Hong Kong port operators urged the government to press harder on consolidating about 70 hectares of land next to its terminals to eliminate congestion and raise their capacity after a round of alliances in shipping lines will further stretch the limits of the already crowded port.
Port operators were coming under increasing pressure to become more efficient as alliances of shipping companies expanded and they would take action if nothing was done, said Jessie Chung Wai-yin, the chairman of the Hong Kong Container Terminal Operators Association.
"If we don't react quickly enough, the liners will leave for other ports," she said.
Congestions and delays at Hong Kong port are common as it lacks enough land to expand its operations. Barges, which carry containers to and from the Pearl River Delta as a feed for ocean-going ships, are facing two days of delay on average. The delay increases to an average of four days before the Lunar New Year and the National Day holidays.
Shipping companies are leery of charges piling up due to demurrage, the expense the owner of a ship or the charterer will pay for failure to load or discharge a vessel on time, a period usually covering several days to a week. The rates can range from a few hundred to several hundred US dollars per day.
An executive from a port operator said sometimes barges needed to wait for up to four days before berthing during peak seasons. Many barge operators, given their highly fragmented industry, are not entitled to compensation for delays.
"As the vessels are getting bigger while the number of calls is cut due to consolidation, cargo shipments will become more concentrated at a time," the executive said.
Major liners will be grouped under three big alliances - G6, P3 and CKYHE - which account for 70 per cent of the capacity of global trade lanes. The P3 group is expected to get approval from the Federal Maritime Commission in the United States by the end of this month. G6 and CKYHE have bolstered their membership to compete with P3.
About 80 per cent of the existing order book is on vessels bigger than 8,000 20-foot equivalent units (teu), so more barges will be needed at a time to feed the big ships. Barge movements in Hong Kong rose 30 per cent over the past 10 years as exporters used barges rather than trucks to cut costs.
Another issue is that more container boxes are being transferred between Modern Terminals and Hongkong International Terminals so more land is needed to store and move them around. The terminal association suggested the government let the operators use the land near Terminals 8 and 9 for container storage and to build more barge berths.
This would boost the port's capacity by three million to four million teu a year, almost a fifth of total handlings at the port last year, Chung said.
"We have had three meetings with officials from the Transport and Housing Bureau since the end of last year and their feedback is positive," she said. "What we want to see is the government speeding up the process."
However, some container operators in Hong Kong are worried that the alliance members could squeeze out smaller shipping lines.
"[The alliance members] could ask for favourable berthing windows during the weekends, making the others berth on the weekdays, which are not attractive to exporters," said Sunny Ho Lap-kee, executive director of the Hong Kong Shippers' Council. "We are apprehensive that when all the smaller shipping lines are pushed out of business, we will have fewer choices."
But for an industry that is highly cyclical and competitive, some industry veterans said more consolidation was inevitable and needed so companies could turn a profit.
"P3 is a partial exercise of a greater consolidation, which is also needed in Asia," said independent shipping analyst Charles de Trenck. "The industry needs that, it has been so unprofitable for so long."