Market Report 2022Hong Kong acrossDistributed MaritimeHongKong Week早晨
JO SAN New dawn for shipping
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Back in the cheap seats
Ironically for this issue’s Up Front section - my regular blurb as an editor - if I may, I’ll take you back to July of the year 2000 where unexpectedly I did indeed find myself sitting in the flash seats, weirdly and totally inappropriately having been upgraded on a flight from London to Hong Kong. It was my first time there, and, fresh out of university and cocky as hell, I had bought a single ticket to try my luck in the former British colony.
Dressed scruffily and unshaven, I was taken aback when told to turn left on entering the plane where a glass of champagne awaited. I had never been to Hong Kong, barely been on a long-haul flight - the next 24 hours, including the check in at a squalid Chung King Mansions residence and that first incredible view over to Central - all proved to be unforgettable and lifechanging in so many ways.
The following eight-plus years proved to be among the most fun and memorable of my life, which is why putting this magazine together proves so sad to me. I still refer to Hong Kong as a second home.
authorities maintain, it wishes to remain on the international stage as a major financial and maritime hub.
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DESIGN Mixa Liu
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Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact grant@asiashippingmedia.com.
We can’t simply pretend that life on the ground in this great Cantonese metropolis is all fine and dandy - it is not, far from it. Its vitality has been sucked from it, and as 2022 morphs into 2023, arguably Hong Kong faces its greatest challenge in modern history if, as the the
Hong Kong has a fantastic history of being able to reinvent itself, to remain relevant in the global economy. I’d argue this capability has never faced such a stern test as today where airplane single tickets are being bought in the reverse direction I took at the start of the millennium.
Nevertheless, there’s a steely determination within this city - as the following pages attest - and I hope it can bounce back.
“ We can’t simply pretend that life on the ground in this great Cantonese metropolis is all fine and dandy ”
The never-ending pain
Covid has desecrated this great trading entrepôt
Hong Kong’s economic fortunes have become closely tied to China’s with a dual policy of zero-covid since early 2020. The Hong Kong government’s strict quarantine regulations, restrictive measures, and the almost total closure of Hong Kong International Airport (HKIA) have, as the Financial Times has said ‘hammered’ and ‘paralyzed’ the economy. The city has effectively been cut off from China and from the rest of the world for two and a half years now.
In late September the onerous quarantine measures were reduced somewhat after intense lobbying by local and foreign business interests stressing that Hong Kong’s regional hub role was being destroyed permanently by the inability to travel freely. However, the reduction, but not abolition of measures, coupled with a pledge to reinstate them if necessary has done little to lift severely sagging business confidence. The socalled “Zero+3” measures of reduced quarantine may encourage Hong Kong residents to move about more freely,
leave and return, but are not expected to do much to encourage visitors from outside the SAR. It is also the case that Hong Kong’s historic unique selling point – proximity to the Chinese mainland – is still moot with the border closed and random zero covid lockdowns still being enforced in the PRC.
For some time the city’s leaders tried to talk up the economy. But it is now too evident that it is in a parlous state. In August government economists cut their growth forecast for 2022 to minus 0.5% after gross domestic product contracted 3.9% and 1.4%, respectively in the first and second quarters of the year. Exports are particularly hard hit as the entrepôt economy has ground to a virtual halt – August’s exports numbers were a whopping 14.3% down over August 2021, according to the customs agency. At a recent press conference financial secretary Paul Chan offered no real prospect of any uptick in exports in the near term.
It has to be said that along with zero-
covid, interest rate hikes in the US have damaged Hong Kong exports too. The Hong Kong dollar remains pegged to the US dollar and the greenback has surged against every Asian currency this year (and the UK pound and euro) — including crucially a 24% rise versus Japan’s yen and a 5% gain against the Singapore dollar. However, there is little Hong Kong can do with the Monetary Authority (HKMA) remaining committed to the dollar peg, which has been in place since 1983. HKMA, the de facto central bank for Hong Kong, may wave some stamp duties on currency trading and, in early October, spent HK$2.355bn to stop the Hong Kong dollar weakening to a point where the peg might collapse. However, this sort of intervention is not sustainable.
“ The city’s benchmark stock index is at a decade low ”
Other problems remain to be dealt with. The key property market is in the doldrums with few transactions being recorded and property developers talking of ‘fire sales’ on newbuild prices. By the end of September private home prices had plummeted to the lowest level since February 2019 while resale prices dipped by 10%, according to government data. As the chief executive of the HKMA, Eddie Yue, has predicted higher lending rates there appears to be no prospect of a rapid bounce back in the property market soon. Consumer sentiment and interest rate hikes hit hard. Retail sales are weak – a 0.1% decline in August over a year earlier (where the government had optimistically estimated a 2.7% growth) while the sector is suffering from the double whammy of the absence of mainland Chinese and international tourists. In 2019 78% of the city’s visitors came from mainland China, so if the border remains closed the vast majority of tourist arrivals are still shut out. Government issuance of consumption
vouchers distributed to the public to boost spending (in HK$2,000 and HK$3,000 allotments that must be used by the end of February 2023) may push up sales a little in the short term but will have no medium or long term effect on sales or confidence. A number of famous restaurants have closed while some hotels admit that only checking-in those undergoing quarantine has saved them.
HKIA remains virtually deserted compared to 2019 – it’s now handling just 3.4% of passengers that it did before covid, and just 30% of flights. The city’s flagship carrier Cathay Pacific is in financial trouble. By the summer of 2022 120,000 residents of the 7.2m city had left in the previous six months (the highest population drop in 60 years) which, when added to departures in 2021 and 2020, add up to a serious dent in the city’s population and workforce. As well as those leaving due to political considerations there is also the much commented upon exodus of corporate and financial services
workers to Singapore, now effectively the primary regional hub.
Looking to the future it is hard to see a rapid bounce back for Hong Kong. Business groups have called for a clearer “roadmap” out of covid so that they can plan for the future. If this is not forthcoming many businesses admit they will move ahead without Hong Kong. Arguably, by some key metrics, Singapore has already overtaken Hong Kong as Asia’s financial centre and the lack of a plan for the so-called “last mile” removal of restrictions (in line with other global financial centres) from the government could accentuate this to Hong Kong’s detriment. The financial community’s displeasure with how things have been handled is perhaps best reflected in the fact that the city’s benchmark stock index is at a decade low.
Many in Hong Kong are hoping for a lifting of all quarantine regulations soon and perhaps a resumption of full crossborder business and trade. But lockdowns and adherence to zero-covid remain in Shanghai and many key cities across China and show no signs of ending. It may yet prove to be a tough remainder to 2022 and perhaps more of the same in 2023 for the troubled city.
