The Emergence of Midstream Operations

The history of midstream operations in Hong Kong goes back a long way. In the early days, before shipping containers, bulk cargo such as grain and miscellaneous goods were transferred to and from shore on barges called “lighters” because their job was to lighten ships. The practice was then called “lightering”. Most goods were transported this way because Hong Kong did not yet have a dedicated cargo facility, only a few government piers and various private wharves.

In 1886, businessman Sir Paul Chater and Jardine Matheson & Co. jointly established the Hong Kong and Kowloon Wharf and Godown Company Limited (today known as Wharf Holdings), which grew into Kowloon’s largest cargo terminal operator. Subsequently, new wharves and warehouses were built in areas such as Tsim Sha Tsui, Sai Ying Pun, and North Point, gradually forming Hong Kong’s early port infrastructure.

Until the middle of the 20th century, most goods worldwide were transported as “break bulk cargo”, the industry term for individual crates, barrels and sacks. When cargo arrived at port, dockworkers (then commonly called “coolies”) manually carried each item from ship to shore or vice versa. Later on, ships either used their own cranes, or barges equipped with cranes towed alongside the wharf, to load and unload goods. If there was insufficient berth space, or if a cargo ship was too large to berth, ships would anchor in the waters off Kowloon, and the cargo would be transferred using barges and tugboats. 

This method, however, was time-consuming and accident-prone, resulting in high rates of cargo loss. An American transport entrepreneur named Malcom McLean came to a realization about how inefficient this was while watching dockworkers loading bundles of cotton one by one. In 1937, he began to explore ways to improve the shipping process. By 1956, he had converted an oil tanker, the SS Ideal X, to carry 58 shipping containers, pioneering the use of standardized containers for cargo transport. 

McLean standardized containers at a length of 35 feet and worked with engineers to develop machinery to safely stack and secure them, laying the technical foundation for modern container shipping. Break bulk cargo was gradually replaced by containers, transforming the way global shipping worked.

By the 1960s, Hong Kong’s manufacturing industry was expanding, and container shipping had entered the mainstream of international maritime trade. In 1966, the Hong Kong government started exploring the possibility of reclaiming land in Kwai Chung for a container port. By 1970, Wharf had upgraded one of its berths to accommodate container ships, followed by similar changes at wharves in North Point and Sai Ying Pun. Yet port capacity was unable to keep up with the growth in cargo volumes, so in the early 1970s, the government went ahead with the Kwai Chung project, opening its first container terminal two years later. By 1974, Kwai Chung had five container terminals; by 1987, it led the world in container throughput, operating non-stop around the clock. 

It was against this background that midstream operations evolved into an important support system for the freight industry. This made Hong Kong something of a global outlier. While lightering became less relevant in other parts of the world after containerization, in Hong Kong, it had to innovate because there was simply not enough terminal capacity to cope. The industry adapted to moving shipping containers and evolved into modern midstream operations. 

As Mr Chee noted, when terminal berths were occupied and cargo ships were unwilling to wait, or when they only needed to unload some of their containers (especially empty ones) some shipping companies hired midstream operators, which eased pressure on the terminals. In reverse, sometimes cargo containers would first be received by midstream operators, then loaded onto barges, and transported to offshore anchorages, where they would be lifted onto cargo ships. 

In Hong Kong, some midstream operators handled the entire chain of operations, owning their own wharves, barges, and tugboats. Others specialized in a single service, such as tugboat operations or barge-based cargo lifting.

How Midstream Operations Work

When cargo ships arrive in Hong Kong, instead of docking at Kwai Chung, they drop anchor at anchorage areas designated by the Marine Department and wait for barges to come and load or unload them. 

The barges themselves are not motorized and need to be pulled by tugboats. Tugboats tow one or more barges alongside the container ship. A crane operator on board the barge aligns the crane with the containers on the ship, then lifts them one by one onto the barge deck. A single barge can carry about 80 to 100 twenty-foot equivalent units (TEUs). 

Once loaded, the tugboat tows the barge to shore, usually to a public cargo working area or a private wharf operated by the midstream company. The barge crane is used again to move the containers onto shore, after which they are transported inland by truck. The process works much the same in reverse: containers for export are delivered by truck to a wharf, lifted onto the barge, towed to the anchorage, and finally hoisted onto the cargo ship. 

