PRD Committee PRD Container Terminals Upriver or Downriver or Lantau Martin Christiansen Maersk Seal

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PRD CommitteePRD Container Terminals Upriver
or Downriver or Lantau?Martin
Christiansen - Maersk Sealand27th February, 2004
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Agenda

• Infrastructure Development
• Structural Disadvantages for Hong Kong
• Market / Demand Outlook
• Terminal Selection Criteria
• Terminal location pros / cons
• Summary

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Lack of unified infrastructure Vision for South
China remain problematic

• One Market Approach missing
• Complex Administrative Structure in the region
  with too many stakeholders
• Current infrastructure plans include
• Shekou Phase IIIII
• Chiwan Phase II, CCT- Mawan,
• YICT Phase IIIB Phase IV
• Da Chan Bay,
• Nansha and HKG CT-10 - PRIORITISATION is
  needed !!
• Hong Kong MUST play a part in the coordination
  within the region, as it is difficult to optimise
  in isolation

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Hong Kong has got some structual disadvantages
that must be resolved to remain competitive...

• Connectivity
• Western Corridor Link will assist but is not
  enough
• Zhuhai/Macau Hong Kong Bridge ?
• Barge Optimisation is needed
• Lack of efficient 24-7 Border Crossings
• Customs Rule Simplification / 24-7 Customs
  handling

• Cost
• Cross Border Trucking Cost Disparity /
  In-efficiencies
• Overall Cost disadvantage (Port Construction
  charges, Port Charges, Total Transportation Cost
  (Trucking, THC Ocean Freight)
• Convergence of cost expected to happen over time
  but not overnight

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The market growth in South China will continue to
be VERY significant

• Significant Sourcing shift from US, Europe and
  South / North East Asia is on-going
• Sourcing of a wider range of products due to a
  continued upgrade of skills
• PRD sourcing now not only for the big
  multi-nationals, medium and small enterprises are
  also moving production
• The end of the quota regime will accelerate the
  migration further
• Y-O-Y container growth for South China in year
  2008 onwards estimated to be at least 4 mill TEU
  p.a.

• Significant infrastructure developments are
  needed to support the growth and avoid
  bottlenecks

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Terminal Selection by carriers are predominantly
done on the basis of

• Cost
• Port Capabilities
• Draft / Waterway restrictions
• Berth Productivity
• Number of Berths available
• Logistics Services
• Port Operator Excellence
• Connectivity / Location
• Distance from Production Market
• Steaming time deviation from Service Schedules
• Connectivity between Strings / Services
• Frequency of vessel calls
• Effectiveness / Ease of Customs Regulations

Impact Low
Impact high
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PRD, NW - Lantau or SW - Tsing Yi location
NW - Lantau
SW - Tsing Yi
PRD

• Low Terminal
• infrastructure cost
• Cost Of Operation
• Location close to
• Production Market
• Customs Regulations
• Experience/Flexibility
• Connectivity/Services

• Connectivity to CT1-9
• Barge Optimisation
• Free port Status
• Flexibility/Experience
• COST
• Distance from
• Production Market

• Connectivity to Zhuhai
• /Macau-HKG Bridge
• Greenfield Operation
• Free port Status
• Split Operation
• Environmental Impact
• High Infrastructure
• cost compared PRD

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Summary

• Do we need the CT 10 Capacity in the Region ?

• YES Absolutely - South China is turning into
  the factory floor of the world and significant
  infrastructure development is needed to support
  the growth

• Is HKG the optimal Location ?

• Structural disadvantages for HKG needs to be
  solved in order for a CT 10 to be competitive
  within the region

• If HKG is chosen as part of an integrated South
  China Strategy where ? Lantau or Tsing Yi ?

• As a carrier - Tsing Yi is the preferred
  location, due to connectivity to existing
  terminal facilities
• Split operation is more expensive and gives less
  flexibility

• What will be the key determining factor whether
  CT 10 ,if constructed, will be successful

• COST and Connectivity to EPRD and WPRD

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Thank You
Q A