Transport & Logistics Development in HK & GD

Waiman CheungCyber Logistics Center

Li & Fung Institute of SCM & Logistics

Sources of Cargos

GDP of the PRD Regions

PRD Export Values Ratios

40.6%

18.4%

11.2%

SZ

DG

GZ

FS

HZ

ZS ZH JM ZQ

Rest of China67.7%

GuangDong32.3%

PRD Region Export Values

Industrial Output: PRD & Zhuhai(2005)

PRD Zhuhai

HK & SZ Economic Data

Hong Kong Economic Data

• Area: 1,104 km2

• Population: 6.90 million• Import/Export: USD 648.82 billion• Foreign direct investment: USD 41

billion• GDP: USD 188.76 billion, a 6.48%

increase from last year

Shenzhen Economic Data

• Area: 1,949 km2

• Population: 11 million (local residents 8 m)• Import/Export: USD 182.86 billion• The largest export city in China for the past 13 years• 141 of the world’s top 500 enterprises have invested

in Shenzhen• GDP: USD 60.15 billion, a 15% increase yearly• Foreign direct investment: USD 3,269 million, a

10.1% increase to last year

Air Cargo Industry in PRD

Ownerships of the Airports

HK IA MC IA GZ IA SZ IA ZH IA

45% 55%

HK SAR G. MC SAR G.

GZ Provincial G.. SZ Municipal G. ZH Municipal G.

GZ IAGroup Co.

SZ IAGroup Co.

GZ IAStock Co.

SZ IAStock Co.

STDM

54.8% 54.6%

33%55%100%

CAM

HKInternational

Airport

HKInternational

Airport

ZhuhaiAirport

0.6m. tons0.7m. tons1m. tons0.16m. tons3m. tonsCargo Capacity

12 m.16 m.25 m.6 m.45 m.Passenger Capacity

11212No. of runway

ZhuhaiShenzhenGuangzhouMacauHK

Basic Facts of the Airports

Cost of Ground Transportation

0.30.50.50.50.50.50.5GZ IA

0.50.50.50.30.50.50.5SZ IA

0.50.50.50.50.50.50.3ZH IA

GZDGJMSZFSZSZH

Unit RMB/KG

Air vs. Trucking Costs

Trucking costBeijing Shanghai Chengdu

RM

B/k

g GZ IA

ZH IA

SZ IA

0

1

2

3

4

Mill

ion

tons

HK

MC

GZ

SZ

ZH

0

10

20

30

40

50

01 02 03 04 05 06Year

Mill

ion

pers

ons 0

50100150200250300

01 02 03 04 05 06Year

Thou

sand

flig

hts

Current Level of Activities

West PRD

HK

Electronics & parts RMB6.8b.

Mainland

35.3% RMB2.4b.

USA RMB409m.

S.Korea RMB184m.

Japan RMB175m.

Taiwan RMB167.

Singapore RMB161m.

An Example of Air Cargo Flow

-$11b.$13.2b.$6.0 b.$4.5b.Expansion Investment

0.6m. tons-

0.7m. tons1.5m. tons

1m. tons2m. tons

0.16m. tons-

3m. tons4.3m. tons

Cargo CapacityAfter Expansion

12 m.-

16 m.30m.

25 m.40m.

6 m.25m.

45 m.50 m.

Passenger CapacityAfter Expansion

1-

12

23

1-

2?

No. of runwayAfter Expansion

ZhuhaiShenzhenGuangzhouMacauHK

Expansion Plans for the Airports

Ocean Cargo Industry in PRD

HONG KONG

• 80% of container handling involve shipments to and from the Mainland

• 13 out of 100 HK people work in shipping or related fields

• shipping provides 250,000 jobs

• generates HKD $200 billion each year

The Container Shipping Industry

Operators in Kwai Tsing

415.5MTLTerminal 9 South (CT9S)

215.5HITTerminal 9 North (CT9N)

215.5ACTTerminal 8 West (CT8W)

215.5HIT/COSCOTerminal 8 East (CT8E)

415.5HITTerminal 7 (CT7)

312.5-15.5HITTerminal 6 (CT6)

114MTLTerminal 5 (CT5)

312.5HITTerminal 4 (CT4)

114DPITerminal 3 (CT3)

114MTLTerminal 2 (CT2)

114MTLTerminal 1 (CT1)

BerthsDepth (m)OperatorTerminal

MTL:Modern Terminals Ltd.

