Study urges Hong Kong to lower logistics costs

Study urges Hong Kong to lower logistics costs

To shore up the dominant position it still maintains as China's premier port, Hong Kong needs to reduce the cost of getting goods to and from its port, according to an article in the current issue of the McKinsey Quarterly.

Its authors, T.C. Chu, Alan Lau and Nicholaus C. Leung, urge the government to first tackle the inefficiencies of getting cargo into the port by lifting some of the barriers that make it difficult or expensive for shippers to transport their goods there. They say that pricing, capacity and competition at the port itself are secondary to these logistical barriers. Poor utilization is one reason for the high cost of trucking. While trucks that carry goods from Dong-guan to such rival ports as Yentian or Shekou-Chiwan can make two or three round trips a day, those going to Hong Kong can only make one because of the long waiting times at internal borders.

Other factors include the high wages of Hong Kong truckers since mainland truckers are not allowed to transport goods into Hong Kong.

While the Hong Kong Government and Hong Kong Shippers Council have suggested reducing terminal charges or building new container terminals, those charges only account for 10 percent of total logistics costs. The authors say that Hong Kong has enough terminal capacity and that additional capacity could be satisfied by making existing terminals more efficient.