Hong Kong Seaport Alliance agrees new deal to ensure fair competition

HKSA strikes new deal on competition

The Hong Kong Seaport Alliance (HKSA), the group of terminal operators formed to improve the Port of Hong Kong’s competitiveness, has agreed to a series of commitments to maintain a fair level of competition in the Port of Hong Kong.

The announcement comes after an investigation by the Hong Kong Competition Commission, which said the commitments will come into effect immediately and will cover numerous areas in the Port’s operations.

These include a commitment to cap charges for services to shipping lines, specifically for gateway cargo transported between the Port and the hinterland., which will also apply to inter-terminal trucking services.

The HKSA will also maintain a minimum service level for gateway cargo and extend the price cap to non-liner customers, such as exporters and truckers.

The HKSA also said it would “maintain reciprocal overflow arrangements with DP World”, another terminal operator active at the Port, “on terms that are no less favourable” to previous agreements.

The HKSA was founded in January 2019 as a joint venture between Modern Terminals Limited (MTL) and HPHT on behalf of Hong Kong International Terminals (HIT), COSCO-HIT Terminals (CHT) and Asia Container Terminals (ACT).

It was done so in direct response to what Hutchison Port described at the time as “rapidly changing environment”, brought on by the formation of new carrier alliances, general carrier industry consolidation and the dramatic increase in vessel sizes.

The parties proposed to jointly operate and manage their 23 berths across eight terminals at the Port of Hong Kong to stem the decline of the Port of Hong Kong as trade hub.

The Hong Kong Competition Commission conducted an investigation into whether the HKSA broke competition rules, due to concerns that it could lead to an increase in prices or decrease in service levels for customers in the gateway market and withhold overflow services from DP World.

There were had concerns around the potential anti-competitive information flows between the Alliance and its competitors at Shekou and Chiwan ports in mainland China as a result of cross-directorships held by MTL.

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