Despite declining volumes through the port, panel of experts agree that Hong Kong will remain a global maritime centre
Over 80% of everything is transported by sea, making shipping one of the most crucial industries in the world. The ongoing war in Ukraine, Houthi attacks on ships traveling through the Red Sea, pandemics, and other geopolitical events can cause disruptions to global trade — with the biggest risk being placed on the seafarers and ships themselves.
To discuss these issues, as well as Hong Kong’s role in the global shipping industry, the FCC held a Club Lunch discussion with three Hong Kong based experts: Angad Banga, COO of The Caravel Group; Olivia Lennox-King, COO of Cetus Maritime; and the FCC’s own Second Vice President Tim Huxley, Chairman of Mandarin Shipping. Moderating the discussion was First Vice President Jennifer Jett.
“We really need to put the seafarer agenda top of mind and front of mind before anything else,” said Banga as he highlighted the different ways that geopolitical disruptions affected shipping.
To avoid conflict zones like the Red Sea, ships have increased their voyages by two weeks or more on average, which results in an additional $200-300K fuel costs. Crews on ships that still choose to travel through the Red Sea aren’t trained for warzones and run the risk of being hit with missiles or drones. Attacks on ships — which may or may not be operated by personnel from warring states or carrying related assets — have seen fatalities and caused mental health issues for seafarers.
“The seafarers are innocent and they’re not involved in any geopolitical event and they’re the ones that no one’s focused on here,” Banga concluded.
Lennox-King also shared her thoughts on modern conflicts’ impact on shipping, but with more of a focus on how the overall industry can (quite literally) maneuver around these issues.
“I have been guilty of using this expression before, but we do sometimes say that shipping loves a war because disruption creates volatility and volatility creates opportunities,” she began.
Ultimately, ships rerouting to avoid conflicts can benefit from increased revenues that result from the supply of ships contracting as a result of longer voyages which prompt rates to rise, all while keeping their crews safe and unharmed.
“We try to predict what’s coming next… but I’d say that shipping, generally speaking, is very adaptable and has done a very good job of absorbing these changes,” Lennox-King said.
Aside from global conflicts, the panel also discussed Hong Kong’s role in the shipping world. The city made its name by becoming an epicenter for global trade in the colonial era, at one point being a leading centre for shipbuilding in Asia, but that is in the past and also recent years has seen a decline in the volume of cargo passing through Hong Kong’s container port. Still, Hong Kong is home to three out of six of the largest container port headquarters, which results in more container ports being managed and controlled from the city versus anywhere else in the world.
“I certainly would not want to be in any other maritime centre than Hong Kong,” said Huxley, who also doubted the idea of the United States returning as a global shipbuilder despite recent threats to impose tariffs on non-U.S. built ships calling there.
While the US was a leader in ship building during WWII in order to combat Axis forces, the decades that followed have seen other countries — primarily Japan, South Korea, and China — become the major locations for the shipbuilding industry. China currently builds over 58% of the world’s ships, and while there may be a future for shipbuilding in Vietnam and The Philippines due to cheaper labour costs, Huxley remained firm on his prediction that the US ship building industry was a thing of the past.
“It is just this evolution of economies, and that’s what we’re seeing now. Any prospect of the Americans coming back as a global ship builder, I mean, I don’t think in my lifetime that I’ll be going to a ship launching in America.”
Watch the full talk on our YouTube channel below:
