HONG KONG AWAKENS

HONG KONG AWAKENS

ontainer traffic at Hong Kong rose 8 percent last year, to 15.75 million TEUs, probably enough for the port to regain the No. 1 title it lost to Singapore a year earlier. Plans are well in hand for the next container terminals. And with the strong recovery in Asian economies, all looks set for smooth sailing after a scare.

The regional economic crisis appears to have shaken the complacency that long characterized Hong Kong's attitude toward its superefficient - and expensive - port operation. And that is no bad thing.First floated on the mainland last year, the idea of jointly promoting southern China and Hong Kong as a single port entity now seems to be gaining ground. Nothing concrete has been proposed, but a concept something along the lines of the bistate Port of New York and New Jersey will probably be the starting point.

New York-New Jersey also gives considerable attention to rail and road connections - not to mention airports - and there has been no strong suggestion of that in the case of Hong Kong and its rapidly growing southern neighbors such as Shenzhen and Zhuhai. There should be; they are integral parts of the transport process.

Hong Kong's marine terminals are privately owned and operated, which accounts for the high costs - as much as 30 percent more than those just across the border, by some estimates. Only this week another meeting among carriers, shippers and terminals ended inconclusively with shippers arguing that Hong Kong is losing business and the lines just as stoutly denying it, or at least saying that it's not their fault.

The government of the Hong Kong Special Administrative Region stepped gingerly into the long-simmering row last year as a referee. That unusual intervention in the private sector did win a one-year freeze on terminal handling charges, but not the reduction sought by shippers and some carriers.

The government's action also rang alarm bells within the transport sector and more widely about whether the administration would abandon its decades of successful laissez-faire.

That seems unlikely. The government of Tung Chee-hwa has other things to worry about. Moreover, Tung is a veteran of the shipping industry, where he was head of Orient Overseas Container Line Ltd., Hong Kong's largest carrier. And he knows a siren song when he hears one.

The Hong Kong Port and Maritime Board is sending a delegation to Japan and South Korea this month to promote Hong Kong as a premier shipping hub, as it did last year in the United States, the Netherlands and Britain. It will include people from the industry - and that kind of assistance shouldn't alarm anyone. Indeed, it should be welcomed as enlightened and for the greater good. After all, Hong Kong's maritime sector is a huge contributor to the territory's battered economy.

Public and private interests are right to be paying more attention to the waterfront: China's young and bustling ports are steadily drawing business away, largely on cost grounds, but in some cases because the logistics are better.

The clutch of terminals at the Port of Shenzhen just across the Special Administrative Region's border saw business jump 47 percent last year, to 2.95 million TEUs. It's a long way short of Hong Kong's towering figure, to be sure. But average growth over the last two years at some Shenzhen terminals has been 60 percent.

Meanwhile, however, Hong Kong's terminal operators haven't been idle. Hongkong International Container Terminals Ltd. and Modern Terminals Ltd. each have operations across the border and are expanding there. One obvious spur for such expansion was to protect bottom lines; business diverted from Hong Kong to a Hong Kong-run terminal on the mainland ensures that at least some income is retained.

At the same time, however, the existence of such operations will accelerate the drift northward. HIT and MTL's terminals are very efficient, and they will introduce all that technology and expertise to China, where wages are considerably lower. That is going to lure more shippers and lines to the Chinese terminals.

The Chinese ports do have some problem with lack of readily available land for physical expansion, and there are signs of congestion. Hong Kong also retains an edge as container ships get ever bigger, since its harbor can handle them easily; some of the Chinese ports won't be able to do that without extensive dredging and reclamation.

But resting on laurels has never been a recommended strategy. In a world where things are changing in a New York minute, such a shortsighted approach quickly develops into an albatross. Like Coleridge's Ancient Mariner, Hong Kong's maritime industry now seems to be casting every which way as it seeks a sound policy for the new century. That's good. It can't afford to wait any longer.