For two and a half years, Hong Kong has been extremely isolated under a strict quarantine policy. This has had a significant impact on the region, its citizens and the flow of goods through the Port of Hong Kong – one of the largest ports in the world. This has recently changed but one big question remains, will China follow?
The leader of Hong Kong, John Lee, recently announced the end of the region’s long-standing policy to effectively cut it off from the rest of the world. It has been a costly period for the Hong Kong economy, with projected 2022 growth of -0.5 to +0.5 per cent and the exodus of some 120,000 residents in 2022 alone.
Citing the need to balance pandemic control with the need to make Hong Kong more economically competitive, many businesses are rejoicing at the prospect of strengthening their ties or reengaging with the region. One important development of the policy shift may be streamlined ocean freight.
The Port of Hong Kong is responsible for handling around 18,000,000 twenty-foot equivalent (TEU) per year and is one of the top ten busiest in the world. With Chinese ports crippled with restrictions and managing immense backlogs, a more open Port of Hong Kong could be a valuable access route to mainland China, particularly for suppliers in Guangdong.
This latest move raises questions about mainland China, which remains the most significant source of global supply chain issues. China’s large ports like Shanghai, Ningbo-Zhoushan and Shenzen have faced immense difficulty in overcoming regional pandemic-related challenges, but could Hong Kong be a pilot project for national border reopening?
Rumours indicate the potential of a 2023 reopening with business trips resuming, but China’s zero-Covid policy remains in place for the time being. There is also discussion that reopening will not happen until the end of March next year, following the annual legislative session; or even as late as Q2 2023 with a gradual implementation. The policy is already estimated to have cost the Chinese economy 4 to 5 per cent GDP this year alone.
We have been involved in projects managing time-sensitive shipments in the region throughout this period and the possibility of more open logistics is certainly welcome. Since the start of the pandemic, our global logistics experts have provided hundreds of emergency solutions for problematic shipments from the mainland, with local bureaucracy navigated by our new Chinese Control Centre.
Since becoming operational in 2021, our team based in Shanghai has proven invaluable. With Mandarin and Cantonese speakers, we have been able to effectively develop solutions in collaboration with Chinese suppliers for our OEM customers across Europe and North America. As the supply chain became increasingly strained, we were able to efficiently re-route and manage challenging shipments, preventing assembly line stoppages and the associated immense costs.
While reactive logistics can solve supply chain emergencies, the greatest benefit comes from working with a logistics partner to develop robust contingencies and mitigate uncertainties. Leveraging pre-established relationships with regional transportation providers and a global network, we are able to rapidly implement effective alternatives. From preventative planning to last-minute solutions, Evolution is the go-to partner for OEMs around the world.
