It is a move that could make or break Hong Kong’s port standing among other prominent ports in the world. The government of Hong Kong is contemplating putting into force a new law which in its current form will render all vessel sharing alliances illegal. A law that fails to take into consideration the workings of the shipping industry with regards to vessel sharing agreements (VSAs).

 

Sources from top shipping companies not in favor of the proposed law claimed that VSAs or other operational sharing agreements facilitate the movement of about 95 percent of containers that either enter or leave Hong Kong. To term the competition ordinance problematic for the country itself would be an understatement.

 

A port which once topped the world’s busiest ports list has been hit and hard in the recent years. Statistics indicated that the country is witnessing a double digit decline in container throughput. Container traffic decline can be put at 9 percent year on year. The danger could not be more pronounced for Hong Kong which went from being a port that directly handled China exports to a major transshipment hub. Which means the cargo being handled by the port is highly portable and could move base to Shenzhen.

 

These disturbing developments fail to deter Hong Kong’s Competition Commission which is expected to be done with the final preparations soon. Breaching this far-reaching law would mean substantial non-compliance penalties. 10% of the turnover is what container shipping companies failing to comply with regulations outlined will have to shell out.

 

Several container shipping companies have tried to reach out to the Hong Kong government to make room for VSAs exemptions. China, the U.S and Europe have laws that make room for VSAs to operate. The Commission did indicate that it understood the concerns of various industry segments and will consider including block exemptions under the rule.

 

With its market share of direct exports indicating a worrying decline, Hong Kong can scarce afford a maritime law that will work against it instead of for it.

 

References:

 

http://www.joc.com/maritime-news/hong-kong%E2%80%99s-new-competition-law-threatens-outlaw-liner-shipping_20150611.html

http://www.joc.com/port-news/second-month-double-digit-decline-hits-hong-kong-port_20150517.html