Shenzhen, Guangzhou and Hong Kong were the third, fifth and seventh-busiest container ports in the world last year. Under the master plan for the GBA, they are supposed to work closer together to boost connectivity and competitiveness. But the reality is different.
Shenzhen and Guangzhou both want a bigger slice of the pie and they have been expanding their port infrastructure rapidly. Both are eating into the market share of Hong Kong, once the region’s maritime master.
Spearheaded by Guangzhou Port Group, the provincial capital has focused on investing in the port at Nansha, its southernmost district. International container volumes jumped by a fifth in the first half of this year and are set to grow further, helped by mega projects including the terminal’s fourth phase, which should be completed in 2021.
With automated quayside bridges and satellite-guided vehicles shuttling around the terminal, Guangzhou’s main port is getting bigger but smarter, and more responsive to an industry marked by the formation of carrier alliances and dramatic increases in vessel sizes. The project is 65% funded by Guangzhou, with neighbouring Foshan chipping in 19% and Zhongshan 16%.
Nansha’s rivals complain about the distorting effects of the financial incentives that it offers to attract the shipping lines. But Guangzhou is determined to grow its reach, taking stakes in smaller ports in Zhongshan, Foshan and Chaozhou, and establishing majority ownership of another new port in Maoming in the far west of Guangdong, which opened in March.
This month there was news of more investment nearby at Bohe, a major recipient for liquefied petroleum gas and liquefied natural gas imports.
Guangzhou’s port bosses are also reaching out across China for customers. Last month they signed an agreement with Zigong city in Sichuan in central China to beef up its logistics knowhow and improve its connectivity with its main ports in Guangdong, and they have set up other offices in the US, Europe, Singapore and Taipei to lure more foreign shippers.
After adding more international lines, traffic was split fifty-fifty last year with domestic flows. Shenzhen surpassed Hong Kong in container shipment volumes in 2013, with Guangzhou sailing past Hong Kong last year as well.
In former days, ports in southern China mostly handled internal traffic, while goods destined for overseas markets were shipped via Hong Kong, which acted as the key entrepot. Now more of the international shipping firms are going direct, transporting cargoes straight to Guangzhou and Shenzhen, where the inland infrastructure is just as good, and handling is cheaper and faster.
Hong Kong is trying to react, which is why four of the city’s largest port operators teamed up earlier this year to form a new alliance. It hopes to win back transshipment share from other rivals in Asia, but critics of the new grouping are unconvinced, seeing it more as a short-term attempt to shore up pricing.
Part of the rationale for the GBA is that participant cities should share resources and concentrate on their core competitive advantages. And in theory, the maritime trio have a plan to restructure the three gateways, with Hong Kong focusing on transshipment and imports into the mainland; Guangzhou serving domestic cargo; and Shenzhen geared more towards exports, with some import handling.
The challenge is that all three ports operate in a similar geographical area, with services that are more or less mutually replaceable. Finding the win-win solutions so beloved by policymakers won’t be easy. Ideas like greater differentiation in shipping routes have been floated, while Hong Kong has also been advised to reduce its operational load, focusing more on higher-end services like ship leasing, ship management and marine arbitration. Some of the port facilities in Shenzhen are co-owned by port firms from Hong Kong, where there could be more incentive to find a path forward together. But that’s not the case between Guangzhou and Hong Kong, where the rivalry looks set to intensify.