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          January, 2016:

          Steadily declining volume drops Hong Kong down global rankings

          Hong Kong slid to fifth place in the global port rankings after another dismal year of declining volumes, with the east Chinese port of Ningbo-Zhoushan stepping into fourth spot.

          The port of Hong Kong has now seen throughput volumes falling for 18 consecutive months, according to preliminary figures from the Hong Kong Port Development Council.

          You need to go back as far as June of 2014 to find a positive throughput growth figure for Hong Kong. In the eighteen months since then, the port has seen an average monthly throughput decline of 7.4 percent. The highest monthly decline of 18.8 percent was recorded in October of last year.

          Port Development Council figures show Hong Kong handled 20.1 million 20-foot-equivalent units in 2015, a drop of 9.5 percent over the previous year, while Ningbo-Zhoushan recorded a throughput of 20.6 million TEUs.

          Preliminary figures show Shanghai was the busiest container port in the world last year, handling 36.5 million TEUs, followed by Singapore (30.9 million), Shenzhen (24.2 million), Ningbo-Zhoushan (20.6 million) and Hong Kong (20.1 million).

          Singapore also had a miserable 2015, with full year throughput volumes falling 8.7 percent. The Maritime and Port Authority of Singapore (MPA) blamed the decline on weak Asia-Europe volumes, the rebalancing of volumes across alliance agreements, and an increase in direct sailings due to low bunker prices.

          To increase competitiveness the MPA has reduced the fees it charges container lines by 10 percent, while terminal operator PSA said it is working with customers to help them lower operational costs by enhancing productivity.

          The South Korean port of Busan, the sixth-busiest container port worldwide last year, handled 19.45 million TEUs, representing growth of 4 percent. The port managed to expand its transshipment business to 10.8 million TEUs, 52 percent of total volumes, and stated its ambition to overtake Hong Kong as the world’s second-busiest container transshipment hub.

          Busan took measures last year to simplify the business environment for foreign shipping lines, including issuing bills for port charges in English as well as Korean, which eliminates the need for foreign lines to use agencies to translate details of the charges. According to an announcement by South Korea’s Ministry of Oceans and Fisheries, fees for ships entering, departing and cargo handling at Busan will not be increased this year and will be reduced by 70 percent by 2019.

          Ningbo-Zhoushan is also targeting transshipment business as a strategy to insulate itself from the effects of a slowing domestic economy. The port opened a transshipment operations center last year and stepped up development and coordination with major carriers, leading its transshipment traffic to increase by 22 percent to more than 4 million year-over-year from January to November last year.

          Terminal operators in Hong Kong are pressing the government for assistance to improve competitiveness. A major issue they face is a rule that prevents mainland truck drivers from driving over the border into Hong Kong, which means when trucks reach the border, the driver has to switch to one holding Hong Kong residency.

          The lack of back-up land in the container yards is another major issue. The government released a proposal to integrate 15 hectares (37 acres) of adjacent back-up real estate to build out new yard space and barge berthing facilities, but terminal operators say it is a case of too little, too late.

          Hong Kong’s decline as a container shipment hub could be exacerbated if a proposed relaxation in cabotage laws in mainland China comes to fruition. Protection of Hong Kong’s role as a transshipment hub is believed to be one of the primary reasons for continuing restrictions on cabotage in the mainland. With cabotage protections in place, Hong Kong remains attractive for handling mainland China-related transshipment cargo, which in turn sustains its competitiveness in handling transshipment cargo for other trade routes.

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