Throughout the process, the cargo ship does not need to dock at a container terminal at all, saving operational costs and waiting time. For ships that only need to deal with a small number of containers, especially empty ones, this method is more flexible and significantly cheaper.  

Container terminals are equipped with various types of heavy machinery to lift containers, using specialized spreaders to lock onto the containers. Barges, on the other hand, attach containers to cranes with steel cables and hooks. Therefore in addition to crane operators, there are hookmen (“ngau1 jaai2”) whose job is to fasten and release the hooks, ensuring that the lifting process goes smoothly. 

In Mr. Chee’s experience, a barge can load or unload a ship at a rate of about 13 containers an hour. Loading or unloading onto the shore can go at 16 containers an hour. By that estimate, a single loading and unloading operation usually takes almost an entire day. 

The Fading Role of Midstream Operations

Plainly, midstream operations were never a replacement for container terminals, but an ancillary support system that kicks in under certain conditions. However, from the 2010s onwards, as the regional shipping landscape changed, midstream operations went into a long, steady decline.

One key factor was the rapid expansion of ports in mainland China. Major container terminals like Yantian and Nansha were built, challenging Hong Kong’s status as a transhipment hub. Initially, shipping companies hesitated to use mainland ports due to complicated customs procedures and lower efficiency compared to Hong Kong. The dockworkers’ strike of 2013, when workers protesting for better pay and conditions brought Kwai Chung to a standstill for nearly 40 days, proved to be a major turning point. Mr. Chee explained that some shipping companies tested out mainland ports and found that they were not as inefficient as expected. With supportive policies driving the maturation of port facilities on the mainland, cargo volumes gradually shifted over there. 

While external competition was intensifying, midstream operations also faced several structural challenges. First, barge operating costs were high due to the limited capacity of shipyards in Hong Kong, which made it very costly to dry-dock and repair large barges. As a result, many repairs had to be outsourced to mainland China as only basic maintenance could be done locally. Secondly, labour shortages worsened, particularly among experienced crane operators, who became increasingly difficult to recruit.

Safety also remained a long-standing issue. According to figures from the Marine Department, more than 3,000 midstream operations-related accidents were recorded between 2000 and 2009, including 51 fatalities. Some voices even called on the government to restrict the scope of midstream operations after the opening of the Hong Kong-Zhuhai-Macau Bridge. 

Due to these combined factors, the midstream operations industry continued to shrink, so that only a small number of businesses continue to operate today. In Mr. Chee’s understanding, only a few large operators, like China Merchants Wharf, continue to provide a small volume of midstream operations services. Many companies have shifted focus to handling break bulk cargo such as steel and construction supplies. Reclamation projects in particular still depend on barges to deliver materials.  

A barge crane loading steel coils onto a ship in 2018. With a decline in container throughput, remaining midstream operators have shifted to transporting construction materials. Credit: Angus Wong.

In the waters around the Yau Ma Tei Typhoon Shelter, barges remain moored for months, hardly ever used. According to Mr. Chee, the price of a barge has dropped significantly in recent years. Where they once cost millions, they now go for six or seven hundred thousand dollars, a clear indication of falling demand. 

Could the recent rise of online shipping bring new opportunities for midstream operators?

On the surface, rising freight suggests new possibilities, but the reality is more complicated. The former flourishing of Hong Kong’s container terminals and midstream operators depended on its role as a transshipment hub between mainland China and the rest of the world. Before China’s opening up, nearly all goods moving in and out of the mainland passed through Hong Kong. However, when mainland ports began to participate directly in global trade, regional logistics routes underwent a fundamental shift. Cargo flowing between Taiwan and the mainland no longer needs to go through Hong Kong, diminishing the city’s role in the global shipping system. (See City Unseen’s piece on the massive container port expansion that never materialized.) 

Despite all of this, midstream operations have not entirely vanished. At one point, the model was even exported beyond Hong Kong’s shores. In 2009, in what was seen as the first overseas deployment of midstream operations, a Chinese shipping operator acquired several barges and tugboats that had been used in Hong Kong and transported them to Angola in West Africa to develop the industry there. 

Regardless of the industry’s contraction, midstream operations hold a key role in Hong Kong’s shipping history. It is both a product of specific historical conditions and a testament to the crucial stage of Hong Kong’s transformation from entrepôt to international logistics center. 

Special thanks to Hong Kong Mid-Stream Operators Association.

This article was written by contract researcher Ng Cheuk Hang.