“ Business groups have called for a clearer roadmap out of covid ”
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Bankers head south
Hong Kong has long had to accept it is no longer the leading maritime hub in Asia, but to relinquish its financial laurels to Singapore too, is a bitter pill to swallow, and one the authorities are adamant will not happen.
Hong Kong’s covid quarantines and new curbs on civil liberties have damaged the former British colony’s image as ‘Asia’s World City,’ sparked an expat exodus, and stoked rival cities’ ambitions of replacing Hong Kong as the region’s preeminent financial hub.
As Hong Kong marks the 25th anniversary of its return to Chinese sovereignty, the city’s status as an international financial and business hub is in doubt like at no point since the handover.
One survey issued in September made plenty of headlines and sparked much debate. The Global Financial Centres Index saw Singapore overtake Hong Kong to become Asia’s top financial centre -
and the third in the world after moving up three places.
Singapore scored higher than Hong Kong on all five criteria – on the availability of human capital, the business environment, infrastructure, financial market development and “reputational and general.”
Hong Kong slipped to fourth place in the index, compiled by think-tanks Z/ Yen Partners and the China Development Institute, ranking 119 financial centres, using data collected from thousands of financial services professionals responding to an online questionnaire.
Hong Kong financial secretary Paul Chan acknowledged the competition with Singapore in a blog post after the index
results were published, laying out a series of data points to show that Hong Kong has much deeper stock, bond and asset management markets than Singapore, and remains a vital bridge to mainland China.
Hong Kong’s stock market has a value of over HK$42trn, or seven times higher than Singapore’s. There are 2,500 companies listed in Hong Kong’s stock market, around 2.7 times more than in Singapore, Chan said.
Hong Kong’s “asset and wealth management market also occupies a leading position in the region,” Chan said. “Hong Kong’s assets under the management of private equity funds is US$180bn, four times higher than Singapore.”
“ Hong Kong’s assets under the management are four times higher than Singapore”Singapore has taken away much banking talent. Will Hong Kong be able to stop the departures?
The city’s government attempted to put on a big global banking summit at the start of November, although in the end the event was more notable for the big names who did not show up, such as the CEOs of Barclays and Citi, and, ironically, Chan himself, down with covid.
In a survey carried out by the American Chamber of Commerce of Hong Kong last year, more than 40% of expats said they were planning to leave or considering it, mostly due to concerns over a draconian national security law imposed by Beijing, stringent covid restrictions that limit international travel and a bleak outlook for the city’s future competitiveness.
Hong Kong handed out just 32,248 work visas last year, down from 62,155 in 2017, according to the Immigration Department. Only 5,701 visas were approved for international workers under the General Employment Policy in the first half of this year, compared to 20,314 in the first half of 2018.
About 121,500 residents departed the city in the year ended June 30, leaving the population at about 7.29m, according to government data. That means the
population fell 1.6%, marking the third straight year of declines and the biggest drop in at least six decades.
That exodus - the one-way ticket scenario - is one playing into Singapore’s hands, with many financial institutions - and shipping companies - relocating there.
Lawrence Wong, Singapore’s finance minister and prime minister in waiting, aims to create 20,000 financial-services jobs over five years through 2025, an increase of about 10% over the current workforce. Singapore’s resident population rose 3.4% in June from a year earlier.
Fitch Ratings warned in a report earlier this year that Hong Kong’s apparent prioritisation of national strategies and governance practices over economic competitiveness may undermine the city’s role as an international financial centre.
“If these risks crystallise, it would leave the economy less dynamic, accelerate fiscal policy challenges associated with ageing and potentially contribute to downward pressure on the territory’s credit rating,” Fitch said in the report.
“ Hong Kong’s population has registered the biggest drop in at least six decades ”
Smart port imperatives
Operations need to digitalise at the city’s container terminals
The steady decline in container numbers at the port of Hong Kong shows no sign of arresting anytime soon with the entrepôt likely to slide out of the top 10 port rankings as early as next year.
After three quarters of 2022, the port of Hong Kong’s cumulative throughput stood at 12.68m teu, a decline of 5%
compared to the total for the first three quarters of 2021. Covid restrictions have significantly cut cross-border container traffic between China and Hong Kong all year.
The United Nations Conference on Trade and Development (UNCTAD) recently released its updated liner shipping connectivity data for Q3. This
provides new data on how well the world’s countries are connected in terms of liner shipping services. Hong Kong was one of the places with the largest declines in connectivity.
“Hong Kong has seen a clear decline during the pandemic period. In reality Hong Kong has experienced a slow erosion of connectivity ever since 2010, but the past year has accelerated this trend,” analysts at Sea-Intelligence noted in a recent report.
The city’s role as a window into China is under threat. The local port community looked on with some concern in May as Danish carrier Maersk carried out landmark first international box relay shipments with China finally toying with easing its strict cabotage rules, something that has traditionally helped bolster Hong Kong throughput.
The formation of the Hong Kong Seaport Alliance in January 2019 has proven to be a smart move. The alliance comprises Hongkong International Terminals, Modern Terminals, COSCOHIT Terminals and Asia Container Terminals, covering 23 container berths at eight terminals in Kwai Tsing. Officials tell Splash the alliance has enhanced efficiencies, optimised utilisation, and improved overall service offerings to customers.
The launch of Electronic Release Order (eRO) in 2020 and the current roll out of Electronic Booking Confirmation Note (eBCN) is digitalising the procedure for import and export containers respectively, enhancing further efficiency.
Dr Jonathan Beard, a partner at EY Infrastructure Advisory, urges the port community to carry out plenty more digital initiatives. Hong Kong needs to become a smart port to prosper, he says, to digitalise the port ecosystem and streamline the flow of cargo and information through the port. Progress in this regard has been slow and bedevilled by the absence of a strong port authority
that could advocate and drive change not only within the port, but also outside the port gate.
The recently appointed secretary for transport and logistics, Lam Sai-hung, visited the city’s container terminals in July to discuss with operators how best to progress with plans to transform the area into a smart port.
“Hong Kong is one of the busiest container ports in the world and has always been renowned for its efficiency. I am glad to learn that the operators have been actively investing in resources over the years to introduce modern management, advanced computer equipment and information technology systems to enhance productivity as well as improve the working environment and industrial safety,” Lam said.
A task force at the Hong Kong Maritime and Port Board, an advisory body, is expected to release details of its own
smart port investigation shortly.
“The government is actively promoting the development of a smart and green port to enhance the international competitiveness of the port of Hong Kong,” Lam said.
To strengthen the collaboration with Greater Bay Area ports, the government has said it will explore establishing communication mechanisms with ports in Guangdong to better leverage the respective complementary strengths in order to promote a healthy and coordinated development among the ports.
“I am confident that the port of Hong Kong will continue to enhance its competitiveness and be a preeminent entrepôt with the concerted efforts of the terminal operators and all stakeholders together with the support from both central and Hong Kong government,” says Horace Lo, group managing director at Modern Terminals Limited.
