Council meeting-III.Member’s Motions Reinforce HK’s status as a regional logistics hub



President, Hong Kong, having its world-class infrastructure and comprehensive transport infrastructure, is at the intersection of domestic and international circulations under the country’s development pattern of “dual circulation”. As a large volume of cargoes is transported to the Mainland and other countries through Hong Kong, it has become a regional logistics hub. But with increasingly intense competition from neighbouring regions, higher local costs, manpower shortages and the lack of land for port development, the logistics industry is facing many challenges. I thank Mr Frankie YICK for proposing this motion, urging the Government to formulate long-term policies that are conducive to the overall development of the logistics industry, especially in land provisioning, with a view to reinforcing Hong Kong’s status as a regional logistics hub.

Since China’s accession to the World Trade Organization in 2001, Hong Kong seized the opportunity and developed into an entrepot, and I remember that I was handling many syndicated and project loans for freight financing then. The port of Hong Kong was the busiest container terminal in the world for consecutive years from 2001 to 2004, but it has been overtaken by Singapore since 2005 and its ranking has been dropping year after year. It has respectively been overtaken by Shanghai, Ningbo-Zhoushan, Shenzhen and Guangzhou ports, and its ranking has dropped to 10th as Mr Frankie YICK mentioned.

The port of Hong Kong mainly provides transhipment services requiring large back-up facilities such as container storage yards and truck depots. About 425 hectares of land in Hong Kong is currently used for port back-up purposes, with about 100 hectares in the port area and most of the rest in Yuen Long, Lok Ma Chau, etc. in the New Territories. According to a research conducted by Our Hong Kong Foundation in 2020, the Hong Kong Port came last in terms of yard-to-throughput ratio among the world’s top ten ports. If the container yards are not large enough or are located far away from the container terminals, the competitiveness of the port will be considerably undermined.

To maintain a satisfactory logistics operating environment and the port’s competitiveness, land requirements should be met more quickly and precisely, including the development of adequate and larger logistics back-up sites and modern logistics facilities to meet the land requirements of the new logistics industry. It has actually been 50 years since the completion of Terminal 1 of Kwai Chung Container Terminals (“KCCT”) in 1972. To increase the logistics back-up sites in the vicinity of the terminal or to build modern logistics facilities in the future, larger areas will be needed to provide room for development but the neighbouring areas in Kwai Chung have already been developed into commercial and residential areas, and there is very limited room for expansion. Therefore, it has long been proposed that KCCT should be relocated.

The Government has already started the Artificial Islands in the Central Waters―Investigation. If the reprovisioning of the container terminal and the provision of logistics back-up sites can be considered in the reclamation plan, it may be possible to maintain the operation of the existing KCCT while building a new port, introducing 5G, Internet of Things, artificial intelligence, full automation, blockchain and other technologies to improve the existing operation efficiency and reduce operating costs. The existing scattering logistics back-up sites can also be centralized, thus reducing transportation time. The Singapore government began consolidating its container terminals in 2012, building and relocating them to Tuas Port in phases, and the first phase of the project already commenced in 2015. The container terminals are affecting the economic lifeline of Hong Kong as a trading, logistics and shipping hub. If we can learn from Singapore’s experience and relocate our container terminals to enhance the port’s competitiveness, it is believed that it will be more beneficial to the overall development of the logistics industry.

Apart from land provisioning, regional cooperation is also one of the development directions of the industry. As the Chief Executive mentioned in an interview a few days ago, logistics is the traditional advantage of Hong Kong; Hong Kong is advantageous in international logistics while Shenzhen is advantageous in international Mainland logistics, and cooperation in this regard represents the advantages complementing each other. If Hong Kong can make use of its advantages such as its extensive international shipping routes and the high-end logistics centre under construction to promote the development of multi-modal sea, land and air transport network and high value-added logistics in the Greater Bay Area (“GBA”), and build a world-class port cluster with various cities in GBA, it is believed that the synergy of development of these ports can be created to achieve mutual benefit and win-win cooperation, and enhance overall competitiveness.

I support the original motion and the amendments of the two Members. President, I so submit.