Paper for LegCo Economic Services Panel
Container Terminal No. 9

Introduction

This paper informs Members of the agreement reached by the commercial parties and endorsed by the Sino-British Joint Liaison Group (JLG) on the development of Container Terminal No. 9 (CT-9).

The CT-9 Agreement

2. The agreement provides that:

  1. Modern Terminals limited (MTL) would exchange its two berths in CT-8 with Asia Container Terminals Limited’s (ACT’s) two-berth share of CT-9;
  2. in addition to its previous one-berth share of CT-9, and the two exchanged with ACT, MTL would develop and own a feeder berth of up to 310 metres within the CT-9 lot at the area presently intended to be a rubble mound, on the basis that MTL would transfer to HIT 60 metres of quay frontage;
  3. in addition to its previous one-berth share of CT-9, HIT would develop and own a feeder berth of up to 320 metres at the cargo working area north of CT-9;
  4. HIT would be granted by private treaty a site (zoned for industrial and cargo working purposes) of 7.7 hectares adjacent to its feeder berth mentioned in (c) above for container handling, on the basis that HIT would transfer to MTL a site of 3.85 hectares within the CT-9 lot itself; and
  5. HIT would provide a suitable screen building on a site adjoining that mentioned in (d) above, prior to its berths in CT-9 being brought into operation.

3. The agreement, negotiated among the commercial parties concerned, is aimed to achieve two objectives -

    - the elimination of single-berth terminals in CT-9; and

    - the incorporation of a feeder berth in each of the two terminals in CT-9.

Shipping Alliances

4. Two major developments in the world shipping business and in Hong Kong have impacted on the design of new container terminals. The formation of world shipping alliances (for example the Grand Alliance consisting of NYK Line (Japan), Hapag Lyoyd (Germany), Neptune Orient Line (Singapore) and P & O (UK); the Global Alliance consisting of OOCL (Hong Kong), APL (USA), Nedlloyd (Holland), Mitsui-OSK (Japan) and MISC (Malaysia); and the Maersk Line (Denmark) and Sea-Land (USA) Joint Service) has given shipping lines a much stronger bargaining power. The new shipping alliances have larger fleets under their control which enable them to call more frequently at major ports (such as Hong Kong) and to cover more ports in any particular regions.

5. To optimise the efficiency of their fleets, these shipping alliances generally demand container port operators to have more than one berth contiguous with each other in each terminal to ensure that their ships will not be held up or delayed due to the lack of berthing flexibility of a single-berth operator. Since these shipping alliances dominate the international container trade, a single-berth terminal is no longer viable.

Growth of River Trade

6. At the same time, the emergence of new ports in Southern China has increased competition in the regional container trade. The Hong Kong port operators are facing increasing competitive pressure from our neighbouring ports on pricing.

7. The strategic location of the Hong Kong port - at the mouth of the Pearl River Estuary - has given us a distinct competitive advantage.

8. It is not only cheaper to transport containers from the Pearl River Delta to Hong Kong by river barges but it also helps to reduce pressure on the border control points and on the road system both inside China and in Hong Kong and we have seen an average of over 40% annual growth in river trade in the past 3 years. The granting of the right to develop a River Trade Terminal in Tuen Mun in March 1996 will further encourage the shift of container cargoes from the roads to the Pearl River and it is essential for us to provide feeder berth facilities in all new container terminals to enable them to operate in concert with the Tuen Mun River Trade Terminal.

9. We have been able to respond to these new changes in the CT9 agreement by slightly modifying the land use adjacent to CT-9 to enhance the efficiency of the new terminals and minimise the impact on traffic.

Concept of Feeder Berths

10. Feeder berths are extra quay face with a small piece of backup land provided at the container terminal to enable feeder vessels (ie small container vessels plying the intra-Asia routes and river trade vessels) to moor at the terminal, so that the container boxes can be loaded and unloaded directly into and out of ocean-going vessels without going through the road system. It will help reduce container traffic on the road and improve the efficient operation of the terminal. At present, due to the lack of quay face in most of the existing terminals, these feeder vessels have to moor at buoys and anchorages in the harbour and the containers are transferred by barges to mid-stream sites or Public Cargo Working Areas all over the territory. The containers are then hauled to the Kwai Chung container terminals over the roads by container trucks, adding pressure on the roads around the container port.

Traffic and Environmental Consideration

11. An Environmental Impact Assessment (EIA) study had been completed for the original CT9 development. The study concluded that the environmental impacts associated with the proposed development could be contained within established criteria provided that the recommended environmental control measures are strictly implemented. The study recommended noise mitigation measures including a screening building at the north-western end of the terminals, use of quieter container handling equipment, and providing glazed windows and air conditioners to the most affected flats in Cheung Ching Estate. Implementation of the latter measures has already started. The diversion of the existing Tsing Yi Road away from the residential area on Tsing Yi, i.e. Mayfair Garden, onto the reclamation to be formed as part of CT-9 project and the completion of the Tsing Yi Duplication South Bridge and Route 3 (Kwai Chung & Tsing Yi sections) by the time CT-9 comes into operation will also help to improve the traffic situation on Tsing Yi.

12. It should be noted that the capacity of a container berth is constrained not so much by the quay length but by the amount of the backup area available for the stacking and handling of containers. The backup required for a standard container berth is 15 hectares. The backup area available for the two feeder berths in CT-9 is 3.85 hectares each - only 1/4 of that for a standard berth. They cannot operate as stand alone berths and must operate as an integral part of the terminal. Since the southern feeder berth is within the area always intended to be used for the container terminal and the northern feeder berth will replace the Public Cargo Working Area planned for the area, we anticipate similar environmental implications on residential developments to the north-west of the container terminal as predicted in the previous EIA study. Indeed, since their operation is to enable feeder vessels and river trade vessels to moor directly at the terminal for loading and unloading container boxes onto the ocean-going vessels, they will help reduce the additional container road traffic generated by the new terminals.

13. The consortia have carried out additional environmental and traffic impact studies for the present proposed CT9 arrangement, i.e. four standard berths plus two feeder berths. The consortia will be required to undertake a design review to ensure that the project meets all environmental and traffic requirements for Government’s agreement before they are permitted to commence construction work.

Growth of Container Throughput

14. Although the growth rate of container throughput has slowed down this year because of the huge base figure, the actual number of containers going through Hong Kong port is still growing substantially in real terms. We predicted a growth rate of around 7% this year which means that we are handling nearly 0.9 million more containers this year than last year. This is equivalent to the capacity of more than an additional 1 1/2 berths.

Economic Implications

15. The port together with its full spectrum of support services plays an important role in facilitating a wide range of economic activities and provides a large number of jobs. In particular, it is pivotal to the continuing growth and development of manufacturing, import/export trade, wholesale/retail trade, and various trade-related support activities. Indeed, with the migration of the manufacturing industry away from Hong Kong, the port has become one of the major sectors which are able to continue to create a wide range of both skilled and less skill demanding jobs for the mass working population. It will only be in Hong Kong’s interest to continue to provide container terminals to match forecast demand to sustain Hong Kong’s economic growth, maintain the competitiveness of our port, and strengthen our position as an international business centre into the 21st century. We are committed to ensuring the timely completion of CT-9 while paying full attention to address the environmental and traffic issues to minimise the impact of the new terminals on residents living nearby.

Economic Services Branch
18 October 1996

Last Updated on 14 August 1998