“ Hong Kong has experienced a slow erosion of connectivity ever since 2010 ”
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Righting the ship
Wellington Koo has followed his forebears to assume chairmanship of the Hong Kong Shipowners Association (HKSOA). Arguably his two-year rein at the influential local body will be more fraught with difficulties than any faced by his father, grandfather and uncle, all of whom held the same role in the past.
Koo, executive director at Valles Steamship, took on the HKSOA leadership a year ago. He is the fourth generation at the helm of privately held Valles, one of the city’s oldest shipowners.
The shipping industry is a highly competitive global business, Koo admits, conceding that in recent years Hong Kong’s shipping industry has faced “huge constraints and challenges”, and shipping companies, businesses and talent have flowed out of Hong Kong. Indeed, the membership and gatherings of the HKSOA are a distant cry of what they used to be.
“Hong Kong must speed up its transformation and upgrading to cope with the new competitive landscape,”
Koo says, pointing towards opportunities presented by Beijing’s determination to forge ahead with the Greater Bay Area, which will see the former British colony become more enmeshed and intertwined in the economic set-up across the border in a number of southern Chinese provinces.
To get the city’s shipping credentials back on track, Koo has been repeatedly calling for a return to Hong Kong’s prepandemic global roots.
“To consolidate its position as a leading maritime hub, Hong Kong should continue to pitch itself as an international finance, shipping and trade centre, as set out in the national strategic plans,” Koo tells Splash, the key part, he stresses, being “international”.
“This is what makes Hong Kong unique, and why Hong Kong is Hong Kong,” he says.
Ensuring freedom of movement, and easing current quarantine rules, will be vital to getting the city back on the maritime map, he urges.
“Throughout history, there have always been challenges of different sorts at different times. The situation is the same for Hong Kong as an Asian entrepôt, especially as the city’s economy is externally oriented and highly dependent on trade with the rest of the world,” Koo says, setting the scene for the current frustration at the ongoing pandemic impasse that has blighted Hong Kong, a place the authorities like to brand as ‘Asia’s World City’.
“ The city’s economy is externally oriented and highly dependent on trade with the rest of the world ”Wellington Koo, chairman of the city’s shipowning association, knows how to get Hong Kong back on the maritime map. Will the authorities listen?
“Shipping is a truly global industry, with ships going to different parts of the world 24 hours a day, seven days a week,” Koo says, adding: “It is most important for global and local entrepreneurs, executives, professionals and technical staff in the industry to be able to travel into and out of the city without unnecessary restrictions.”
While the HKSOA was happy to see the new John Lee administration relax quarantine rules, they are still not on a par with most other locations and are not conducive to attract international business travellers and for the city to reconnect with the world.
Another issue, something that both his father and uncle fought for too, centres around government administration.
While the former Transport and Housing Bureau has been split up, with the establishment of a new policy bureau dedicated to transport matters – the
Transport and Logistics Bureau - Koo still feels this is not enough.
“Throughout the years, the maritime industry has strongly advocated the
establishment of an independent, statutory body for the maritime industry,” Koo points out.
The current Hong Kong Maritime and Port Board, set up in April 2016, has been in place for over six years, which Koo says is more than enough time for all the stakeholders to have observed and reflected on its operations.
“Our government always emphasises its open attitude and the need for a phased approach. This is clearly an opportune time to review and to take the next incremental step forward,” Koo says.
Angad Banga, of The Caravel Group, currently serving as HKSOA deputy chairman will likely become chairman in November 2023.
“ Hong Kong should continue to pitch itself as an international finance, shipping and trade centre ”
What maritime wants from John Lee
The local shipping community is already pitching Hong Kong’s new leader a host of ideas. How many will stick?
On July 1, Hong Kong welcomed a new leader with ex-police officer John Lee taking over from Carrie Lam on the 25th anniversary of the handover of the city, a big date in the calendar with president Xi Jinping jetting in from Beijing.
Speaking at the ceremony Xi said Hong Kong must maintain its unique position and advantages, including consolidating its role as a financial, aviation and trading hub, adding that the city will make a “major contribution” to the historical process of “realising the great rejuvenation of the Chinese nation.”
Hong Kong must proactively complement the National 14th Five-Year Plan, the infrastructure development in the Greater Bay Area, and the Belt and Road Initiative, he added.
Hong Kong’s maritime community has a long list of items they’d like to see the new administration look at,
and discussions with senior officials are underway about reviving the city’s shipping hub status.
Top of the list for everyone polled is an easing of the covid rules, something neatly described by Gautam Chellaram, the chairman of local dry bulk owner KC Maritime.
“ An open travel policy with no restrictions must be at the forefront of the chief executive’s government priorities ”Credit: South China Morning Post/Alamy Live News
“Maritime is synonymous with the sea and therefore an open travel policy with no restrictions must be at the forefront of the chief executive’s government priorities,” Chelleram says, adding: “Maritime is truly a global business involving various international communities. Hong Kong business travellers must feel comfortable to travel in and out of the city freely and demonstrate to the rest of the world we are open for business.”
Bjorn Hojgaard, the head of AngloEastern, agrees, saying maritime priorities are the same as the priorities for other industries in Hong Kong.
“Make the Special Administrative Region (SAR) attractive for work, travel and living, for locals and expats alike,” urges Hojgaard, one of the local shipping community’s most vocal critics of the government’s handling of covid.
Nevertheless, there’s a lot more besides covid that is on people’s wish-list.
Few people are better suited discussing government maritime priorities than Rosita Lau, the veteran Ince lawyer and chair of the Promotion and External Relations Committee on the Hong Kong Maritime and Port Board, an organisation created in 2016 as a sound board to work better between public and private interests.
The Hong Kong government must work hard to promote the city’s maritime industry both internally, and externally to the world, she urges.
Another priority, Lau says, ought to be to enlarge the pool of maritime talent including maritime legal talent so as to collaborate with the initiative of making Hong Kong an international maritime dispute resolution centre and legal
services centre.
While the former Transport and Housing Bureau has been split up, with the establishment of a new policy bureau dedicated to transport matters – the Transport and Logistics Bureaumany would like the government to go a step further, with a dedicated maritime portfolio, but these calls have fallen on deaf ears for decades.
“If it is not ripe for an entity similar to Singapore’s Maritime and Port Authority to be set up and manned by the government, then in the interim, adequate additional manpower should be provided to the Transport and Logistics Bureau so that the bureau has enough pairs of hands,” Lau suggests.
“ Adequate additional manpower should be provided to the Transport and Logistics Bureau ”
For the government in the beginning of its new term, it may indeed be useful to review how the various departments and bureaus are holistically working together to support the maritime industry ecosystem as a whole, agrees Angad Banga, chief operating officer at The Caravel Group.
