We would like to inform you about the current status of a labor strike at the Hong Kong International Terminals (HIT). HIT, which has a 70% market share in terms of port handling volumes, operates five terminals out of a total 9 berths (with 16 deep water ship berths) at the Kwai Chung Terminal Port (with a total of 24 ship berths). The strike (backed by the local Unions) started about a week ago demanding a pay increase of about 20% from the subcontractors of the HIT. The unrest has continued to grow, which attracted more participation from the workers and support from the community. Hundreds of dock workers (allegedly about 450 workers accounting for about 30 to 40% of the total dock employees serving HIT) and their supporters occupied some areas of the terminals including some of the gates. HIT has been relocating its internal resources and manpower to sustain the operation of the terminals and contingency procedures have been activated.

There is some slowing down of truck traffic within the vicinity of the demonstration and operation at the gates; however, there had been no major disruption to the overall terminal’s operation so far for the initial days. HIT is declining any direct talks with the dock workers for their pay raise, but it is calling on its subcontractors to promptly resolve the matter with the workers. The latest development is that HIT has obtained a court injunction to ban the protestors from the illegal occupation of the terminal premises. While the protestors have now moved out of the terminals, the strike and protest continues outside of the terminals. The unions are also threatening with escalated actions. The latest talks called up by the government labor department failed yesterday and they are working hard to quickly arrange the next meeting.

As the strike continues, the negative impact has started to surface. HIT warned on Tuesday that the continued industrial action could affect some 80 container vessels expected to call at its terminals in the next three days. Carriers have been implementing different contingency measures, including skipping the calls to the Hong Kong port and delaying the arrival of the ships, etc. to counteract the strike. Hong Kong port is currently experiencing serious delays for the import containers to be picked up from these HIT terminals. Export cargo from Hong Kong is also facing certain delays but not as serious as the inbound containers. It remains uncertain as to which direction the situation will take as of this writing. We will keep a close eye on the matter and we will monitor the impact to all shipments. Until it is resolved, we will continue to provide you frequent updates on the latest developments.