29 November 2002
KCRC’s statement on Utilization of Freight Yards
In response to press enquiries, the Kowloon-Canton Railway Corporation (KCRC) issued the following statement in relation to the operation of its freight yards and its land holdings:
"KCRC is mandated under the KCRC Ordinance to operate passenger and freight services in accordance with prudent commercial principles, and to do all things which in its opinion are necessary to facilitate the proper carrying out of its business. Accordingly, KCRC enters into commercial agreements with freight services providers to utilize its assets in order to be responsive to market conditions, contain costs and enhance revenues. The range of services provided by these freight service providers comprise the following:

(a) stuffing and unstuffing of cargo into and out of containers and freight  wagons;
(b) the use of freight yards for the purpose of delivering and taking away cargo by trucks and other road vehicles;
(c) the berthing of vessels against KCRC piers for the purpose of delivering cargo to and taking cargo away from KCRC’s freight yards;
(d) the warehousing of cargo awaiting shipment or collection;
(e) lashing, i.e. the services involved in securing cargo and covering up the goods, usually break-bulk, to freight wagons;
(f) freight forwarding operations undertaken by companies which collaborate with KCRC freight; and
(g) storage areas for cleaning services contracted out by KCRC.

"KCRC has entered into licence agreements with 10 freight service providers. Similar arrangements have been in place since KCRC began its freight operations.
"Under a licence agreement, an operator is granted the right to use land for a stipulated purpose, and in the case of KCRC freight, the right to handle and store cargo in the Corporation’s freight yards. KCRC has the right to remove the licencee from the land at very short notice and at any time use the land for its own purposes. A licencee does not have the statutory or common law protection which is available to tenants whose interest in land confer on them exclusive possession of space for the period of their leases. The licensing arrangements are not intended to violate the non-alienation provisions in the KCRC Ordinance and relevant Conditions of Grant. Indeed, KCRC’s legal advisers have provided the Government with an opinion confirming that there is no breach of the relevant Conditions of Grant.
"An allegation has been made that the KCRC has unduly profited from its freight operations, and withheld its profits from the Government, KCRC’s sole shareholder. This is not true.
"Any net profit the Corporation makes is payable to the Government in the form of dividends. The Government has seen fit, however, to allow the Corporation to retain its profits for the past few years and to use them towards meeting the cost of building such new railway projects as West Rail Phase I, and the East Rail Extensions."