When planning to enter Hong Kong’s maritime trade, it is beneficial to engage with an experienced service provider. Paul Hype Page has worked with clients in the maritime and logistics sector. We can link you up with the right target market and provide relevant insights to help you grow your business.
The Hong Kong Maritime Industry
Hong Kong has established itself as a premier International Maritime Centre that is home to one of the world’s largest shipping communities, with roughly one-tenth of the world’s merchant fleet, and a vibrant maritime cluster offering a complete range of high-quality maritime services. It has the advantage of a well-established port infrastructure that is strategically located. It is a major international trading hub with a significant amount of logistics-related transport.
In 2018, Hong Kong overtook London for the first time in four years to occupy the second spot in the global shipping center index. It was ranked the seventh busiest container port among 160 economies in the world with Shanghai and Singapore respectively at the top.
Hong Kong unveiled remote-controlled, rubber-tired gantry cranes and the automated container stacking systems for Container Terminal 9 North in Tsing Yi. This technology upgrade is expected to reduce carbon emissions, thus creating cleaner environments for operations.
- Ship management
Ship management includes organizing crew and supplies, dry-docking, maintenance, and regulation compliance.
Shipbrokers provides service in ship chartering and transactions. They help ship cargo owners to find the best ship for a voyage and complete charter. They are also responsible for monitoring the implementation of voyage instructions, payments, preparation contracts, and related documents. They seek employment for ships and negotiate favorable shipping rates and routes for their clients.
- Shipping finance
Shipping finance involves sales, leaseback transactions, and other related services. Ship finance service providers engage in the loan documentation for credit applications, which require shipping risk analysis and industry intelligence. An example is shipping banks which provides ship owner with financial services such as currency and payment system management. An example of such banks is HSH Nordbank and Credit Agricole.
- Maritime insurance
For ships and cargo to complete a voyage, they must be insured. Insurance brokers help ship buyers identify the risks and tailor the suitable insurance coverage. As of March 2019, there were 89 authorized ship insurers in Hong Kong with 35 being foreign insurers. Hong Kong is a hub for protection and indemnity (P&I) insurance which is a form of insurance that involves third-party liabilities and expenses arising from ownership or operation of ships.
Maritime law/legal services
The Hong Kong Maritime Law Association was established in 1978 and consisted of maritime lawyers, ship-owners, and organizations & individuals involved in the maritime sector. The legal services for the maritime sector cover maritime casualty and commercial shipping activities. Commercial services covered include ship finance, contracts for shipbuilding, and transactions. Maritime lawyers specialize in Admiralty Law work for ship owners, charterers, and cargo owners. The High Court has specialist lists to deal with admiralty disputes with its own Admiralty Court judge.
Hong Kong is a major maritime arbitration center in the region. Shipping disputes are resolved through arbitration or mediation.
Success Factors of the Hong Kong Maritime Industry
Developments in the container terminals and the rising demand for inland river transport. The government supports the maritime sector through initiatives and incentives. The Hong Kong Special Administrative Region Government (HKSARG) proposed objectives and arranged with trading partners to avoid double taxation on income derived from international shipping operations. This improves the maritime industry’s competitiveness and thus helps the country to position itself as a global maritime sector.
The low tax regime and strong institutional environment, as well as the cluster of maritime services, make Hong Kong a preferred choice for foreign vessel owners.
Tax planning take advantage
A well-established port which is strategically located is responsible for high value-added & professional maritime services and fostering talent development, thus propelling Hong Kong as an international hub.
With enhanced integration between Hong Kong and other cities under the Greater Bay Area (GBA) development, the port is likely to gain a new lease of life as being part of the major Southern China port cluster. Under the GBA plan, it plans to consolidate and enhance Hong Kong’s status as an international maritime center and support its development of high-end maritime services.
What affects the maritime industry in Hong Kong?
The significant developments and expansions in the Chinese maritime sector and the growth of the Chinese alternative modal transport with Western areas have restrained the growth of the Hong Kong industry.
The registration fees collected from ship registration has not been directly allocated to the marine department. The money is supposed to improve facilities and increase the workforce.