For example, with the recent reorganisation of the government structure, the Transport and Logistics, Financial Services and Treasury, and Commerce and Economic Development Bureaus now all report to the Financial Secretary.
“This,” says Banga, “is a great step towards enhancing synergies and communication to have these departments working as systems together.”
Another potential opportunity, Banga suggests, includes how the Environment and Ecology Bureau could partner with any other relevant departments and industry to drive decarbonisation efforts.
This topic, decarbonisation, is one Vinod Sehgal, the CEO of SeaQuest Shipmanagement, reckons the government must take seriously when it comes to their
plans for maritime.
“Decarbonisation, alternative power sources, ESG, carbon capture systems, AI and digitalisation are just some of the new buzzwords in the path to 2050 and beyond,” Seghal says.
The SeaQuest boss’s advice is for government to take proactive steps such as establishing technical advisory committees, setting aside funds for research, development and implementation of leading edge technologies while encouraging the sector towards compliance.
From the perspective of the SAR’s port operators, Horace Lo, group managing director at Modern Terminals Limited, tells Splash it’s vital Hong Kong maintains and enhances existing competitive advantages including the unique status and role of Hong Kong under the cabotage rules of China. Lo says it is also important for Hong Kong to establish its port
community system under the Smart Port initiative to facilitate accurate and timely information flow among users in the port and other stakeholders in the logistics ecosystem.
For the Greater Bay Area (GBA), while the ports in the area have been developing rather independently, Lo reckons there should be better coordination so as to develop the area into the biggest container hub port cluster in the world, and to improve its long-term competitiveness. “We have to efficiently coordinate terminal capacity in the GBA to achieve a proper balance between supply and demand in view of evolving market needs,” Lo says.
Concluding the wish-list from a commercial standpoint, a spokesperson for insurer the TT Club reminds the new administration the importance of maintaining the city’s flexible regulatory approach and low tax environment.
“ We have to efficiently coordinate terminal capacity in the GBA ”
Strength in numbers
First conceived in 2017, the Greater Bay Area (GBA) is up there with the Belt Road Initiative in terms of mega, overarching economic plans laid out during the tenure of Xi Jinping as leader of China. In a way it harks back to previous Communist times, what Deng Xiaoping called: “Crossing the river by feeling the stones” - a way of bridging divides for greater, mutual strength longterm
The Guangdong-Hong Kong-Macao Greater Bay Area comprises the two Special Administrative Regions (SARs) of Hong Kong and Macao, and the nine municipalities of Guangzhou, Shenzhen (pictured), Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province. The total area is around 56,000 sq km, population 86m and the combined GDP approaching $2trn, bigger than many G20 economies.
The objectives are to further deepen cooperation amongst Guangdong, Hong Kong and Macao, fully leverage the composite advantages of the three places, facilitate in-depth integration within the region, and promote coordinated regional economic development.
It is a project that excites many in Hong Kong, though there are plenty of people who have their own concerns about this planned integration.
“A closer integration of the economies in the GBA has the potential to make the combined output larger than the sum of the parts,” argues Bjorn Hojgaard, the head of shipmanager Anglo-Eastern.
“If you remove frictions to the free
movement of people, of goods, of capital and of ideas, you spur innovation and growth, and with that come new opportunities,” he reckons.
Under the GBA initiative, Hong Kong will continue to be an international financial, maritime, trade, dispute resolution and legal services centre, something Rosita Lau, a lawyer for Ince and member of the Hong Kong Maritime and Port Board, says the city is perfectly suited to carry out.
“I say so with full confidence because Hong Kong is the most international component of the GBA cluster of cities, and has long been an international maritime centre,” Lau tells Splash,
Yoking
“
If you remove frictions to the free movement of people, of goods, of capital and of ideas, you spur innovation and growth ”
pointing to the scale and efficiency of the city’s ship registry, the plethora of P&I club offices, and the range of tax concessions on offer to a wide range of maritime businesses.
“I do not see any other component city of the GBA has such strength in these regards,” she says.
Matthew McAfee, who heads up local shipowner Fairmont Shipping, tells Splash that Hong Kong’s maritime and finance expertise will be “vital” in developing the GBA.
Angad Banga, chief operating officer at Hong Kong-based trader The Caravel Group, says he is “very bullish” about GBA prospects for Hong Kong’s maritime community.
“The vast population and expected growth in GDP per capita within the GBA means this is a very significant opportunity for businesses both within our industry and those which need our services,” he says.
“We believe the enhanced interconnectivity and exchange of people between the cities will also address the talent shortage issues that the city has been facing,” says Hing Chao, the chairman of local shipowner, Wah Kwong.
“The legacy strengths of Hong Kong in its unique and highly regarded common law legal system and various strengths as a financial and business hub incentives maritime companies to establish operations in Hong Kong, and to raise
capital with debt and/or equity financing,” explains Damien Laracy, a partner at law firm Hill Dickinson.
With its integration into the development of the GBA, Hong Kong can optimise the allocation of resources in the region, benefit from the complementary advantages, and focus on the development of high-end shipping services, jointly building a complete and efficient emerging shipping ecological chain with the rest of the GBA, argues Wellington Koo, the chairman of the Hong Kong Shipowners Association.
Outlining what each of the major cities brings to the GBA, Koo says: “Hong Kong has the financing advantages, Shenzhen has the outstanding achievements in technological innovation and manpower training, and Guangzhou has a strong shipbuilding industry. Shipping needs new technologies and new energy to achieve the decarbonisation goals. Hong Kong, together with other cities in the GBA, may create a new shipping industry chain amid the massive changes.”
With a ports perspective on the GBA, Horace Lo, who heads up Modern Terminals, a company with facilities in both Hong Kong and across the border in the Pearl River Delta, has plenty of thoughts on how the economic zone could work out.
The total container throughput in the GBA exceeds 70m teu per annum. Over the years, the port of Hong Kong and
other ports in the GBA have developed into an important cluster of ports, each with its own distinctive role and positioning.
“We have to efficiently coordinate terminal capacity in the GBA to achieve a proper balance between supply and demand in view of evolving market needs,” Lo advises.
Despite the effusiveness above, there are some words of caution for all those that think the formulation of the GBA will be a panacea for Hong Kong maritime.
“Performance must be quantifiable,” stresses Gautam Chelleram, the chairman of dry bulk owner KC Maritime. “I do not think the verdict is out yet on the synergy between Hong Kong and the Greater Bay Area from a maritime perspective. Hong Kong has a lot on its plate, and I would not recommend spreading itself too thin on expanding itself regionally,” he advises.
Ince’s Lau also points out that despite the fact the GBA plans have been in existence for five years now, the authorities have yet to stipulate that Chinese shipping companies should use Hong Kong law as the governing law and that Hong Kong arbitration or Hong Kong court proceedings be the governing mode of dispute resolution.
