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Hong Kong Port May Lose Customers as Ships Diverted on Strike

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April 3 (Bloomberg) -- Billionaire Li Ka-shing’s Hongkong International Terminals Ltd. is losing customers as a strike by dockworkers causes a 20-fold increase in vessel berthing times at the world’s third-biggest container port.

Evergreen Marine Corp Taiwan Ltd. has diverted at least three ships after more than 10 vessels faced delays, the company said in an e-mailed statement. The time needed to berth a vessel has lengthened to 60 hours from three, the South China Morning Post reported yesterday.

The strike entered its seventh day, threatening to damage Hong Kong’s reputation as a trade hub for China at a time when competition with mainland ports is intensifying. Dockers are demanding a 25 percent pay increase as rising living costs and record home prices spur discontent in the former British colony.

“Hong Kong’s port is well known for its efficiency and the high frequency of scheduled services,” Geoffrey Cheng, an analyst at Bank of Communications Co. who has covered the industry since 1994, said today by phone. “The strike is definitely a blow to the business in the short term. Workers may run out of patience as their compensation has failed to catch up with economic growth in recent years.”

Hongkong International Terminals is operated by Li’s Hutchison Port Holdings Trust, and with its partner controls more than half the city’s port capacity. Hutchison Port Holdings fell 1.2 percent to 85 Singapore cents as of 12:43 p.m.

Losing Money

The company has lost about HK$5 million ($644,000) a day, and may face claims from shipping companies, Gerry Yim, managing director of Hongkong International Terminals, said yesterday.

About 450 protesters, including students and labor activists, remained on the street outside the entrance of the port in the Kwai Tsing district, Ho Wai-hong, a representative of the Union of Hong Kong Dockers, said by phone today.

The dock workers, who are employed by contractors, are demanding that hourly wages rise by HK$12.50 from about HK$50, the union said. Strikers won’t accept an offer of a 5 percent pay increase, Radio Television Hong Kong reported on its website today, citing Lee Cheuk-yan, a lawmaker from Hong Kong’s Labour Party.

Distribution Hub

The Hong Kong Shippers’ Council, which represents the city’s exporters, importers, traders and manufacturers, said members should seek alternatives because of the strike.

The strike “is going to ruin Hong Kong’s reputation,” said Willy Lin, chairman of the Hong Kong Shippers’ Council. “A lot of brands, clothes, watches, camera, even iPhone, iPad, they use Hong Kong as their regional distribution center. We do need very efficient port operations.”

The city is the world’s third-largest container port by volume last year, behind Shanghai and Singapore. Hongkong International Terminals and its partner Cosco Pacific Ltd. control about 55 percent of capacity in the city, according to UOB-Kay Hian Holdings Ltd.

Labor discontent in Hong Kong has risen as its wealth gap widens to the biggest since records started in 1971. Cathay Pacific Airways Ltd. in December agreed on a deal with the flight attendants union, averting labor disruptions threatened after disagreements on wage increases and working conditions.

The strikers are demanding direct talks with Hongkong International Terminals, the union, which represents about 500 people working at the berths, said yesterday. Protesters were forced to leave the facility this week after the city’s High Court granted a temporary injunction barring them.

Wage Dispute

Dock workers say they are getting paid less than in 1997, according to union spokesman Ho. The laborers received pay increases of as much as 20 percent in 2011, Hongkong International Terminals said in an e-mailed response to questions.

Hongkong International Terminals operates 12 berths at four terminals in the Chinese city and two through a venture with Cosco Pacific. Hong Kong has nine terminals.

The company and its partner handled 11.7 million 20-foot container boxes in 2011, according to the latest annual report of Hutchison Port.

Maersk Line, the world’s biggest container shipping company, sees “minimal impact” as its main vessels call at the port operated by Modern Terminal Ltd., it said in an e-mailed statement today.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Vipin V. Nair at vnair12@bloomberg.net