Co-Opetition Between the Ports in Hong Kong and Shenzhen from the Users' Perspective

1. Introduction

Globalization and international trade have stimulated the development of world logistics. An efficient and cost-effective supply chain has become one of the critical factors of success in global business (Chopra & Meindl, 2013). Increasingly, manufacturers rely on outsourcing, off-shoring, and logistics integration to gain competitive advantage on cost and service. As a result, global sea freight has increased significantly in volume in recent decades (Figure 1). Together with containerization technology, the role of container port in the global supply chain has become increasingly critical (Cuadrado et al., 2004). Ports are no longer considered merely as starting or ending points in export and import trades. They are now regarded as important links in door-to-door transport operation as well as major logistics platforms for value-added activities within the supply chain (van Klink & van den Berg, 1994).

Figure 1.

Growth in global seaborne trade in recent decades

With globalization of manufacturing and marketing, global economic growth has shifted towards the rapidly developing countries in Asia such as China, India, and Vietnam. Take China as an example. It experienced on average a double-digit annual growth rate in GDP in the 1990s and the 2000s and became virtually the backyard factory of the world (Knoema, 2012). Areas with abundant supplies of cheap labor and resources, such as the Yangtze River Delta region in the eastern provinces and the Pearl River Delta region in the southern provinces, have attracted thousands of foreign investors to set up plants there for production of consumer goods. These goods are subsequently shipped back to developed countries for sale. The accelerated economic growth in China has also raised the average household income hence the demand for imported goods from developed countries. Both of these activities stimulated rapid development of container ports to meet the need for increasing export and import trades. For instance, the two leading ports in China – Shanghai port and Shenzhen port – have both experienced a remarkable growth in container traffic of 338% and 296% from 2002 to 2010 (Containerization International, 2012). Their throughput volumes were 31.7 million and 22.6 million twenty-foot equivalent units (TEUs) respectively in 2011 placing them the top and the fourth ranking ports in the globe (World Shipping Council, 2012). Table 1 shows the top ten busiest container ports in the world in 2010 and 2011 in terms of throughput or annual TEUs processed. The ranking remains unchanged in both years and six of the ports are located in China.

Source: World Shipping Council (2012)