“This is a measure of top priority which has to be taken without delay in order to make the initiative successful,” Lau concludes.
Latest Targeted Tax Concessio ns se t to Grow Maritime Cluster
The Hong Kong Government has high hopes of attracting more maritime businesses to Hong Kong following the enactment of new legislation providing tax incentives for qualifying shipping commercial principals (i.e., ship managers, ship agents and shipbrokers).
These latest incentives are just part of an ongoing campaign by government to enhance Hong Kong’s status as a premier maritime centre for the region.
Under the new Inland Revenue (Amendment) Ordinance, qualifying commercial principals will enjoy a 50% reduction in their corporate tax burden – with a concessionary tax rate of 8.25%.
As expected, the response from these sectors have been generally enthusiastic; as expressed by comments from Fleet Management Limited’s managing director Kishore Rajvanshy:
“This is a positive step towards supporting the ship management sector in Hong Kong,” said Mr Rajvanshy, head of one of the largest ship management companies in the world.
“In the ship management sector, salary costs, office rent and taxes have key impacts on a company’s bottom line. Therefore, this reduced profits tax rate provides an incentive for international ship management companies to either set up or maintain operations in Hong Kong. It also means that companies can allocate the tax savings to other aspects of the business to support growth, such as further staff hiring or innovation.”
Growing the Pie
According to estimates released by a Task Force of the Hong Kong Maritime and Port Board, the new tax regime could bring about cumulative incremental ship agency, ship management and shipbroking business receipts of around HK$32bn. It is also expected that the tax measures would promote additional direct employment of around 27,600 staff and indirect employment of some 50,000 to 55,000 additional employees.
As of 2020 there were 254 ship management and ship agency firms operating in Hong Kong together with 61 shipbrokers. Ship managers and agents collectively employed 6,318 onshore staff. At the same time 219 staff members were employed by shipbroking firms.
Commenting on the latest raft of tax concessions, Abraham van Olphen, managing director of ship agency firm Central Oceans Asia Ltd, said: This is very good news and finally gives the much needed support from the government to, hopefully, retain our status as an international shipping hub.
“We are sure these tax benefits will greatly benefit Hong Kong’s position as an international shipping hub, as it will allow existing companies to invest in expanding their service portfolio and attract more shipowners to call Hong Kong. At the same time, we would expect new maritime businesses, lured by the tax incentives, to realise the advantages of operating in an environment that offers an international finance centre, international trading houses and strong connectivity to the Mainland,” he said.
Benny Wu, managing director at Arrow Shipbroking Group, welcomed the tax incentives the firm can now enjoy from this year. He also suggested the Government could go further by offering incentives to the large international trading houses to attract them to have a presence in Hong Kong. “By attracting the big fish they will certainly attract the fishermen, i.e. the high valueadded maritime services,” he said.
Other Maritime Businesses Benefitting from Enhanced Tax Concessions
The introduction of tax incentives for ship managers, ship agents and shipbrokers, follows swiftly on from a previous Inland Revenue Amendment aimed at offering similar corporate tax relief to ship lessors, ship-leasing firms, which came into effect in June 2020.
The highly attractive tax measures are just one example of the many concrete initiatives the Government has introduced since 2016 to demonstrate its commitment to the development of Hong Kong as a leading maritime centre.
How to build back trust
This is likely the most challenging time Hong Kong has faced in the last several decades,” concedes Matthew McAfee, who heads up local shipowner Fairmont Shipping. “But,” he adds, “this is an extremely resilient city.”
Few places on Earth are as resilient, capable of bouncing back and transformation. Nevertheless, the challenge Hong Kong faces to rekindle its covid-battered maritime hub status is immense.
Hong Kong fell to seventh place among the top maritime cities of the world,
according to the Menon Economics and DNV’s 2022 report published in January. The Special Administrative Region (SAR) was placed fourth in the last report released in 2019. Meanwhile, the XinhuaBaltic International Shipping Centre Development Index Report released in July placed the city fourth worldwide, down from its silver ranking on the podium in the report’s previous edition.
Other shipping and financial hubs in the region such as Singapore and Tokyo have been heavily promoting their strengths to companies looking at exiting
Hong Kong in recent years with a number of well-known Hong Kong shipowners looking at alternate sites.
“The last couple of years’ dynamic zero-covid policies have been extremely damaging to Hong Kong’s reputation as a place from which to do international business, and with that shipping,” says Bjorn Hojgaard, the CEO of AngloEastern, the SAR’s largest shipmanager. “We are behind, and it’s no use pitching the return of Hong Kong until the policies for compulsory testing and isolation, social distancing, group gatherings and mask mandates are competitive with international standards.”
“ You should definitely not write off Hong Kong ”BY
This point of view is shared by Gautam Chellaram, the chairman of dry bulk owner KC Maritime.
“Hong Kong needs to focus on rebuilding trust that despite the lengthy covid restrictions it still is an international, vibrant shipping hub which can provide shipping services at the doorsteps of China operating within a constitutional principle of one country, two systems,” Chelleram tells Splash.
Hong Kong is the fourth largest flag state in the world, offers a very attractive
tax regime and enjoys a first-class reputation in international shipping, Chelleram notes.
The city, he says, needs to identify key unique selling points such as having a digital registration and finding cost effective solutions where other leading cities are behind the curve to make Hong Kong the flag of choice.
Hong Kong has overcome many challenges before points out Vinod Seghal, the head of SeaQuest Shipmanagement, listing the Asian financial crisis, SARS, bird ‘flu and the 2008 financial crisis as examples. There’s no reason the current administration cannot overcome today’s challenges, he reckons.
“ Hong Kong needs to focus on rebuilding trust ”
Under Carrie Lam and her successor John Lee, the city has been good at providing tax perks to make the city more attractive to maritime companies.
In July, the new Lee administration introduced half-rate profits tax concessions to ship agents, shipmanagers and shipbrokers, which together with 2021’s enactment of the Ship Leasing Bill ought to attract more commercial interests to Hong Kong.
Applauding the latest tax cuts, Angad Banga, chief operating officer at The Caravel Group, tells Splash: “This tax environment incentivises companies to set up and retain entities in Hong Kong, and provides increased scope and flexibility to companies to invest in other areas of their business, such as hiring more people or allocating more resources to R&D. This supports the continued building of this maritime industry ecosystem in Hong Kong.”
The strength of Hong Kong’s industry ecosystem as well as its geographical position are its greatest assets, Banga reckons. The key to Hong Kong’s continued success as a leading maritime
hub according to the Caravel executive lies in its agility to move with and support industry cycles of peaks and troughs, as well as periods of unexpected challenges or turmoil.
“While we welcome the recent tax concessions, further tax incentives, facilitation of more friendly working visa procedures and expat families support would all encourage movement of the commercial principals and talents into the city,” suggests Hing Chao, the chairman of one of the city’s most famous shipowner brands, Wah Kwong.
