Introduction

Hong Kong Port (HKP) and Shenzhen Ports (SZP), No. 3 and 4 container ports in the world respectively, are the two major ports of the Pear River Delta (PRD) port cluster. Between them, HKP’s share for container cargos was 95.8% in 1996. While the number of TEU through HKP has been increased from 13,460,000 to 23,539,000, its share has been going down every year to 56% in 2006 in just over a 10-year period. HKP’s competitiveness for container cargos from PRD is significantly weakened due to the rapid rise of SZP. Facing such a challenge, there have been many discussions and studies in Hong Kong on how to strengthen HKP’s competitiveness and maintain its leading position in market share. Recently, Zhang Xiaoqiang, deputy chairman of the State Development and Reform Commission (发改委) said in Hong Kong that Hong Kong should rethink its pursuit of shipping-center status, and it is reasonable for Guangdong to build more container terminals and for Hong Kong to focus more on high-end logistics services (South China Morning Post, 22 June 2007). Regardless whether his speech was an official position of the central government or whether his advice was a right one, the future seems certain: HKP will not retain its leading position in terms of market share and Hong Kong as a world premier shipping and logistics hub cannot forever endowed mainly by container cargos from South China. The questions we really should ask ourselves are: What should be a comfortable market share for shipping and logistics to continue to be one of the economic pillars for Hong Kong? What will be the market equilibrium in the Hong Kong and PRD region (HK-PRD) 10 years down the road? What are the measures that the government(s) and industries should take to align the two different market shares, if they are different? What should Hong Kong do to sustain and prosper as a world shipping and logistics center? The proposed project intends to address these crucial questions scientifically. We will conduct a thorough demand and supply analysis for container cargo services in HK-PRD using both qualitative and quantitative methods. Based on the collected data and forecasting, we will then construct econometric models to predict the market equilibrium among HKP, SZP, and Guangzhou Ports (GZP). Supplemented with qualitative analysis and judgment, we will then identify issues that the Hong Kong government and industry should address to position Hong Kong strategically with the new reality. We will also explore areas of cooperation between Hong Kong and PRD and identify possible policy changes in Hong Kong, Guangdong, and the Central Government that can facilitate the corporation. We expect that the outcomes of the proposed project will generate significant impacts on the local and regional economic welfares. It should also contain interesting academic research issues, e.g., a market allocation model that captures the unique features of competition and cooperation among multiple ports whose behaviors are influenced by firms that are stakeholders of more than one port. Furthermore, an important mission for C.Y. Tung International Center for Maritime Studies as well as other existing and planned PolyU internal research centers is to play a leading role in the years to come to provide economic forecasting and policy analysis for the local and regional governments and industries. The expertise, know how, methodologies, and professional and industrial connections developed from this project will be a major asset and driving force for this mission.

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