It is expected that Shenzhen will surpass Hong Kong as the third largest container port in the world by the end of 2013. Although Hong Kong has had its share of problems thanks in part to a strike earlier in the year along with a shortage of land to expand facilities, major government investments in Chinese domestic ports has also put a dent in Hong Kong’s growth. In fact, in 2010, the port lost its number one position to Shanghai.
Shenzhen has benefited from these government investments. For the first eight months of 2013, Shenzhen’s TEU throughput increased by 1.2% year-on-year while Hong Kong’s throughput declined almost 7.0%. While Shenzhen may be benefitting from Hong Kong’s land shortage dilemma, the port is also benefitting on possible lower costs.
Both ports compete for shipments from the Pearl River Delta area of China but according to industry analysts, these manufacturers may face added fees of up to $200 per container if Hong Kong is chosen over Shenzhen. In addition, once Chinese trucks reach the Hong Kong border, containers must then be transferred to Hong Kong trucks resulting in time delays and additional costs. Another concern is that the lack of space at Hong Kong’s terminals has resulted in higher stacks of containers resulting in the need for more machines to work and thus adding additional costs for Hong Kong operators.
Still, Hong Kong port officials point out that the “high frequency of sailings and the ability to reach more than 500 destinations worldwide” ensures Hong Kong’s competitiveness against Shenzhen. Its status as a free port with simplified customs clearance processes is also an advantage, as pointed out by officials.
Besides infrastructure improvements to attract new shippers, Shenzhen is also extending its dry port network. These “dry ports” are similar to intermodal hubs in the US and are built further inland to be utilised to collect shipments and to perform logistics and customs clearance services. Yantian International Container Terminal and China Merchants already offer sea-rail intermodal services to 15 locations including Chongqing, Shaoguan, Changping, Changsha, Chendu, Kunming, Wuhan, Zhuzhou, Liling, Hengyang, Nanchang, Ganzhou, Dalang, Shilong and Guiyang.
For 2012, Shenzhen’s sea-rail intermodal shipments increased almost 20% to about 139,000 TEUs. Although this represents a very small percentage of its total throughput, Shenzhen appears committed to developing this network particularly as the Chinese government invests in much needed rail infrastructure improvements.While Hong Kong and Shenzhen compete for the title of third largest global container port, additional competition will come from other ports in the region such as Singapore, Busan and China’s other 2,000 plus ports. Those that can connect manufacturing facilities that have moved further west in China and into Southeast Asia by way of dry ports will probably achieve success – creating efficiencies and thus lower costs for shippers.
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)