Hong Kong's ports are suffocating from competition across the border. In fact, Shenzhen Port has been capturing the growth of the majority of the South China throughput, thanks to the cheaper trucking cost compared with Hong Kong's.

But the picture is not all dismal. There are ways to save the ports and trucking industry here. One of them, the Green Lane, was launched and tested in 2006 and has shown some positive results.

In fact, the Green Lane model, initiated by the port and shipping community, is back on the radar of policy makers and the logistics industry. It was part of the policy proposals by Chief Executive Donald Tsang's special panel on expanding economic co-operation with mainland China under the 11th Five Year Plan.

The objective of the Green Lane is to alleviate cross-boundary traffic congestion by simplifying customs procedures and to reduce trucking costs so as to increase the competitiveness of Hong Kong's logistics industry. Because of the speedier customs procedures performed at both Huanggang border-crossing and South China International Logistics Centre (SILC), valuable time can be saved and truck drivers are able to make more than one round trip per day, thus increasing cost efficiency (see sidebar on p.14).

According to studies conducted by one of the trucking companies registered to use the Green Lane, the cost saving for shippers for transporting a container from Dongguan to Hong Kong averages to HK$450-550. For longer-haul journeys, the saving amounts to HK$1,500-1,650.

With such advantages, it is a puzzle why not more than ten cross-boundary trucking companies have signed on to use the Green Lane since the launch in May 2006. As of November 2006, only 560 Twenty-foot Equivalent Units (TEUs) have been transported using the lane.

Speed bumps

Why has the Hong Kong transport industry not readily embraced the Green Lane even though it provides obvious benefits?

For the most part, truck drivers are not rushing to adopt the concept because of fear and uncertainty as a result of the lack of awareness.

A major concern is that the Green Lane might actually reduce drivers' incomes. Using conventional methods, a northbound Hong Kong truck driver making a trip to a final destination in mainland China would be able to earn the wages for the entire trip.

Using the Green Lane, the driver would stop at the SILC, unload the laden container, which would then be passed to a mainland driver to continue the domestic journey. Truckers fear that if they have nothing but an empty box to return to Hong Kong, then the earning potential is reduced compared with using the conventional method.

However, this perceived disadvantage can be turned into an advantage if more trucking companies become aware of the Green Lane and make use of it to create a critical mass.

"There should be more communication within the industry on the subject of the Green Lane so more people will know about its time- and cost-saving features and social impacts," said a spokesman from a company that participated in the pilot Green Lane project last year.

"Once a critical mass is reached, shippers will take advantage of the service and ask truck drivers to pick up laden containers at the mainland logistics depot and transport them back to Hong Kong. This would allow drivers to make up for what they perceive to be a reduction in income. "

Besides, the significant time saving from the simplified border crossing and customs clearance procedures will allow drivers to make more than one return trip per day, thus increasing their earning potentials.

Another reason for resistance against using the Green Lane is due to the restraints imposed by the Shenzhen Customs at the SILC. Currently, it operates from 8am to 5pm, which limits the flexibility of truck drivers who want to cross the border in the evening.

"If mainland truck drivers cannot make it to SILC by 5pm, they risk having to wait around an extra night before they can continue on their journey to Hong Kong," explains Ricky Wong, Chairman of the Hong Kong Container Tractor Owner Association.

"On the other hand, if they use the conventional route passing the border at Huanggang, they can still make it to Hong Kong the same evening, thus saving them invaluable time. While the savings resulting from using the Green Lane can amount to about US$100, a shipper would normally avoid the risk of having to waste an extra night and miss the boat in Hong Kong."

Mirror effect

It is, of course, not enough to have the Shenzhen Customs increase its operating hours in order for the Green Lane concept to work seamlessly. Reciprocity by the Hong Kong Customs and logistics industry is necessary.

Kelvin Leung, Chairman of Hong Kong Association of Freight Forwarding and Logistics, emphasises that the Green Lane concept will have a positive influence on the Hong Kong economy, especially if it is reciprocated on the Hong Kong side.

How Green Lane works   The Green Lane consists of two express lanes at Huanggang designed for truckers who have installed GPS devices and e-seals. Prior to their trips, the truckers would register online with the Unified Road Manifest system operated by OnePort Ltd. This pre-declaration procedure makes it unnecessary to go through the conventional customs clearance procedure at Huanggang. Normally, drivers would wait in queues for one to two hours for the customs to decide whether to open and check the containers or not. By contrast, it takes only about 15 minutes for truckers using the Green Lane method to cross the border as they only need to present some simple paperwork at an express window without having to go through the actual customs clearance. Clearance will later be performed by the Shenzhen Customs when they arrive at the South China International Logistics Centre (SILC), 6 kilometres away from Huanggang.

"If we can match the programme on the Shenzhen side and set up logistics parks on the Hong Kong side, say, at Lok Ma Chau, then mainland truck drivers can also drop off their containers and leave them for Hong Kong drivers to pick up and complete the remainder of the journey."

This means that Hong Kong drivers will be able to pick up more business exactly the same way mainland drivers do when they pick up laden containers at SILC.

But incentives are necessary to create one or more logistics depots on the Hong Kong side, and the Hong Kong Customs also needs to set up stations in these depots to perform expedited customs clearance.

Ricky Wong says the Government of the Hong Kong Special Administrative Region should take a leadership role in supporting the Green Lane by consulting the industry and then ensuring a level playing field for all parties interested in establishing logistics depots.

"The Government should consider giving a tax break or a discount on land prices to those interested in creating a depot," Wong says. "It has said that Hong Kong's logistics industry is losing its competitive edge. Well, now it's time to take action and do something to reduce the cost burdens of the industry."