Another plus from government this year has been the establishment of a dedicated Transport and Logistics Bureau to support and formulate policies to strengthen the maritime cluster’s development.
Concluding on an optimistic note,
Caravel’s Banga says that while Hong Kong may get caught up in this current geopolitical environment of increasing tension and deglobalisation, where countries are looking inwards rather than outwards, the city’s pro-business approach to free and fair trade – as well as position within Asia and as a key gateway to mainland China – provides it with a “significant competitive advantage”.
“You should definitely not write off Hong Kong, despite the difficulties of the last couple of years,” says AngloEastern’s Hojgaard, one of the most fierce shipping critics of the territory’s handling of covid. “Hong Kong has rebounded resoundingly before, and can do it again,” he says, adding: “But it’s fair to say that this is probably the biggest test ever of confidence in Hong Kong as a vibrant international business centre in Asia.”
“ This tax environment incentivises companies to set up and retain entities in Hong Kong ”
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Pastures new
Hong Kong’s shipping lines have spent the year carefully plotting their next phase of expansion, with alternative fuel considerations uppermost in mind
Last year saw Martin Fruergaard appointed Pacific Basin CEO replacing Mats Berglund. In 2022, another long-term senior official announced his retirement. Pacific Basin appointed Stanley Ryan as its next chairman, replacing David Turnbull, who had been with the listed dry bulk firm since 2008. Ryan, already a non-executive director at Pacific Basin, was with Cargill for 25 years through to 2014. Other posts held include serving as a director and interim CEO at Eagle Bulk. Ryan will become chairman after next year’s annual general meeting, scheduled for April 18.
By far the biggest news from Pacific Basin this year was its decision to go for methanol in the future fuel debate, sticking its neck out where few other dry bulk firms have done so far.
In May this year, Pacific Basin entered into a memorandum of understanding with Japan’s largest shipbuilder Nihon Shipyard and trading house Mitsui & Co to cooperate on the development of zeroemission vessels and potential investment
in related green fuel bunkering infrastructure. With the feasibility assessment now complete, Pacific Basin said last month green methanol is currently the best fuel around which to plan its first generation of zero-emission vessels.
The company is now busy developing a ship design around which it plans to contract its first generation of dualfuel zero-emission newbuildings, in collaboration with itsJapanese partners.
OOCL
Also getting into methanol this year has been OOCL, Hong Kong’s largest containerline.
The listed parent of OOCL, bought
by COSCO four years ago, joined the Hang Seng Composite Index in May after scoring a series of record profits.
In November, it was revealed OOCL’s next generation of ships would be methanol flavoured with parent COSCO ordering a total of 12 duel-fuelled 24,000 teu ships in China.
Wah Kwong
The big news coming from Wah Kwong this year was the opening of a London office, signalling a sizeable shift in operations outside of Hong Kong.
The office, led by managing director William Fairclough, is keen to build a greater slice of business out of Europe and North America.
“ Pacific Basin argues green methanol is the best fuel around which to plan its first generation of zero-emission vessels ”
Also of note was the decision to team up with French class society Bureau Veritas and Shanghai Qiyao Environmental Technology Co, a subsidiary of Shanghai Marine Diesel Engine Research Institute, to study the feasibility of installing carbon capture and storage (CCS) units on existing ships to meet 2030 carbon intensity indicator (CII) targets. Two Wah Kwong bulk carriers have been selected for the pioneering experiment, which follow on from the Chao family-led firm’s earlier foray into carbon credits.
Mandarin Shipping
Tim Huxley-led Mandarin Shipping is left with just one ship following a series of boxship sales at the height of the sector’s boom.
Mandarin sold the 2017-built, 1,756 teu Mount Kellett to CMA CGM for $45m with the one year older sister vessel, Mount Butler, sold for an undisclosed
sum to the same French line.
The deal leaves Mandarin with just the 1,700 teu Mount Cameron. Huxley formed Mandarin with fellow former Clarksons broker Will Fairclough in 2006. All the company’s ships are named after mountains in Hong Kong. The company is now readying its next project, likely to be outside the container sector.
CU Lines
Another Hong Kong-based company riding the waves of the container fortunes this year has been China United Lines (CU Lines).
Fast expanding CU Lines entered the Asia - Middle East trades this year as well as debuting a Brazil service to go alongside existing offerings in intra-Asia, Asia-Europe and the transpacific.
Liner veteran Lars Christiansen, schooled in the ways of Maersk, serves as co-CEO as the carrier increasingly goes global.
In March the carrier placed an order at Shanghai Waigaoqiao Shipbuilding for the construction of its two largest containerships to date. The 7,000 teu pair will deliver in late 2024.
Taylor Maritime
Taylor Maritime Investments, which listed in London in July last year, recently struck a takeover deal with Singapore-based Grindrod Shipping that values the bulker
owner at around $506m.
The Ed Buttery-led TMI will, through its subsidiary Good Falkirk, offer $26 per share in the Nasdaq and Johannesburglisted rival – a move that would create a significant market player in the mid-sized dry bulk industry with a fleet of 58 ships.
TS Lines
The container party might be showing signs of fizzling out, but that is not
stopping a number of Asian liners seeking listings.
TS Group, the parent company of TS Lines, has filed an application for a Hong Kong stock exchange listing, as has Chinese freight forwarder LC Logistics, parent of BAL Container Line.
TS Lines has Taiwanese origins, but is incorporated in Hong Kong. It currently operates 49 ships of 106,203 teu, making it the 19th largest operator worldwide, according to Alphaliner.
The world’s management hub
Hong Kong remains preeminent when it comes to looking after other people’s vessels
Hong Kong can lay claim to having three out of the 10 largest shipmanagers in the world (see chart below), plus a host of up and coming brands. The government has made the business a tax-friendly one and managers these days form arguably a more important cluster than owners in the city’s maritime DNA.
At the top of the global rankings is Anglo-Eastern, chaired by Peter Cremers with Bjorn Hojgaard (pictured) as CEO.
In June the company diversified, buying Cruise Management International (CMI). CMI manages cruise ships ranging from smaller passenger ships and coastal vessels to larger 2,000-passenger vessels in the expedition, Arctic operations, luxury adventure and educational cruising markets, in all regions of the world.
“The shareholders are pleased to pass the entire share capital of CMI to the new owner Anglo-Eastern, which has the scale, reputation, and technical capability to develop the business and continue the services provided to CMI’s clients and
customers in the bespoke expedition cruise sector,” said a statement from CMI. “Anglo-Eastern believes its values mirror those of CMI and is delighted to have found the opportunity to extend its ship management operations into a new sector, with the acquisition of such respected operators.”
