Hong Kong Shipping Industry Struggles in Stormy Waters
Shipping trade through Hong Kong dropped for a 22nd straight month in November, and is likely to come under continued pressure due to fallout from the U.S.-China trade war and a longer-term migration of low-end manufacturing to Southeast Asia.
Hong Kong was one of the world’s busiest ports between 1987 and 2004, acting as a transshipment center that fed on China’s rapid economic rise during that time. But the port has sunk in the global rankings over the last decade as new, more sophisticated shipping centers have sprung up in China, especially in the nearby cities of Guangzhou and Shenzhen. A more recent challenge from regional rival Singapore is also taking a toll.
Container throughput at Hong Kong’s ports fell 7.4% year-on-year in November when 1.52 million twenty-foot equivalent units (TEUs) passed through the city’s ports, accelerating from October’s 4.1% year-on-year decline, according to data from the Hong Kong Maritime and Port Board. Throughput was down 6.2% year-on-year in the first 11 months of the year.
The city’s longest decline saw throughput drop for 25 consecutive months between July 2014 and July 2016, the Maritime and Port Board’s data shows. But with the busy Christmas shipping season now past and the weak Chinese New Year season coming up, industry watchers say the falling trend could be hard to reverse in the short term — meaning the current streak could end up setting a new record.
The limping trade volumes come as U.S.-China trade has dropped considerably during their trade war that has continued for more than a year. Such trade is important for Hong Kong, which acts as a transshipment center for many such goods. China exports to the U.S. fell 23% year-on-year in November, dragging the country’s total export figure for the month down by 1.1%, according to the latest Chinese customs data.
At the same time, Hong Kong is also taking a hit as many lower-end manufacturers that are major users of shipping services relocate to Southeast Asia to avoid rising costs in China. That trend has accelerated with the trade war, as many manufacturers also seek to diversify their global footprints to hedge against trade conflicts.
One of the biggest beneficiaries of that geographic shift has been Singapore, which acts as a major transshipping hub for Southeast Asia, said Paul Tang, chief economist at Bank of East Asia. In contrast to Hong Kong’s flagging numbers, Singapore’s November container throughput rose 8.4% to 3.27 million TEU — more than double Hong Kong’s volume.
Tang said Hong Kong’s shipping industry is likely to continue feeling downward pressure, as global economic growth slows and lingering effects of the U.S.-China trade war result in declining orders. He added that in addition to the manufacturing migration to Southeast Asia, the city is also facing competition from nearby Chinese mainland ports like Guangzhou and Shenzhen, which have lower costs.
Contact reporter Yang Ge (firstname.lastname@example.org; twitter: @youngchinabiz)
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