April 30, 2026 | 15th Five-Year Plan | Economics
The spring of 2026 saw tensions running high in the Middle East and the Strait of Hormuz under constant blockade. With that, the shipping industry has once again captured global attention. As a long-established international shipping hub, Hong Kong’s maritime trade flourished in the 1980s, but cargo throughput and global rankings have declined gradually since 2008. In 2023, Hong Kong’s container terminal throughput fell out of the global top 10 for the first time (according to global port throughput data released by the international shipping research firm Alphaliner, Hong Kong’s port throughput in 2023 was approximately 14.34 million TEUs, a year-on-year decline of 14.1%). The Hong Kong Reform Institute sat down with Mr. Zheng Yang, shipping industry expert, to discuss the challenges and opportunities facing Hong Kong’s shipping industry.
Q: What accounts for the continued decline in Hong Kong’s shipping throughput in recent years?
A: Hong Kong’s shipping industry has long centered on transshipment operations. The decline in throughput stems from multiple factors, which can be examined from two perspectives: foreign goods imported into the mainland via Hong Kong and mainland goods exported overseas via Hong Kong.
First, the volume of foreign goods transshipped through Hong Kong to the mainland has been significantly affected by the relaxation of the mainland’s cabotage policy. The cabotage policy determines whether foreign-flagged vessels are permitted to engage in maritime transport between domestic ports. Prior to 2013, China essentially prohibited foreign-flagged vessels from engaging in maritime transport between mainland ports, but Hong Kong-flagged vessels were exempt from this restriction and could operate between mainland ports. In other words, due to legal constraints, foreign-flagged vessels had to undergo transshipment in order to bring goods to the mainland, which created a large number of transshipment business opportunities for Hong Kong. However, following the cabotage policy’s gradual relaxation since 2013, in pilot regions such as the Shanghai Free Trade Zone, Chinese-owned foreign-flagged vessels (i.e. vessels owned by Chinese companies but flying foreign flags) have been permitted to conduct coastal transshipment operations directly on designated routes. Since then, the volume of foreign goods transshipped through Hong Kong to the mainland has been significantly affected.
Second, the demand for exporting goods from the mainland to overseas destinations via Hong Kong has also decreased with the rise of multiple mainland ports (such as those in the Pearl River Delta and Shanghai). Since these mainland ports are often closer to production sites, designed for easy entry and exit of large-tonnage vessels, equipped with automated loading and unloading, and offer lower costs than Hong Kong, some mainland businesses have chosen to export directly from mainland ports to overseas markets. Consequently, the volume of mainland goods exported via Hong Kong has dropped substantially compared to previous years.
Q: How can Hong Kong’s shipping industry improve its competitiveness?
A: Enhancing port automation and digitalization, building a comprehensive shipping ecosystem, and actively cultivating and attracting talent are effective ways to boost competitiveness.
Since many of Hong Kong’s port facilities were developed in the 1970s and 1980s, their level of automation lags behind that of newer mainland ports (such as Nansha Port in Guangzhou and Yangshan Port in Shanghai). Furthermore, due to land constraints, it is difficult to achieve full automation. A more feasible approach for Hong Kong is to focus on introducing suitable technology in core operations (such as crane operations) to improve terminal efficiency, building comprehensive and user-friendly digital logistics platforms, and continuing to maintain advantages such as fast customs clearance in order to attract container ships to Hong Kong. In fact, the Hong Kong Government just launched a new Port Community System earlier this year to provide real-time tracking of cargo by sea, land, and air. Currently, over 3,000 companies have registered to use the system, which should see continued improvement along the way.
At the same time, it is essential for the Hong Kong Government to continue supporting green transformation of ports and vessels. According to the targets set by the International Maritime Organization (IMO) in 2023, the international shipping industry should achieve net-zero greenhouse gas emissions by around 2050. Currently, the Hong Kong Government has announced port fee waivers for vessels using or carrying green fuels, and offers incentives to green-fueled vessels registered in Hong Kong. In March this year, Hong Kong completed its first green methanol bunkering operation. Further improving the support infrastructure for green fuel bunkering and related services will enhance the appeal of Hong Kong’s ports to world-class vessels.
Second, building a comprehensive shipping ecosystem is crucial for the sustainable development of Hong Kong’s shipping industry. Terminals, shipping companies operating scheduled or tramp routes, and maritime services are all indispensable components of this ecosystem. Although Hong Kong’s cargo throughput is significantly lower than it was in previous years, the ports still play a vital role in driving the Hong Kong economy and ensuring the stability of industrial and supply chains. As such, land designated for the terminals should not be reduced indiscriminately.