The Sino-US trade war exposes the international shipping market to greater uncertainties and risks of a downward trend. Hong Kong suffered a drop in container throughput in 2018, falling from the fifth position to the eighth in the world.
Importance of Maritime Industry
- The maritime industry offers low-cost and efficient maritime transport, especially in developing countries.
- Shipping ensures a more evenly spread of the benefits of trade and commerce to most parts of these countries.
- The industry provides various job opportunities for aspiring marine professionals.
Joining the Maritime Industry
Youths aspiring to be seafarers should first choose to work in the deck or the engineering departments. By obtaining professional qualifications and accumulating experience, the crew members of local vessels, river trade vessels, and seagoing vessels may be gradually promoted to higher ranks in a well-planned manner.
Those aspiring to operate local pleasure vessels for a living should obtain the required qualifications for the Pleasure Vessel Operator Certificates of Competency.
Joining Maritime Department is open to crew members who have appropriate professional qualifications and have accumulated sufficient experience for careers such as pilotage, ship management, maritime law, surveying. The professional grades in the Maritime Department include Marine Officer, Surveyor of Ships, and Shipping Safety Officer.
Historical Changes in the Port and Shipping Industry in Hong Kong
Shipping is a major contributor to total global carbon dioxide emissions. In recent years, various operational and technical measures have been put in place to counter this problem.
The port and shipping industry has experienced three development stages: rapid growth from the 1970s – 1990s, solid growth from 2000 – 2005, and slow/sluggish growth from 2006 – 2015. Hong Kong’s maritime roots are tied to its role as a conduit for trade even from the 1800s because of its strategic location at the southern tip of China and because of its natural deep-water harbor.
From 1972 to 2012 the port is said to have expanded to 18 times its original size compared with a growth factor of 10 in Singapore. Containers throughout Hong Kong and Singapore were similar between the 1980s and 1990s. But in the 2000s Hong Kong was dominating the world stage in terms of container volumes as mainland China opened its economy and became the world’s factory. At that time ports in Yantian, Nansha was not well developed, and they did not have the systems and laws to support shipping; therefore, the manufacturing industries shipped everything to Hong Kong, and then out to the rest of the world contributing to the rapid growth of the port.
For ten years, the government did not implement measures to stay competitive. It was content at being the world’s best thus during the second half to the 2000s it lost pace being forced out of first place by Singapore followed by Shanghai which has remained the world’s best since.
If you are interested in starting your maritime business in Singapore, feel free to consult us as well. Paul Hype Page has the experience you need in establishing your company and connect you with the specific target markets to meet your needs.
Maritime is an international industry with markets all over the world. Building various hubs around the ASEAN region will be of utmost importance for your business to prosper. Speak to our consultants today if you are interested in incorporation in both Hong Kong and Singapore.
Covid-19 and the Maritime Industry
Coronavirus restrictions mean that thousands of seafarers are unable to return home. The seafarers manage the merchant ships that keep the global trade flowing. These seafarers are working extended periods, risking their well-being and the supply chain. After months at sea, stress, fatigue and time away from loved ones are taking its toll.
The Future of Maritime In Hong Kong
Under the GBA plan, the government will inject funds into the Maritime and Aviation Training Fund to nurture talents for the sectors and introduce tax measures to promote the development of ship leasing and marine insurance businesses.
The industry is also embracing technologies to address ongoing management challenges and improve efficiencies. Truck platooning is being tested in which a series of automated trucks will follow a lead vehicle and travel closely together, thus achieving a smoother traffic flow.
Maritime Industry in Hong Kong FAQs
Hong Kong, Shenzhen, Zhuhai, Macau, Guangzhou, Zhongshan, Foshan, Huizhou, Dongguan, Jiangmen, and Zhaoqing are part of the “Greater Bay Area” plan as initiated by China’s government.
Both Hong Kong and Singapore have their strategic location along the maritime trade routes and choosing which location depends on the target market of your business. Hong Kong ports allow faster trade to China markets, while Singapore ports allow more networking opportunities for international maritime businesses.
The GBA plan allows the Hong Kong government to providing training funds for future talents that are keen to join the maritime industry.
The maritime industry provides low-cost and efficient maritime transport, especially in developing countries. The export and import business will be able to maximize their profits by transporting their good via maritime routes.