HIT: Hongkong International Terminals Ltd.

COSCO: COSCO Information & Technology (HK) Ltd.

DPI :Dubai Port International Terminals Ltd.

ACT: Asia Container Terminals Ltd.

Share Holders

Asia Container Terminals, Ltd

HIT/COSCO

Hongkong International Terminals HPH

China Merchants Holdings (International) Company Limited

WHARF

Modern Terminals

DP World

PSA

Hongkong International Terminals

COSCO Group

Kwai Tsing Existing Facilities

86Yard Gantry Cranes

92Quay Cranes

12.5-15.5Water Depth Alongside (meters)

8,500Total Berth Length (meters)

24Container Berths

285 (= 407football fields)

Total Area (hectares)

QuantityFacilities

Kwai Tsing Weekly Shipping Schedule

26Yangon93Dubai31Cape Town 200Rotterdam198Hamburg25Seoul239Tokyo83Los Angeles 213New York

ServicesDestinations

Kwai Chung

US$308

US$274+599

US$2,000

US$3,000

US$680

Yantin

US$130

US$141+579

US$2,000

US$3,000

US$800

Source: HK Port – Master Plan 2020, http://www.pdc.gov.hk/eng/plan2020/pdf/annex.pdf

Shipping Cost Comparison

Japan

Europe

U.S.A.

Japan

Europe

U.S.A.

Cross Border Trucking Restrictions

Share Holders

Yantian International Container Terminals

HPH

China Merchants Holdings (International) Company

Limited

Modern Terminals

Swire

DP World

Shekou

Container

TerminalsModern Terminals

Chiwan

Container

Terminal

Kerry Logistics

China Merchants Holdings (International) Company

Limited

Modern Terminals

Yantian Existing Facilities

24Exit Gatehouse Lanes

27Entrance Gatehouse Lanes

196Yard Gantry Cranes

55Quay Cranes

14-16Water Depth Alongside (meters)

4,418Total Berth Length (meters)

11Container Berths

222 (= 317 football fields)

Total Area (hectares)

QuantityFacilities

Weekly Shipping Schedule Comparison

2693312001982523983213

From HK

2Yangon25Dubai10Cape Town 92Rotterdam96Hamburg5Seoul30Tokyo51Los Angeles 134New York

From YTDestinations

Kwai Tsing & HK Ports Throughout

0.0

5.0

10.0

15.0

20.0

25.0

1995 1997 1999 2001 2003 2005

Kwai Tsing

HK Ports

Mill

ion

TEU

s

Yantain & SZ Ports Throughput

02468

101214161820

1994 1996 1998 2000 2002 2004 2006

YICT

SZ Ports

Mill

ion

TEU

s

18.5

8.9

Dropping Market Share

Source: Study on Hong Kong Port – Master Plan 2020, 2004

Relevant 11th 5-year Plan

• Guangdong will focus on improving 10 key aspects by launching 233 key projects, with a total investment of 1.5 trillion RMB

• Transportation: 62 projects related to highway, railway, ports and airport, with a total budget of 537 billion RMB, among which 418 billion will be input in the next five years

Facility Comparison

35-Exit Gatehouse Lanes

41-Entrance Gatehouse Lanes

28686Yard Gantry Cranes

7192Quay Cranes

14-1612.5-15.5Water Depth Alongside (meters)

7,0478,500Total Berth Length (meters)

1524Container Berths

344 (= 491 football fields)

285 (= 407 football fields)

Total Area (hectares)

ShenzhenAfter Expansion

Hong Kong Facilities

Summary

• Hong Kong, Gaungzhou (GZ), Shenzhen (SZ) are sharing the same logistics catchment area

• Logistics infrastructures in GZ and SZ are catching up

• Optimistic and aggressive development/expansion plans in both GZ & SZ

• Hong Kong, Macau, Zhuhai bridge, terminal No. 10, and logistics park are forever planning

• Hong Kong air cargo industry will experience similar challenges as the ocean terminals

?