As for shipping companies operating scheduled or tramp routes, they work complementarily with the terminals, and contribute to Hong Kong’s trade and financial sectors too. For these companies, Hong Kong offers cost and efficiency advantages in terms of material procurement and supply, but the shortage of specialized talent and high operating costs are persistent challenges. Addressing these industry concerns will help these companies stay and grow in Hong Kong.
Proactively developing maritime services is clearly beneficial to Hong Kong in maintaining and furthering its status as an international shipping center against the backdrop of declining cargo volumes. Maritime services are diverse, encompassing areas such as ship management, shipbroking/chartering, classification societies, as well as ship financing, maritime arbitration, marine insurance, maritime education, maritime consultancy, and accounting services. Currently, Hong Kong has the world’s fourth-largest ship register, and is the second-largest maritime P&I insurance center as well as one of the four major international maritime arbitration centers. Introducing further policies to encourage the development of these high-value-added businesses and stepping up efforts to attract relevant companies and institutions to operate in Hong Kong will contribute to the high-quality development of Hong Kong’s economy. Focusing on building a comprehensive ecosystem encompassing ports, shipping enterprises, and maritime services will help revitalize Hong Kong’s shipping industry and elevate this traditional sector to new levels.
Third, the cultivation and recruitment of talent are crucial for enhancing the competitiveness of Hong Kong’s shipping industry. At present, a major challenge that shipping enterprises and maritime service providers face in Hong Kong is a shortage of talent. Local talent with relevant academic qualifications and work experience in shipbuilding or the maritime industry more generally is virtually depleted. To address this shortage, in addition to supporting shipping enterprises to recruit international talent, efforts should also be made to encourage the recruitment of talent from the mainland, while ensuring proper qualification recognition and alignment. In fact, mainland China’s shipbuilding industry is at the forefront of the world in terms of both technology and production capacity, and smart port operations are flourishing. Talent from these sectors on the mainland could play a catalytic role in advancing Hong Kong’s shipping industry. Furthermore, cultivating local shipping talent is also very important. Encouraging more universities to offer relevant courses and establish clear career development pathways will help attract local students to pursue these programs and join Hong Kong’s shipping industry.
Q: The 15th Five-Year Plan outlines support for Hong Kong to consolidate and enhance its status as an international shipping center, actively participate in the high-quality development of the Belt and Road Initiative, and leverage its professional service advantages to assist enterprises in “going global.” How can Hong Kong’s shipping industry make greater contributions in this context?
A: The shipping industry is inherently a highly internationalized industry. Against the backdrop of the Belt and Road Initiative, Hong Kong’s shipping industry could consider further deepening cooperation with neighboring countries, including those in Southeast Asia. Take Indonesia, the largest country in Southeast Asia, as an example. The country comprises 17,506 islands and a population exceeding 270 million. Due to its geography, ships are the most suitable means for transporting goods. Shipbuilding is a highly capital-intensive industry, often requiring tens of millions of dollars. When Indonesian shipowners build ships using financing from domestic banks, the costs are often high. While foreign capital offers lower financing costs, foreign banks typically insist that the ships used as collateral be registered in the country or region where the bank is located. This year’s Hong Kong Budget stated that a draft amendment to the relevant ordinance will be submitted to the Legislative Council within the year to reform the current ship registration arrangements and permit a “dual-flag” system. This new arrangement means that ships registered in Hong Kong, under specific business models (such as bareboat charter), may simultaneously be registered in another flag state (say Indonesia) and fly that country’s flag, and vice versa. Let us consider the following scenario: a shipowner company registered in Hong Kong flies the Indonesian flag under a bareboat charter arrangement, with an Indonesian shipowner acting as the operator to manage and run the vessel, and engages in domestic shipping within Indonesia (as Indonesia only permits vessels flying its national flag to engage in domestic shipping). This approach could potentially allow the company to benefit from Hong Kong’s lower financing rates while expanding its shipping operations into the Indonesian market, creating a win-win situation. However, much would of course depend on the specific implementation details of the domestic laws of the countries involved under the “dual-flag” arrangement, which is a matter that requires particular attention.
On the other hand, shipbuilding technology in some Southeast Asian countries is not as advanced, and their equipment and facilities are relatively rudimentary. When shipping enterprises from China and Hong Kong collaborate with these local firms, they generally cannot simply collect payment and hand over the vessel; instead, it is more appropriate to oversee the project from start to finish. In this process, we can leverage our relative advantages in technology and management while assisting local partners in improving their craftsmanship and industrial standards, thereby enabling our shipbuilding and modern shipping services to “go global” hand in hand.
Zheng Yang is a seasoned shipping industry expert and marine engineer with decades of experience in shipbuilding as well as maritime operations and management.
Translated with AI, with subsequent editing done manually.