Heavy cargo | cpjobs.com

Heavy cargo

Published on Friday, 26 Apr 2013
Striking dock workers are costing their employers millions of dollars every day, and after more than four weeks of protests, agreements on pay and working conditions have still not been reached.
Photo: Bloomberg
Athena Tse

With unhappy dock workers and young people shunning the sector, is Hong Kong’s shipping industry sailing into the sunset?

Hong Kong’s dock workers have taken to the streets to voice out their frustrations over what they claim to be their dismal working conditions and slave wages. But given the radical changes sweeping the shipping industry, are they doomed to be just voices in the wilderness?

After years of ruling the maritime roost, the city lost its claim as having the world’s busiest container port in 2005 to Shanghai and second-placer Singapore in terms of twenty-foot equivalent units, or TEUs (see table).

As if tumbling down the rankings and anaemic volume growth weren’t bad enough,  Hong Kong dock workers have gone on strike since 28 March over what they consider poor pay and conditions, with their ire directed at the city’s dominant port operator, Hong Kong International Terminals (HIT), and two of its subcontractors, Everbest Port Services and Global Stevedoring Service. Amid the crippling strike, Global Stevedoring has since announced a business shutdown by 30 June when its contract with HIT ends.

The city’s TEU figures suggest that the local logistics industry is no longer the force it used to be. Hong Kong was once the gateway to the mainland – all goods to and from China went through the city. With the mainland continuing to improve its infrastructure and its import and export system, this is no longer the case.

“I was not surprised when Shanghai overtook us, in terms of the number of containers being handled,” says Stephen Cheng, president of the Hong Kong Logistics Association, who remains optimistic about the future of the local logistics industry. “As the mainland continues to develop, import and export numbers have skyrocketed. It is obvious that Hong Kong’s ports are not enough to handle all the cargo going in and out of the mainland. It is not alarming for Shanghai and other ports on the mainland to take away some of the business.”

The challenge for Hong Kong to stay competitive is to develop high-quality service to handle high-end products, he says. “Competition in the logistics field has to do with price and quality. It would not be possible for Hong Kong to compete on price – our land and people costs are way too high. Instead, we should target the high-end segment to help clients transport high-end goods,” Cheng says.

With its low-tax policy, efficient customs service and sound legal and banking systems, Hong Kong is equipped with the right tools to target clients which produce high-end goods, Cheng adds. “We need to compete with superior service quality. Clients with high-end products do not mind paying more to get the job done. Hong Kong has advanced technology in tracking goods and has a good reputation for delivering goods on time and in excellent condition. The service quality – not quantity – defines the future for the local logistic trade,” he says.

Raymond Kan Ting-wah, a lecturer in business administration at the Hong Kong Institute of Vocational Education who specialises in logistics, agrees that Hong Kong needs to target high-end products to continue to develop.

“Hong Kong’s ports are efficient and can handle electronic products which are required to be delivered many times within a short period. They also have high-quality storage facilities to store and transport red wine. These are the advantages that the local logistics industry can continue to build on,” he says.

Athena Tse, senior consultant in the supply chain, logistics and procurement division of Robert Walters Hong Kong, sees the mainland’s increasing demand for high fashion as a major driving force behind Hong Kong’s logistics industry. “Mainlanders’ higher purchasing power has led to more international brands setting up logistics operations in Hong Kong, which has expanded the luxury-retail market in the city,” she says.

Tse adds that with its promising future, the local logistics industry has little problem retaining management talent. “In recent years, candidates from mid-management level upwards who have moved jobs within the industry were able to receive a 10 to 15 per cent salary increment, while employees who remained in their jobs received average year-on-year salary increases of 4 to 8 per cent,” she says.

This is a far cry from frontline operational staff, many of whom have seen their pay drop since the 1990s (see table). When viewed against the 28.5 per cent inflation rate between 1995 and 2012, their situation is even more desperate.

With an abundance of logistics diploma and degree programmes on offer at local institutions, the industry does not lack managerial talent. Cheng believes the recruitment of frontline staff is more of a concern. “Frontline staff such as crane operators, warehouse keepers and truck drivers are hard to recruit. I think the industry and education institutes can do a better job in producing the right talent for the industry,” he says.

The 2010 manpower survey report on the transport and logistics industry by the Vocational Training Council shows that the demand for staff at cargo-handling terminals has been steady, with around 2,900 staff in 2009 and 2010 working at container ports.

Kan fears that there will not be enough young workers to replace the current frontline workforce. Cheng agrees, saying that the long working hours and harsh working environment have turned off many young people.

With lack of young talents, logistics-sector employers may want to review industry working terms, Cheng says. The apparently harsh working conditions faced by dock workers have captured the attention of media and the public. For the past four weeks, local media have been blooded with reports of crane operators having to spend up to 12 hours a day in their control rooms, with no lunch hour or proper toilet breaks. When striking dock workers started a Facebook page in September last year to share the realities of their hard working lives, they quickly registered more than 210,000 likes.

Amid the strike by dock workers employed by HIT’s sub-contractors, Cheng feels employers could have done a better job communicating with workers about their working conditions and pay. However, he does not believe that subcontracting is the root of problem. “Employers should value staff as an asset. HIT reacted slowly and it is difficult for the company to control the damage when a strike has already broken out,” he says.

Neither HIT nor subcontractor Everbest Port Services responded to inquiries from the Classified Post regarding the dock workers’ strike.

Become our fans