The Sino-US trade war exposes the international shipping market to greater uncertainties and risks of another downward trend. Hong Kong, the hub of cargo transshipment in South China, suffered a sharp drop in container throughput in 2018, falling from the fifth to the eighth place in the world, and a year-on-year drop of more than 9 percent in the first four months of this year. It can be seen that although Hong Kong terminal operators set up the Hong Kong Seaport Alliance for self-salvation at the beginning of this year, in order to improve terminal efficiency and enhance competitiveness, at least the decline in container throughput has yet to be stopped.
What is more worrying is that the "maritime business principals" mentioned in last year's Policy Address, namely the shipowners, operators and ship managers are also on a downward trend in recent years. According to the latest statistics, the number of establishments of ocean shipowners and operators of sea-going vessels was 138 in 2017, reduced by seven compared with 145 in 2016, while the number of employed people dropped from 4,306 in 2016 to 3,092 in 2017. Looking at ship agents and managers, and local representative offices of overseas shipping companies in Hong Kong, the number of establishments only increased slightly from 269 in 2016 to 270 in 2017, but the number of employees decreased from 7,759 in 2016 to 7,673 in 2017. It must be remembered that, these are just the numbers for 2017 - prior to the trade war.
I recently went to Ningbo, Zhejiang province to attend the second Global Alumni Association of Shanghai Maritime University, where I had in-depth communications with over 350 alumni from around the world, most of whom are engaged in shipping and logistics. Many alumni entrepreneurs, who once had or still have shipping and logistics companies or offices in Hong Kong, told me they have gradually moved their physical operations to Shenzhen, Shanghai or Singapore in the past few years. To my surprise, some alumni even transferred their company's capital receipts, payments and current settlement businesses to Singapore. This means that Hong Kong's status as an international shipping center is being eroded by Singapore, and the transfer of physical businesses may shake Hong Kong's status as an international financial settlement center. The reason is, according to the alumni, in addition to Singapore having more attractive tax incentives and financial measures in shipping logistics than Hong Kong, mostly importantly Singapore has set a 20-year vision of development for its shipping industry, while our industry does not know exactly what kind of plan and development will be adopted in future for the shipping industry of Hong Kong. This points to a "pain point" that Hong Kong's shipping industry has been facing - namely a lack of long-term planning and measures for development.
In her manifesto released during the chief executive's election campaign, Carrie Lam Cheng Yuet-ngor stated the government should play a leading role in developing a comprehensive strategy for shipping industry development to cope with the fierce competition in the international market. This was reflected in her first Policy Address released in October 2017, in which she said that the Hong Kong Maritime and Port Board, which was set up as an advisory body to the government, was actively working with the industry to develop a comprehensive plan to consolidate Hong Kong's position as a diversified international maritime hub. Unfortunately, nearly two years later, not only has the so-called comprehensive plan not been released, but the words were not even mentioned in last year's Policy Address. Last year's Policy Address implemented eight measures to support and promote the development of a high value-added maritime industry, which was thus praised as unprecedented favorable policy support for the industry since Hong Kong returned to its motherland 21 years ago. But in the absence of a long-term and comprehensive development strategy, these measures are only capable of a supporting role, they cannot become the "blueprint" to lead industry development.
Correspondingly, as Hong Kong's biggest competitor in the region, the Maritime and Port Authority of Singapore had published The International Maritime Centre 2030: Strategic Review as early as September 2017 to formulate long-term development plans and strategies in response to the opportunities and challenges brought by the wave of global technology. On the other hand, the United Kingdom also caught up with the trend. The Department of Transport announced in January this year Maritime 2050: Navigating the Future, a shipping industry development strategy plan, to comprehensively review the current development trend of international shipping market and the advantages of the UK maritime industry, and to provide detailed planning and advice from the aspects of science and technology, talent, environment, trade, infrastructure and security.
There is no denying that Hong Kong's government and maritime industry in recent years have also done some research and made some suggestions. However, many crucial questions are still pending answers, including what basis and advantages Hong Kong will have in the development of a diversified shipping center, what challenges and difficulties are faced by Hong Kong in the case of a trade war and the continuing downturn of the global shipping market, what measures should be adopted to attract shipping business principals to expand their businesses in Hong Kong, and how measures to consolidate and enhance a high value-added maritime service industry can be carried out. Without a comprehensive, complete and detailed long-term strategic plan, these questions cannot be answered, nor can they be fully discussed, accurately analyzed and deeply studied. Moreover, the shipping industry cannot make its own development plan, and even feel helpless in the face of current difficulties and challenges.
A farsighted and comprehensive plan is necessary for the development of individuals, industries, cities and countries. Like the development of the Bay Area, although some people think that Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area released in February is just a top-level design and lacks specific policy measures, this is exactly the importance of such an outline, namely to set out general directions including targets, principles and emphasized areas, so as to provide the governments and industries in the Bay Area with guidance and principles to follow.
In fact, the outline provides the Hong Kong shipping industry with directions as to how to participate in the Bay Area, including exploring the port group of Guangdong, Hong Kong and Macao for cooperation and regional alliance, relying on the advantage of Hong Kong's high value-added shipping and financial services development of marine insurance, reinsurance and ship finance, giving full play to the advantages of Hong Kong shipping service so as to extend and optimize international service network, etc.
However, after all, the outline was not formulated for the development of the Hong Kong shipping industry, it only puts forward the "direction". It aims at the development of the Bay Area, as to how Hong Kong can consolidate its status as a transit hub, how it can promote diversification of an international shipping center, how it can develop high-end shipping services, such as vessel management and leasing, vessel financing, maritime insurance, maritime law and dispute resolution. It also looks at how to make use of the Belt and Road Initiative to provide relevant services to enterprises from the Chinese mainland, Macao and overseas, which requires a comprehensive strategy of vision. Only by doing this can the government and the industry clearly understand the core factors behind Hong Kong shipping industry's success in history which are still the key to future development. Then we will know how to participate in a new era led by the great tide of science and technology innovation, and continue to play an important role. We can also then grasp the future development of the new knowledge and skills. To develop a comprehensive development strategy, the maritime industry of Hong Kong can wait no longer.
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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