Why port, shipping and logistics sector is Hong Kong economy's heart

The port, shipping and logistics sector is critical to the health of the HKSAR economy – transportation, storage, postal and courier services together employ almost 9% of Hong Kong’s population.

The ocean freight sector accounts for over 95% of world trade. Here within the South China cluster, the multiple ports process a total of 60 million containers (TEU) per year. Hong Kong’s far-reaching connectivity and extensive global network make it the largest container port in South China, handling over 23 million containers (TEU).

Ranking number 3 in container ports worldwide – very closely followed by its close neighbour Shenzhen, Hong Kong has nine container terminals, all privately owned and operated, with a total of 24 berths.

Being served by 80 international shipping lines, providing 450 container-liner services per week to more than 500 destinations worldwide, Hong Kong is also North Asia’s major trans-shipment hub.

Demonstrating continuing leadership from the private sector in environmental awareness and sustainability initiatives, the Fragrant Harbour’s voluntary “Fair Winds Charter” has recently been extended until the end of 2013.

Originally introduced in 2010, the charter calls for participating vessels to switch to low sulphur fuel (0.5% sulphur content or less) while at berth in Hong Kong - significantly lower than the official limit of 3.5 per cent.

Seventeen shipping lines participate in this industry-led, voluntary, at-berth fuel switching programme for ocean-going vessels (OGVs) calling at Hong Kong. It is the first initiative of its kind in Asia, and the only shipping-industry led fuel switching initiative in the world.

Shipping is one of the largest contributors to sulphur dioxide (SO2) emissions in Hong Kong. According to Civic Exchange group, if all operators switched all vessels to using low-sulphur fuels, emissions from shipping would fall by 80%, having a significant impact on overall air quality.

In September 2012 the government introduced the Port Facilities and Light Dues incentive scheme to support carriers that voluntarily switch to low-sulphur diesel.

Some 570 ships have since been registered for the subsidy scheme, which provides a 50 per cent reduction in port and navigation related charges for ocean-going vessel operators that switch to fuel containing no more than 0.5% sulphur.

The latest development in January is that HKSAR Chief Executive CY Leung announced that his government will bring in new legislation to enforce the requirement to switch to low sulphur fuel whilst at berth in Hong Kong. He said that following consultation with the maritime sector, such proposals will be tabled for the next legislative session and are likely to become approved by the end of this year.

Meanwhile, industry practitioners continue to call for an Emission Control Area (ECA) that embraces the whole of the Pearl River Delta – exploratory discussions amongst Hong Kong, Shenzhen and Guangdong officials are continuing.

The policy address also confirmed the government will step up efforts with the Guangdong Provincial Government in exploring the feasibility of requiring ocean-going vessels to switch to low-sulphur diesel while berthing in all the Pearl River Delta ports – including Shenzhen, Guangzhou, and Macau, as well as Hong Kong.

Chief Executive CY Leung confirmed he has been in touch with his counterparts in Guangdong over the possible formation of a Emissions Control Area (ECA) for the Pearl River Delta – such an ECA would be the first in Asia.

An official from Guangzhou Port said “this is a good thing for both sides, and building a green port is also our goal, and we have the responsibility and obligation to respond to the government's call to build a green port, and the development of a low-carbon economy."

Neighbouring Shenzhen Port commented: “We have been making efforts in energy conservation and emissions reduction. We have updated some port facilities into more eco-friendly ones. The ECA would require a joint effort, and we are looking forward to it.”

Industry practitioners advocate the vigorous pursuit of a Low Emission Zone for South China territorial waters, thus levelling the playing field for all neighbouring ports and as an interim step towards the more complex ECA.