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Rising fear of mass shipping exodus from Hong Kong to Shenzhen

THERE are growing fears among shipowners that they will be forced to move operations from Hong Kong to neighbouring Shenzhen if government cannot offer an exemption to new competition rules what would make their vessel sharing agreements (VSA) illegal.
Shenzhen on the mainland has no such regulation and if there is no block exemption before the new ordinance comes into force December 14, members of the Hong Kong Liner Shipping Association (HKLSA) see little option but to abandon the port.
"A good 10 per cent of our business moves through Hong Kong and it is a nice business," said HKLSA head Tim Smith, also Maersk chief in China. "If everything moves to Shenzhen I will be forced to lay off people and may even lose the business."
Guidelines on how the new competition law will be implemented when it is introduced mid-December were released this week. The Competition Ordinance outlaws vessel sharing agreements under which most of the containers entering and leaving Hong Kong operate.
"When you think that 95 per cent of the container throughput in Hong Kong comes in or goes out in services that are VSAs or other operational sharing agreements, that could be quite problematic," said Mr Smith.
The Competition Commission, an independent agency to enforce the ordinance, earlier said it would consider block exemptions, but said little else since.
"We are in a very uncertain situation, and companies like ours do not like uncertainty," said Mr Smith. 
"While it is difficult to believe that the Hong Kong government will allow a competition law to destroy its container shipping business, it''''s inaction has led to a steady decline of the port in the past 15 years. 
Mandatory clean fuel is 40 per cent more expensive than regular bunker in Hong Kong. In Shenzhen, use of low sulphur fuel is voluntary, providing another incentive for carriers to shift calls across the border.