Provisional Legislative Council Panel on Transport Future of Waterborne Transport

INTRODUCTION

This paper discusses the future role and development of ferry services in Hong Kong.

GOVERNMENT's FERRY POLICY

2. Ferries provide an essential link to the outlying islands where land transport alternatives are not available. They also provide a useful alternative between Central and the New Towns. In the inner harbour, ferries play a supplementary role.

3. Ferry services in Hong Kong are mainly provided by two franchisees - Hongkong and Yaumati Ferry Company Limited (HYF), and Star Ferry. HYF operates a network of 13 routes and Star Ferry runs a network of 3 inner harbour services. Franchises are granted by the Executive Council.

4. On the other hand, a ferry operator may be granted a right to operate a ferry route in the form of a licence. Licensed ferry services cater for demand that does not justify enfranchising the routes, e.g. non-essential services, recreational services and special services such as vehicular services for dangerous goods vehicles. Licences are granted by the Commissioner for Transport. At present, there are 21 regular licensed ferry services and 87 "kaito" routes serving remote coastal villages. The franchised and licensed services (excluding "kaito" routes) together carried 200,000 passengers a day in 1997 (Annex A).

5. In view of the rising operating costs and declining patronage, ferry franchisees have been facing great financial difficulties. The Administration has conducted a thorough review of the existing franchised networks to identify means to enable operators to make the best use of available resources to maintain and improve essential ferry services. The review has resulted in the cancellation of some of HYF's non-essential routes so that the Company may deploy resources to maintain and improve essential services to the outlying islands. The non-essential routes excised from the network, where justifiable, will be tendered out as licensed services to let market forces determine the value of their continued existence, their service and fare levels and scale of operations.

FUTURE ROLE OF FERRIES

6. With the continued development of road and rail infrastructure, the role of some of the ferry services is expected to change in the foreseeable future -

1. Routes serving Mui Wo and Discovery Bay - These will cease to be essential with the completion of the Mui Wo-Tai Ho road link and the Discovery Bay Tunnel. However, continuation of the passenger services to Central will provide useful links relieving pressure on the road system.

2. Routes serving Western New Territories - Their role in providing alternatives to congested land routes will diminish after the completion of the Airport Railway, Route 3 and the West Rail.

7. Ferry services could play a useful short-term role in case of any mismatch between the completion of residential developments and adequate road infrastructure, e.g. coastal services operating between Central and the eastern part of Hong Kong Island before the completion of the Island Eastern Corridor. Similar situations may arise in the case of some future housing developments, e.g. in Telegraph Bay before the completion of Route 7.

CONSTRAINTS IN DEVELOPING FERRY SERVICES

8. Compared with other public transport modes, ferries face a number of operational disadvantages which exert pressure on their commercial viability and limit the scope for their expansion.

Declining Competitiveness

9. Unlike buses and railways with en-route stops, ferries operate between two fixed points. This limits their catchment area and passenger base. Although public transport interchange facilities are provided near ferry piers as a matter of policy, their effectiveness in enhancing the attractiveness of ferry services is constrained by the additional time, fare and inconvenience involved in interchanging. Adding calling points would not help either as it would lengthen the journey time considerably.

10. In addition, the following developments affect the competitiveness of ferry services -

1. New road and rail infrastructure - increasingly comprehensive and efficient road and rail networks, and the associated expansion of land-based public transport, continue to abstract ferry passengers.

2. Harbour reclamation - piers are affected by harbour reclamation and need to be relocated to newly reclaimed land before the surrounding areas are fully developed. The longer walking distance and reduced convenience inevitably lead to a drop in patronage on the affected ferry routes.

3. Speed restrictions inside harbour - the increasing volume of marine traffic calls for tighter speed restrictions inside the harbour for safety reasons. This increases the journey time of ferry services which makes them less attractive.

4. Little Incentive to improve - without reasonable financial returns and attractive prospects, ferry operators are unable to invest on improving the quality of their services to meet the rising expectations of the public. This leads to a further drop in patronage and results in a vicious circle.

High Operating Cost

11. Ferry services are costly to operate. On a per seat per year basis, the capital cost of a high-speed ferry is four to six times as high as an air-conditioned bus (Annex B). The number of operating crew required is also considerably more.

Costly Pier Facilities

12. Piers and the associated public transport interchange facilities are costly and take time to construct, e.g. a one-berth pier costs about $50 million and its construction takes two to three years. Construction of new piers is only justified if there is a strong demand for expansion of ferry services. On the other hand, the shortage of piers at prime locations limits the potential of future development of ferry services. This results in another vicious circle.

