The MTR Corporation will close down its rail freight business on June 16 due to low market demand.

Acting Secretary for Transport & Housing Yau Shing-mu today told lawmakers in the past 10 years, while the total cargo volume has increased by over a quarter and cross-boundary cargo movements between the Mainland and Hong Kong have grown by almost 30%, rail freight volume dropped more than 80%.

"The freight volume for cargo transported to and from Hong Kong using rail in the past three years in terms of tonnage is 141,000 tonnes, 109,000 tonnes and 84,000 tonnes in 2007, 2008 and 2009 respectively, accounting for 0.05%, 0.04% and 0.03% of all cargo movements to and from Hong Kong, and 0.11%, 0.08% and 0.06% of all cargo movements between Hong Kong and the Mainland."

The decreasing rail freight volume is due to a combination of factors, most notably market competition, he said. Compared with other modes of freight transport, rail does not have unique advantages in the local market in terms of flexibility, time or costs.

"The corporation arranges cargo to be transported to and from the Mainland and Hong Kong through three freight forwarders.

"Before deciding on the date of cessation, the corporation communicated closely with freight forwarders such that sufficient time would be allowed for them to make arrangements to transport cargo to destinations through other means. The corporation will continue its communication with stakeholders, including the trade, and provide assistance as far as practicable."