8 February 2024 (Lloyd's List) - THE ports under Hong Kong-based terminal operator Hutchison Ports' HPH Trust turned in a poor performance for 2023, indicative of deep changes in the sector.
Overall full-year throughput fell 6% to 21.3m teu while the trust's collection of terminals in Hong Kong port grouped under HPH Kwai Tsing plunged 15% to 7.6m teu.
Volumes at Hutchison Ports Yantian in the neighbouring province in mainland China slid a more modest 1.5% and continued to comprise more than half of overall volumes.
Perhaps best representative of what is seen as the outdated port business model of Hong Kong, the drop in HPH Kwai Tsing's throughput is part of a persistent slide at the erstwhile South China top port since 2021.
This has seen Hong Kong barely hanging on to its place within the top 10 ports in the Top 100 Container Ports while slipping below the 20m teu mark since 2018.
HPH Trust is aware of the market's changes. "In Hong Kong, despite the easing of cross-border controls from late 2022, cargo volume has remained stagnant in 2023 due to the structural change in shippers’ preference to direct shipment in China instead of vessel-to-vessel transshipment via Hong Kong," it said in a results presentation.
And the future does not look bright either. HPH Trust noted that "some of the competition in Greater Bay Area continue to receive government incentives, hence (being) able to offer attractive lower price options to shipping lines".
Meanwhile it anticipates further losses ahead from the recently announced Gemini Cooperation partnership between Maersk and Hapag-Lloyd.
HPH Trust revealed that Yantian has been selected by the alliance as a main port of call in South China, but this will likely be at the cost of current Hong Kong volumes. "HPH Trust will work closely with Gemini Cooperation to identify any new opportunities which the new cooperation may bring," it said.
Geopolitical issues such as the Red Sea attacks were also highlighted as potentially affecting business ahead. Liner schedule disruptions could negatively impact first quarter 2024 throughput, HPH Trust said.
Meanwhile, it warned that port operators are unlikely to see upside from high storage income such as that seen during the pandemic period. This was seen in 2023 with average revenue per teu for Hong Kong and China below the previous year, mainly due to lower storage income and renminbi depreciation.
For 2023, HPH Trust reported a 13% drop in revenue to HKD10.6bn ($1.4bn) which resulted in a 79% fall in profit to HKD233.5m.
