West delta rising part I: bridging logistics gaps in China’s Pearl River Delta

In today’s Part I of our feature, we consider the role of the recently opened Hong Kong-Zhuhai-Macau bridge in supporting the diversification of cargo flows in China’s Pearl River Delta region.

China’s Pearl River Delta (PRD) region has long served as the nexus of air cargo flows between Asia and the rest of the world, reinforced by the rising economic strength of Hong Kong – the world’s busiest cargo airport since 2010 – and mainland China.

Over the past two decades, global demand has intensified, thus requiring major expansions to infrastructure and connectivity between Hong Kong International Airport (HKG), which in 2018 handled 5.1 million tonnes of cargo, and mainland China. To expand distribution capabilities and support ever-growing cargo volumes, the Chinese government began drafting a plan to strengthen network connectivity within China and its competitive stance in international trade flows. One major facet of this plan was the Hong Kong-Zhuhai-Macau Bridge (HZMB), which entered into construction in December 2009 and opened at the end of 2018, following delays, budget overruns and safety issues during its construction. In the general mood of global uncertainty as of late, the decade-long project has been met with both optimism and skepticism by air cargo industry stakeholders, as companies weigh the worth of including the bridge in regular operations. Now that the HZMB is open, industry providers are asking is – how will the bridge influence operations, and what is its ultimate value?

Shifting cargo flows: east and west

Before motivations for building the HZMB can be understood, it is important to observe the geography and history of the Pearl River Delta region and how these have impacted the development of logistics and cargo flows in the region.

The PRD is separated by the core branch of the Pearl River, while the surrounding delta around this is formed by three other major rivers – the Xi Jiang (West River), Bei Jiang (North River) and Dong Jiang (East River). The land mass within this area comprises several Chinese prefectures [including Guangzhou, Shenzhen, Zhuhai, Dongguan and others] and the special administrative regions of Hong Kong and Macau, which are all further divided by smaller rivers and estuaries.

From Hong Kong, logistics providers can move cargo volumes into mainland China by one of two means – through the western PRD, with Zhuhai and Macau at its forefront, or the eastern PRD, where Shenzhen sits as gatekeeper to the rest of Mainland. In the past, connections through the eastern PRD to Mainland China have received higher traffic due to heavy domestic and foreign investment into Hong Kong and Shenzhen.

Cargo moving by ground to the mainland via the eastern PRD passes through one of four boundary control points located on the border of Shenzhen and Hong Kong – Lok Ma Chau, Man Kam To, Sha Tau Kok and Shenzhen Bay. Lok Ma Chau accounted for 60 percent (8,511,218 vehicle movements) of cargo land transport movements five years ago, and in 2018 still saw 52.7 percent of movements (6,810,644 vehicle movements), despite shifts in flows through other points, according to data provided by the Hong Kong Customs and Excise Department.

Moving cargo from HKG through the western PRD has always been another option, but was much less efficient. Driving from HKG to the Lok Ma Chau control point takes approximately half an hour, while travel time for cargo over ground to Zhuhai from Hong Kong took four hours.

The opening of the HZMB Bridge significantly changed the PRD landscape, reducing travel time between Hong Kong and the western PRD to 45 minutes. . With this development, the HZMB now offers a competitive mode of cargo land transport to the western PRD through Zhuhai and Macau.

Scattered networks: integrating international and domestic routes

The need to integrate scattered transport networks, thus facilitating cargo logistics transport to support equitable economic growth between Chinese provinces, has long been recognized by Chinese authorities. To facilitate cargo to the mainland via the eastern PRD, authorities in Shenzhen and Hong Kong worked closely since the mid-1970s to establish the four control points on the border between their locales. However, the western PRD remained disconnected overall from Hong Kong.

At the start of the new millennium, China’s central government decided to support China’s economic growth by increasing network integration and diversifying risk. For local government and private stakeholders, connecting the western PRD would increase their competitive advantage against other Chinse regions’ emerging cities– like Zhengzhou and Chengdu – and Asian countries in air cargo and logistics.

While collaboration between stakeholders in Shenzhen, Hong Kong and Zhuhai helped to identify gaps in integration, development of physical infrastructure remained critical to creating a practical connection between Hong Kong and the western PRD. To that end, the plan for construction of a bridge between Hong Kong, Zhuhai and Macao was born. With cooperation between mainland China’s Central Government, as well as the local governments of Guangdong, Hong Kong and Macau, construction began late in 2009 and was completed with the opening of the bridge at the end of last year.

Although it is too early for a large shift in cargo flows to the western PRD via the HZMB, 16,902 cargo vehicle movements took place over the bridge in October 2018, which comprised 1.6 percent of the bridge’s daily traffic, according to data from the Hong Kong Customs and Excise Department. Since then, the cargo traffic share of vehicle movements on the bridge has grown, and accounted for 6.4 percent of traffic volume as of Jan. 28. Given more time, airport authorities and integrators in the region anticipate the HZMB will see a continued increase in cargo operations over the bridge.

In practice, moving goods across the HZMB via truck will operate in a similar process to that for moving goods to and from Shenzhen. In order to move cargo between the three different legal and customs systems, the customs departments of Hong Kong, Zhuhai and Macao signed a memorandum of understanding in November. The agreement establishes a liaison mechanism for the three customs administrations, extending the use of a single “e-lock” scheme, and expanding a customs clearance program currently in force between Hong Kong and Shenzhen to the Hong Kong and Zhuhai Ports of the HZMB Bridge. Although private cars are restricted to a quota, there is no limit to the number of cargo transport trucks that can utilize the bridge so long as they are double-plated, licensed by both Hong Kong and the mainland.

Increased traffic on receiving ends of the bridge is of potential concern. Prior to the opening of the bridge, Zhuhai authorities worked with Siemens to alleviate traffic congestion potential in the city. In 2016, Siemens created a traffic management system for the public to access via mobile device to see real-time and forecasted traffic in order to plan their transport throughout the city. Siemens also created a “green light” system for the Zhuhai Transportation Bureau that allows authorities to track traffic flows. While traffic management schemes were intended to alleviate traffic congestion for the general public, these measures also indirectly support cargo traveling via shared roads.

Of the three receiving ends of the HZMB, Macau currently seems to be facing the greatest threat of traffic congestion. Macau legislator Ho Ion Sang said that “the transport infrastructure of Macau has severely lagged behind schedule – many of the complementary traffic facilities could not become operational at the same time as the HZMB,” as reported by Macau Business. Traffic to Macau is not estimated to be huge in the initial opening period of the HZMB, but in apprehension of future grid-lock the government is considering plans to divert traffic in the midterm by building more underground tunnels or flyovers, and in the long-term through land reclamation and road surface enhancement.

Click here to read part II of this Pearl River Delta feature, as Air Cargo Airports details the role of the HZMB in PRD airports’ strategies to expand cargo logistics networks by air or here to learn more about infrastructure development in the western PRD.