Hong Kong under pressure again, faces more restrictions on cross-border trucking

04 Aug 2022

By Jennifer Chang      Photo:Tim Durgan

A new outbreak of BA.5 sub-variant strains appeared in Shanghai, especially in Baoshan District. The local infection cases reported a while ago were mostly freight and logistics personnel. But so far, there is no impact on air transport, and the operation of Shanghai Pudong Airport has reached the level before the blockade. Not only in Shanghai, but also in Shenzhen,because the local epidemic situation has exceeded a month, the social transmission chain is still unable to be identified, and news of the decision to strengthen the epidemic prevention management of enterprises has been reported.

Reduce non-essential personnel entry and exit, and conduct closed production for 7 days. Shenzhen again tightens COVID-19 controls to try to stop new spread of highly contagious omicron sub-variant BA.2. As a result, supply chains operating through Hong Kong are again facing restrictions on cross-border truck operations. The restrictions, which begin on July 25, reduce truck capacity to around 10-20% of its usual level. Cross-border freight capacity from South China to Hong Kong was reduced from 3,500 to 1,500 vehicles per day, Dongguan from 675 to 124, Shenzhen  from 300 to 88, and Liantang from 360 to 21. In addition, there are stricter testing policies: truck drivers must show evidence of a negative test result within 24 hours. Due to truck restrictions, there has been a huge increase in demand for feeder services to transport goods to Hong Kong. While some freight will be diverted to sea, the overall drop in capacity will affect the flow of freight between South China and Hong Kong. The total shipping time is expected to be extended by two to four days.

Cross-border truck operations were  restricted earlier this year as China grappled with a series of Covid-19 outbreaks. At the time, Hong Kong hub airline Cathay Pacific said trucking restrictions were one of the main reasons for the drop in demand. Now facing another blow to cross-border trucking, Hong Kong is losing the favor of shipping companies as a transshipment hub. Meanwhile, waning demand for cargo at the Hong Kong gateway has apparently dealt another blow to the port, according to South China terminal operator Hutchison Port Holdings. Hutchison said in its first-half earnings report that throughput at Shenzhen's Yantian International Container Terminal rose 7% year-on-year, but throughput at its Kwai Tsing terminal in Hong Kong fell 7% due to "lower local and transshipment cargo."  Profits have come under pressure as Hong Kong handles a drop in imports and exports in recent months. This also has a negative impact on the preference of shipping companies to use Hong Kong as one of their transshipment hubs, as there is less flexibility in service rotation. Hong Kong government officials have contacted mainland officials repeatedly in the last few months to get the restrictions eased, but there has been no progress so far. Ocean carriers are dropping calls at Hong Kong as stringent cross-border COVID-19 restrictions curtail the transfer of goods between Hong Kong and mainland China by barge and truck.

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