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Industry facing challenges well into 2002

by Claus V. Hemmingsen

Mr. Claus V. Hemmingsen is a familiar face in Hong Kong's shipping industry. He has been Managing Director of Maersk Hong Kong Limited since July 2000. Previous to this appointment, he was Vice President for liner activities in the Asia region of Maersk Sealand. Mr. Hemmingsen had also spent five years in Hong Kong as Operations Manager and subsequently as Director of Liner Trade.

Two factors have significantly influenced the shipping industry in 2001. First of all, the global recession has driven down merchandise stocks and severely impacted consumer confidence. Volume growth rates have hence been very slim if at all present in most markets, none more than the major consumer regions of North America and Europe.

Secondly, ocean carriers have made investments in new tonnage, anticipating more positive growth patterns than have been seen in the past year, and more than are likely to emerge in the foreseeable future.

The global effect of such an imbalance in supply and demand is hence likely to persist, leaving the industry with serious challenges well into 2002. This is an unhealthy situation for all parties.

Drastic reactions have been experienced with freight rates having been reduced dramatically. The increasing trade imbalance and lack of financial returns have triggered a tonnage withdrawal by a large number of carriers.

Though the expectation of 2002 is somewhat subdued, the confidence in Hong Kong remains high with a number of positive factors indicating that Hong Kong may do better in a global context:

  • Import volumes into China will increase in the wake of WTO, leaving Hong Kong with access to a growing total market.

  • The strategic co-operation with the Pearl River Delta to build efficient logistics pipelines will provide a boost to Hong Kong.

  • The first berth of CT9 will be launched in the late 2002, opening a new era in productivity for the port of Hong Kong.

  • The logistics centre, expected to launch late 2003, on the Airport Island will provide a consolidated facility to cargo handling.

  • The proposal of the Port Rail Line between Lo Wu and Kwai Chung Terminals will give access to a largely unexplored portion of the PRC hinterland.

The recently formed Hong Kong Logistics Development Council (LDC) coupled with the Steering Committee on Logistics Development, set up earlier in the year, will provide a forum for both the public and private enterprise to improve the logistics sector of Hong Kong.

Hong Kong should further project its efforts in a number of areas to remain competitive in the long term. These include:

  • To improve the level of education, especially English proficiency and logistics skills.

  • To protect the legal and financial frameworks which have been important factors of success.

  • To improve the cross boundary efficiency for trucks and in general for any cross boundary movement of people and goods.

  • To reduce pollution.

In general a stagnant development for 2002 is expected with slight growth being a potential upside. Improved co-ordination across the boundary with South China will increase the potential for growth.

With the development of infrastructure and long-term investments into Hong Kong, Maersk Sealand is committed to serve as the market leader in providing values to our customers.