FUTURE DIRECTION

Improvement Measures in the Immediate Term

13. Ferries will continue to provide essential transport services for the outlying islands. These services have to be maintained and further improved. In this regard, the Administration has been negotiating with HYF on a pier development package at Central Reclamation so that profits generated from the pier development could be used to improve essential ferry services to the outlying islands and to reduce the pressure on future fare increases. The proposed improvements include the purchase of faster vessels and the provision of air-conditioning at the Central piers.

14. Apart from providing essential links to the outlying islands, ferries can play a useful role in relieving pressure on the road system and providing an alternative to congested land routes, including temporary road congestion in case of any mismatch between the completion of residential developments and road infrastructure. However, the short-term demand for such services makes the operations commercially not viable. To provide for stop-gap services, the Administration would explore whether public landing steps or pontoons could be used where there are suitable sites with appropriate landside facilities.

15. In addition, the Administration is exploring means to improve the commercial viability and attractiveness of ferry services. These include -

1. increasing the source of non fare-box income, e.g. encouraging more commercial concessions at piers;

2. granting exemptions to speed limits within the harbour;

3. upgrading facilities at piers and their adjoining areas, e.g. Yung Shue Wan pier;

4. planning commercial and residential developments above and in the vicinity of ferry piers to attract more passengers; and

5. providing convenient covered pedestrian walkways to ferry piers.

Long Term Development

16. At the macro level, the Administration is examining in detail the market niche for waterborne transport and the role of ferry services in the context of the Third Comprehensive Transport Study, having regard to the future population distribution and travel pattern. The study is due to complete in early 1999. At the district level, the Administration will conduct traffic and town planning studies to review the need for ferry services in individual districts, including the feasibility and usefulness of ferries in providing relief of road congestion. An example is the planning study on Hong Kong Island South and Lamma Island.

Transport Bureau
February 1998

Annex A

(page 1 of 2)

List of Existing Ferry Services

Franchised Services

Cross-harbour Services

1. Edinburgh Place - Kowloon Point

2. Wan Chai - Kowloon Point

3. Edinburgh Place - Hung Hom

4. North Point - Hung Hom

5. North Point - Kowloon City

6. North Point - Kwun Tong

7. Wan Chai - Hung Hom

8. Central - Tsim Sha Tsui (East)

New Town Services

9. Central - Tuen Mun

10. Central - Tsuen Wan/Tsing Yi

Outlying Islands Services

11. Central - Cheung Chau

12. Central - Mui Wo

13. Central - Peng Chau

14. Central - Yung Shue Wan

15. Central - Sok Kwu Wan

16. Peng Chau - Mui Wo - Chi Ma Wan - Cheung Chau

Licensed Services

Passenger Services

1. Central - Discovery Bay

2. Aberdeen - Mo Tat - Sok Kwu Wan

3. Peng Chau - Hei Ling Chau

4. Discovery Bay - Mui Wo

5. Ma Liu Shui - Tap Mun

6. Cheung Chau - Yi Long Wan

7. Central - Yi Long Wan

8. Central - Pak Kok Tsuen

9. Wan Chai - Tuen Mun

10. Central - Gold Coast

11. Central - Tsing Lung Tau

12. Aberdeen - Ap Lei Chau

13. Sai Wan Ho - Sam Ka Tsuen

Vehicular Services

14. North Point - Kwun Tong (dangerous goods)

15. North Point/Kwun Tong - Discovery Bay (including dangerous goods)

16. North Point/Kwun Tong - Mui Wo (including dangerous goods)

Recreational Services

17. Joss House Bay - North Point

18. Kowloon Point - Mui Wo/Cheung Chau

19. Central - Tuen Mun - Sha Lo Wan - Tai O

20. Tsuen Wan - Tuen Mun - Sha Lo Wan - Tai O

21. Ma Liu Shui - Tung Ping Chau

Annex B

Comparison of Capital Costs
and Staffing Requirement of Ferry and Bus

	Carrying Capacity	Capital Cost	Capital Cost per Seat per Year	Staff Required on Board
Ferry
· Catamaran1	500	$45.0M	$6,000	7
	200	$6.5M	$4,640	3
· Triple-decker2	1,500	$55.0M	$1,220	8
Air-conditioned Bus3	130	$2.0M	$1,100	1

Note :

^1.Life span of a catamaran of 500 seats is 15 years, that of a 200-seater is 7 years.

^2.Life span of s triple-decker is 30 years.

^3.Life span of an air-conditioned bus is 14 years.