Provisional Legislative Council
Economic Services Panel

Lantau Port


The purpose of this paper is to inform Members of the planning for Container Terminal 10 (CT10) and Container Terminal 11 (CT11).


2. Hong Kong is a port-based economy. It was founded as a port for the China trade and throughout its history its economy has depended on the port ' s success and its ability to meet the demand for facilities. The opening up of mainland China ' s economy since 1978 has re-established Hong Kong ' s position as the main port for China trade. Last year (1996) the number of China-related container boxes shipped through Hong Kong amounted to over 8 million TEUs (20-foot equivalent units), which is equal to the combined throughput of all the major container ports in China.

3. On the other hand, the shift of Hong Kong ' s lower value-added labour assembly operations into the South-east Asian region, especially into southern China, has enabled us to develop into a manufacturing support base for the region. The relocation of these labour intensive and lower value-added industries has enabled local manufacturers to expand into higher value-added and ' high-tech ' based manufacturing activities, which in turn support their offshore production activities. This has consolidated Hong Kong ' s position as a regional manufacturing centre.

4. All this has helped Hong Kong become the world ' s seventh largest trading entity. Some 90% of our own trade in volume terms goes through the port, and over 90% of the cargoes from southern China go through our port. Handling that cargo is not only essential to our economy, but it is also essential to support the continued growth and development of southern China ' s economy.

Port Development Policy

5. Since the development of the first container terminal in Hong Kong in the early 1970 ' s, the policy of the Government has been to provide new terminal facilities to match forecast demand. This policy encourages private investment, ensures high capacity and levels of efficiency, optimises the use of limited land resources, and minimises waste.

6. A key element of this policy is the accurate forecast of future port cargo demands. In assessing what additional port facilities we will need in future we have forecast the volume and nature of cargoes likely to be handled in our port. Since it normally takes more than five years from the planning to the commissioning of a new container terminal, our planning horizon for new terminal facilities covers 20 years. In forecasting future demand, we have taken into account such variables as:

  1. the historic and likely future trends in the movement of Hong Kong ' s GDP and those of our major (and mainland China ' s - our main source of cargo) trading partners;

  2. the impact of mainland China ' s continuing modernisation on trends in cargo movement - for example, the economic and industrial growth potential of southern China in general and particularly the Pearl River Delta;

  3. our competitive position in the region; and

  4. the construction and development potential of new ports in southern China in general, and the Pearl River Delta in particular.

7. The strong growth of China ' s economy will continue to exert a huge pressure on ports in mainland China and Hong Kong in the foreseeable future. Our 1995 Port Cargo Forecasts predicted that if all the port projects currently being planned in southern China are completed on time, there will still be a demand for Hong Kong to handle 36 million twenty-foot equivalent units (TEUs) of containers a year by the year 2011. When we look at the future demand for container terminal facilities, we have to look at not only our need but that of mainland China and particularly southern China. The combined throughput of Hong Kong and the Shenzhen ports was over 14 million TEUs in 1996. A modest growth rate of between 8 - 10 per cent a year, which is entirely possible given the strength and momentum of the Chinese economy, will mean that we will need container facilities to cope with an additional 1.1 - 1.4 million TEUs, or two container berths a year, whether these new berths are located in Hong Kong or southern China. The huge base figure of the Hong Kong port means that the recent slow down of the growth rate of the throughput will affect the timing, but not the need for new terminals.

8. If the facilities are not in place to meet that demand, not only will there be congestion in Hong Kong ' s port, the knock-on effect will seriously delay the development of both Hong Kong ' s and mainland China ' s economies given the very heavy reliance on export trade of both our economies. Despite their rapid growth (from a low base figure), the south China ports are still in their very early stage of development. It will take many years before they can expand to a sufficient scale to serve as main international ports. By that time, demand will have grown to require more new port facilities.

9. The following is the forecast of demand for container handling facilities in both Hong Kong and South China ports and the projected share of the demand in the 1995 Port Cargo Forecasts:

Year Projected South
China cargo
Share handled
by South
China ports
Share handled
by Hong
Kong port
Hong Kong ' s
own demand
Hong Kong ' s
total demand
m TEUsm TEUsm TEUsm TEUsm TEUs
200112.764.158.61 14.8723.48
201124.3111.9712.34 23.9036.24

Planning for CTs 10 and 11

10. CT9 will add 2.6 million TEUs handling capacity to Kwai Chung port. This is sufficient to cater for 3-5 years of the forecast growth in demand. We need to continue to plan for new terminals to meet the longer term requirements of both Hong Kong and mainland China. In addition, over 3 million TEUs of our throughput are now handled at mid-stream. This has potential to migrate to terminals. We need to provide terminal capacity for it to do so and to promote competition.

11. When CT9 is completed, the whole Kwai Chung port region will be fully developed. There is no more room for any new terminals. The Port and Airport Development Study in 1989 examined a number of potential sites for further container terminal development and identified that North-east Lantau has the greatest merits compared to the other options. It could share the airport infrastructure and much of the existing port facilities at Kwai Chung. It performed well environmentally and is located away from the habitat of the Chinese White Dolphin. There is an excellent access channel, Lamma Channel, which requires little maintenance dredging. The site can accommodate 17 container berths with the potential to develop up to a total of 24 berths, plus feeder berths to cater for the increasing use of the Pearl River waterways for transportation of containers between Hong Kong and the Pearl River Delta ports. The ample supply of backup areas near the port allows the development of industry parks and other port related industries and services (such as ship repairs). Another advantage of the North-east Lantau site is it has potential to accommodate freight rail facilities. A direct rail link will extend the cargo catchment area of Hong Kong beyond Guangdong and help to accelerate economic development into the interior provinces of Mainland China.

12. Another option considered was West Tuen Mun. The location was considered less favourable than North-east Lantau for container terminal developments because it is exposed to swells and the construction of a breakwater would be expensive. It also has very limited scope for expansion (maximum two terminals of four berths each) and it would require a new channel to the north and west of Lantau Island. The proposed Tonggu Waterway and cross-border links, however, may improve the accessibility of West Tuen Mun. We are liaising with the Mainland authorities on the planning and development of these cross-border infrastructure projects and will review the option of West Tuen Mun for container port development depending on the progress of the Tonggu Waterway and cross-border links projects and the requirement dates for CTs 10 and 11 which are being reviewed in the current Port Cargo Forecasts exercise.

Economic Services Bureau
3 September 1997