Anglo-Eastern, founded in 1974, has grown through both organic growth and sizeable acquisitions over the years, including the 2001 merger with Denholm Ship Management and the 2015 merger with Univan Group.
Earlier in the year, Anglo-Eastern formed a procurement joint venture, Sea
Sourcing, with the world’s largest boxship tonnage provider, Seaspan. Seaspan said the joint venture would provide access to better value propositions, stronger negotiation power, improved risk mitigation, knowledge sharing and also seek to deliver enhanced value to supply partners by engaging them in longer-term partnerships.
Last month, Anglo-Eastern’s flagship maritime training centre in Mumbai celebrated the inauguration of its new premises at Leela Business Park in Andheri East. The new training space is home to Anglo-Eastern Maritime Training Centre (AEMTC) Mumbai and the associated partner facilities of MAN PrimeServ, WinGD and Wӓrtsilӓ
“The rejuvenation of our flagship training centre is symbolic of our continued investment in and commitment to lifelong learning, which has been key to Anglo-Eastern’s DNA and success over the years,” commented Hojgaard on the opening.
“ Anglo-Eastern has grown through both organic growth and sizeable acquisitions over the years”
‘The go-to partner for shipowners’
Fleet Management has seen many more ships join its ranks this year
In 2024 Fleet Management will celebrate its 30th anniversary. It remains one of the world’s fastest growing managers with more than 600 ships on its books and in Kishore Rajvanshy, managing director from day one, it has one of the true stalwarts of the industry.
The Caravel Group subsidiary has had a busy year with plenty more vessels joining its ranks. The biggest moment news-wise took place in June in Singapore where the company launched a new integrated shipmanagement unit –MaruFleet Management (MaruFleet) – in collaboration with MMSL, a subsidiary of Japan’s Marubeni Corporation, a company Fleet has been working with since 2014. .
“We see our relationship with Fleet as a partnership,” said Tomohiro Endo, managing director of MMSL. “We share the same philosophy and vision in growing our businesses through a clear focus on safety, quality and technical management.”
“We have positioned ourselves as the go-to partner for shipowners who want to be proactive and collaborative when
it comes to facing the industry’s biggest challenges and changes in the coming decades - whether it’s about greener fuels for shipping, adopting digital
New appointments at Wallem
AS COMPETITION GROWS in the field of shipmanagement, it can be difficult for companies to set themselves apart.
At Wallem, group CEO John-Kaare Aune says the company strives to deliver high-quality maritime solutions tailored to a shipowner’s individual needs.
“We also position ourselves as a trusted and forward-thinking partner with a focus on managing the ship of the future – something we are well equipped for given our expertise in modern shipboard technology and processes,” Aune tells Splash.
Aune says his clients appreciate both the cost efficiencies and quality that Wallem services provide.
“After all,” he says, “downtime is very more costly, our role is to ensure their vessels are properly managed and maintained in the most cost efficient way.”
In March Wallem appointed Ioannis Stefanou as managing director of Wallem Ship Management, with responsibility for the oversight and strategic planning of the company’s shipmanagement activities worldwide. Stefanou joined Wallem in 2014 to lead
technology, or retrofits and newbuilding considerations to ensure a vessel can sail today and in 20 years,” Rajvanshy tells Splash.
its technical management
In August Alastair Marsh, the former CEO of class society Lloyd’s Register, was appointed to Wallem’s board.
“ We see our relationship with Fleet as a partnership”Ved Chhabra Chairman & Managing Director
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To ensure comprehensiveness of repair for our clients, we maintain a diverse team to cater to a wide range of services ensuring well planned, efficiently organized schedules with proven record of timely deliveries, this ensuring that the vessel gets back to commercial operation on time, every time. To achieve this goal, we have invested in state of art equipment, good infrastructure, excellent logistics support via a large fleet of vehicles, extensive handling facilities such as forklifts and cranes, efficient supplier network and we ensure continual training for our teams for constant improvement in performance.
We believe that the whole team at International Ship Repair has significantly contributed to the company’s growth. The skill, knowledge, and expertise of our 1000+ employees ensure the quality of output defining us as a positive, capable, and noteworthy company.
Under the guidance of the Chairman & Owner Mr. Ved S Chhabra, the key Management team for the company, headed by the General Manager Mr. R C Yadav, along with the Commercial Manager Mr. Vijay Vaz, and the Marketing Manager Mr. S N Iyer have been instrumental in the phenomenal growth of the company and in honing it as one of the best the industry has to offer.
Mr
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Registry reaches around the world
The Hong Kong flag remains the fourth largest in the world and continues to grow both in terms of size and geographic reach
The total gross tonnage of ships registered with the Hong Kong Shipping Registry (HKSR) stands in excess of 131m gt.
In recent years the Marine Department, which oversees the flag, has established regional desks around the world - something that came into particular use during the pandemic and the severe restrictions Hong Kongers
faced in terms of overseas travel.
Today, the flag has offices in London, Shanghai, Singapore, Sydney, San Francisco, Tokyo, and Toronto.
Apart from technical support, the overseas posts also help in promotional campaigns. In order to uphold the quality of the Hong Kong fleet, the foreign offices are also tasked to conduct free flag state quality audits on Hong Kongregistered ships.
Administratively, the shipping register has streamlined its work processes with regard to the issuance of exemptions and dispensations and continues to explore the use of digital technology. In July this year it launched an online one-stop shop where owners can get most ship registrations and certifications in one single online form, as well as fixing online payments and giving customers a fee calculator for ship registration fees and annual tonnage charges.
Officials at the registry are proud of
its white list status and the continued safety record of the flag.
For last year, the detention rate of Hong Kong-flagged ships under the Tokyo Memorandum of Understanding was 1.2%, significantly below the regional average detention rate of 2.3%; and the three-year rolling detention rate of Hong Kong ships under the US Coast Guard’s Qualship 21 stands at 0.67%, better than the average detention rate of 0.87%.
“ The registry has offices in London, Shanghai, Singapore, Sydney, San Francisco, Tokyo, and Toronto”
Hong Kong can be proud of its flag’s global reputation
For all the latest shipping news from Hong Kong
Where will the next generation
The war for talent is relentless.
Sadly for Hong Kong the pandemic, combined with its relatively new tough national security law, have seen one-way plane tickets become prized items. The brain drain from the Cantonese entrepôt has been extraordinary - the city’s population declining in numbers not seen for more than six decades.
More alarmingly for the city’s shipping community is that while many shipowners and managers remain, much of their operations departments have decided to relocate, a wealth of expertise has been hollowed out.
There’s then the issue of attracting
the local youth to a career in maritime, something that becomes more tricky as the years go by.
The instant gratification, not to mention rewards, which are increasingly demanded of new entrants to the workplace, combined with people wanting a better work/life balance have meant that long days learning the ropes followed by equally long evenings studying for shipbroker or insurance exams are not being embraced to the same degree as in the past.
