and Port Bureau once wrote a research report, pointing out that Hong Kong should transfer from physical activities to London, England and other places to learn, upgrade to professional services, and no longer just blindly pursue physical throughput.
(Visual China)
What answer is the government handing over?
For a long time, there have been voices in the academic and industry circles that Hong Kong ports should transform and develop high-end shipping, because Hong Kong does not have any physical manufacturing industry.
In this regard, Huang Yinghao said that the most important thing is to support the digitalization of the industry, apply innovative technologies, and promote "smart ports". He also suggested that the government can provide matching funds, or provide medium and long-term low-interest loans to support relevant enterprises to speed up the construction of 5G base station networks and other infrastructure to accelerate the development of the Internet of Things.
Lin Xiaolu, a member of the election committee, pointed out that at present, only a small number of warehousing facilities operate in modern facilities in Hong Kong, and logistics upgrades are subject to existing regulations, such as land and building regulations on the ceiling height of old industrial buildings, which will make automation and intelligent equipment The use of smart logistics has been affected; he reminded that if the government does not remove the barriers for the transformation of the logistics industry, it will be difficult for the industry to exert the efficiency of smart logistics no matter how hard they work.
"In view of the uncertain global economic environment, when the government determines the future direction of the Lantau Logistics Park, including its development scale and timing, it must take into account the trends and prospects of the Hong Kong and global economies, so as to ensure the effective use of public resources devoted to the development of the logistics industry .” The written reply given by the former Secretary for Transport and Housing Eva Cheng at the Legislative Council meeting on June 10, 2009 is also applicable today.
In 2008, the combined container throughput of Shanghai and the Pearl River Delta jumped 148% and 142% respectively compared with 2003, but Hong Kong only increased by 20% - the worries at that time were from the rapid growth of the mainland economy and the development of port cities, Hong Kong The port ranking dropped from No. 1 in the world to No. 3; and today, Hong Kong’s ranking has almost dropped out of the top ten. In response, the Secretary for Transport and Logistics, Lam Sai-hung, only reiterated that “Hong Kong’s logistics, shipping, and aviation industries are facing rapidly changing operations. environment and challenges, in order to respond flexibly to the ever-changing situation, we will continue to communicate and cooperate closely with the industry, and through formulating different measures and development strategies, we will give full play to Hong Kong’s unique advantages and enhance our competitiveness.”
Frankly speaking, the government is not unaware of the difficulties faced by logistics and transportation, but its policies in this area are suspected of "too much thunder but little rain".
Former Chief Executive Carrie Lam Cheng Yuet-ngor proposed in her "Policy Address 2021" to enhance Hong Kong's status as an international shipping center, cooperate with the industry to study specific plans to promote the development of "smart ports", and develop high value-added maritime commercial services, including ship registration, financing and management, Marine insurance, maritime law and arbitration, etc.
The current Chief Executive Lee Ka-chao’s "Policy Address 2022" also stated that he will actively promote "smart ports" and promote the action plan for the development of high-value-added modern logistics; The author stated that "Hong Kong is actively promoting the efficiency of the port to enhance the competitiveness of cargo, and has already developed towards the direction of high-end shipping services." For example, there are about 900 shipping-related companies in Hong Kong that provide diversified maritime services. The fourth largest ship registry, the second largest maritime P&I insurance center in the world, and one of the four largest international maritime arbitration centers in the world.
The Smart Port of Rotterdam, the Netherlands: The Port of Rotterdam is one of the largest entrepots in Europe. It is using the computer company IBM's Internet of Things (IoT) and cloud technology to develop networked shipping: 3D printing technology is used to reduce the cost of unmanned ships and speed up production. Combined with smart buoys, port Real-time data on facilities and weather, aiming to transform into an automated smart port by 2025 (IBM Blog photo)
Uncertain how to transform?
It can be said that Hong Kong's logistics industry is developing well under the guidance of the government, but the authorities' active intervention in the logistics industry is extremely limited.
In fact, before the SAR government launched tax incentives for ship agents, ship managers and ship brokers in July 2020, the number of ship registrations has been ranked first in the world all year round; and Hong Kong already has the financial and legal resources to provide maritime services. The High Court also has legal experts specializing in maritime disputes and has admiralty court judges.
As of November 27, 2021, Chen Fan, the then Secretary of the Transport and Housing Bureau, wrote an article stating that the task force of the maritime business consignor has completed the study of further implementation of tax incentives and will recommend the designated maritime business consignor, that is, ship management The Hong Kong Maritime and Port Bureau has also set up a task force, promising to study specific plans to promote the development of "smart ports".
However, the progress of the work of the Smart Port Task Force and the specific measures of the development plan have not yet been made public.
As for the tax incentives introduced by Hong Kong, are they attractive?
Perhaps it can be compared with Singapore, which ranks second in the world's ports.
Singapore proposed the "Chartered International Shipping Enterprise Plan" as early as 1991. All shipping companies that have passed the certification, regardless of whether their ships fly the Singapore flag, their fleet income will be exempted from income tax and enjoy 10-year tax-free benefits, which may be extended in the future. 20 years, while similar preferential measures in Hong Kong are only for ships registered in Hong Kong.
Similarly, Singapore's "Income Tax Act" stipulates that the non-Singaporean ships enjoy tax exemptions only limited to the income from passenger, mail or cargo transportation loaded from Singapore (not just transshipped from Singapore), and the operation of foreign ships can enjoy more benefits in Singapore. Multiple interests.
In addition, in order to encourage logistics companies to choose Singapore as a base to provide cargo delivery and logistics services, the Singapore government launched the "Chartered Shipping and Logistics Enterprise Plan" in 2004. Chartered shipping and logistics companies can enjoy a preferential tax rate of no less than 10% of their income. And this offer lasts up to ten years.
Therefore, from the perspective of tax incentives alone, Hong Kong is not more attractive than Singapore.
However, Hong Kong does not need to copy Singapore’s policies in its entirety, because Hong Kong’s own taxation is already low, and tax incentives may not become an element that makes Hong Kong regain the favor of logistics companies. On the contrary, the active planning of the local government is more worthy of Hong Kong’s reflection.
The container yard lease in Singapore is as long as 30 years, which is conducive to long-term planning for practitioners in the logistics industry; and the government's high degree of intervention in the development of the industry is also conducive to centralized planning and resource allocation. A series of tax incentives, talent training and technology Consult the Support Policy.
In contrast, Hong Kong, as a "free port", has freer capital flow, and the port is owned, operated and managed by four port companies - which is rare in the global port system.
The shipping policies of the Sin Chew and Hong Kong governments have their own advantages and disadvantages, but Hong Kong is not as proactive as Sin Chew, and has not actively transformed into a model suitable for its own development.
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