In days gone by, management trainee schemes gave a career path. These are increasingly rare. The past couple of
years of working from home have caused untold damage to many at the early stages of their career as they have not had the mentoring and hands-on training which are so essential to get to grips with any business, not just shipping. With the ability to build personal relationships at the heart of the shipping industry, the lack of social interaction has seriously damaged further career development, whilst doing job interviews remotely is no replacement for face-to-face contact and in many cases has proved a recipe for disaster.
Gautam Chellaram, executive chairman at local dry bulk concern KC Maritime, reckons it ought not to be that difficult to attract youth into shipping - it’s more a question of how to frame that entrance.
Chellaram says since the industry’s two biggest challenges are digitalisation and decarbonisation, a focused start-up strategy in these areas should attract
“ Hong Kong’s liveability score has been plunging in response to unscientific covid restrictions and perceptions around the national security law”
come from?
What should Hong Kong maritime be doing to ensure it gets its share of the brightest and the best?
and nurture young talent, something that is championed by the creators of The Captain’s Table, the Special Administrative Region’s outstanding maritime tech pitch competition (see page 54).
“Increased partnership with universities both for R&D and for talent is necessary. Both financial and policy support are necessary to make such ventures attractive,” Chellaram tells Splash.
Wellington Koo, chairman of the Hong Kong Shipowners Association (HKSOA), argues that local authorities should build into the secondary school curriculum greater awareness of Hong Kong’s position as an international maritime centre, while local university students in different disciplines such as business, law and engineering ought to be made more aware of the many opportunities in ship finance, marine insurance, maritime law and marine engineering.
The HKSOA chair also calls for
more support for local universities and the Vocational Training Council for the development of relevant courses and training and skill-enhancement programmes.
Angad Banga, likely successor to Koo at the HKSOA, is in agreement that more needs to be done to promote maritime at high school and undergraduate level.
“To attract talented students to our industry, as an industry we should consider partnering with universities and relevant education and youth affairs government departments to position the industry as a viable long-term career path for a range of disciplines,” Banga, chief operating officer at The Caravel Group, says, adding: “As an industry, we need to do a better job of educating the future generations of Hong Kong that a thriving career can be built in the maritime industry, through multiple different disciplines.”
Bjorn Hojgaard, Koo’s predecessor at the HKSOA as well as being the CEO of
shipmanager Anglo-Eastern, says all bets are off until covid restrictions are less onerous.
“The commercial principals in Hong Kong are offering attractive terms for both local and foreign talent, but Hong Kong’s liveability score has been plunging in response to unscientific covid restrictions and perceptions around the national security law. Hong Kong’s future as a shipping hub is dependent on the choices it makes in these areas; with industry specific measures of secondary importance,” Hojgaard says
For Vinod Sehgal, the CEO and managing director of another Hong Kong-based manager, SeaQuest Shipmanagement, costs remain a severe issue in the talent debate.
“The four pillars on which talent is usually attracted are compensation package, safe environment, health infrastructure and education and housing,” Sehgal maintains.
“While Hong Kong seems to be doing generally well on three of these,” he says, “they need to work on improving and lowering the costs of education and accommodation. This may be easier said than done but one way would be to increase compensation and reduce taxes.”
“ We need to do a better job of educating future generations that a thriving career can be built in the maritime industry ”
Dreamers and intellectual humility are two key ingredients in getting maritime to net zero emissions
Su Yin Anand from The Captain’s Table Innovation Challenge on what the industry needs to move along its decarbonisation path
Is the headline above an outlandish statement? To some, perhaps. But this is what we have observed over the three years we have been running this program. We start with this proposition: Innovation is necessary to get to net zero. We then follow up with this question: What do we need to innovate successfully?
References to dreams are littered in speeches by great people, the most notable being Dr Martin Luther King’s seminal speech in 1968 which came to be known as the ‘I have A Dream’ speech. Even the King of Rock and Roll, Elvis Presley sang about it in his hit song ‘If I can Dream’. Why? It is because dreams lead to success. Dreams inspire.
How does this relate to innovation
and getting to net zero emissions? The maritime industry lives in a highly operationalised world where routine processes and procedures, metrics and results are prioritised. Ideas that disrupt routine, or which involve risk-taking, are generally discouraged. Typically, recruitment focuses on talent from within the industry, and therefore, talent comfortable with working in this operationalised world.
However, routine, and risk aversion are diametrically opposed to the notion of innovation, which requires and indeed, encourages creativity, experimentation and risk taking. Dreamers fill the gap between these two worlds. The argument goes that those who dare to dream have the courage to challenge status quo and current biases. This will undoubtedly lead to conflict between the two worldsroutine and execution versus abstract. But it is at the intersection of the debate between the two worlds that realistic forward looking and human centric solutions will be generated because both the operational world and the dreamers’ world are necessary for innovation. Dreamers provide the ideas and the operational world grounds ideas generated by dreamers in reality.
This then brings us to the second ingredient – intellectual humility. Innovation is difficult and success often involves having to overcome organisational resistance. It also requires collaboration, and investment of time and resources. Effective innovation requires listening, strong communication, learning mindset and acknowledgement that one person does not have all the answers. This is where intellectual humility is key. By setting aside preconceived notions, opening minds to new ideas and surrounding yourself with people who make you better, leaders of organisations will be well positioned to kickstart and drive their innovation processes.
Therefore, companies looking to embark upon their innovation (and decarbonisation) journeys should start by looking at their people. Do you have the right mix of operational experts and dreamers, and the right level of intellectual humility (and curiosity) across the leadership levels? A common mistake made by companies seeking to
innovate is to jump straight to the technological solution but without the right people looking at and working the technology, the probability of failure is high. After-all, technology is merely an enabler.
At The Captain’s Table Innovation Challenge, first set up in Hong Kong four years ago, we put people at the focus of what we do, and we believe this is what sets us aside from the competition. We seek to get to know and understand our founders – we look for dreamers. We want to know what drives them, what motivates them, and whether they dream big enough to have the courage to overcome the difficult entrepreneurial path ahead of them. With our stakeholders, we seek out individuals within corporates who are looking to make a difference in their space, and who therefore have the ideas and resilience to challenge the status quo, and provide our founders with the support needed to ground their ideas in reality. This recipe has seen us through three successful iterations of the challenge. We are now preparing for our highly anticipated fourth challenge.
This year, the focus remains firmly on the four pillars of People, Decarbonisation, Sustainability and Smart Port Solution, and we are actively recruiting for entrepreneurs (dreamers) with solutions in these areas.
The finals will be held in Hong Kong in January, with fringe events to be held in London and Singapore.
The Captain’s Table is a YPSN (HK) initiative. It is the leading pitch challenge for startups. Click the QR code for more details.
