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/: HK Business/H02

Is Hong Kong losing its competitiveness as a logistics hub?

: 2012-01-31

Though the city has enjoyed regional logistic hub status for decades, there is a raging debate among logistics players as to whether it can survive the strong regional competition it faces today, Joy Li reports. While new entrants to the Hong Kong logistics sector, including small and medium-sized enterprises, are complaining about rising costs and strong rivalry from the mainland in the south as well as from neighboring countries like Singapore and Vietnam, major players take the competition in stride by defraying the costs across the supply chain, and increase the use of technology for their operations. As logistics is about reducing costs and offering faster delivery times to customers, major players and niche players, capitalizing on Hong Kongs advantages as a logistics hub, tend to do well, no matter what the trade scenario is like. They can, utilize all their skills to record profits, even during a recession or economic slowdown, as past performances show. However, things have changed, according to Cheung Wai-man, professor at the Chinese University of Hong Kong, who said: Industry players who use Hong Kong, or used to use Hong Kong for a logistic solution are (now) facing real challenges from Shenzhen which is offering itself as a lower cost solution to the city and Singapore which is offering various incentives to woo high-end users. Clearly Hong Kong has advantages like being the freest economy in the world and its connectivity via its world-class facilities, which offer a combination of air, land and sea transportation. But the most powerful (advantage) of all is its flexibility (in delivering logistics solutions), he said. He warned that despite all these advantages, Hong Kong had to do much more in order for the local logistics industry to grow further and to continue retaining its competitiveness to be ahead of competitors, failing which the territory will lose out. These were some of the findings of a research project conducted by the Chinese University on Hong Kongs competitiveness as a regional distribution center which were revealed by Cheung at the Asian Logistics and Maritime Conference held in Hong Kong at the end of November, 2011. James E Thompson, who is chairman of global logistics company Crown Worldwide Holdings Limited, said that logistics is the backbone of the Hong Kong economy and the people are very adaptive in weathering through economic ups-and-downs as had been proven over the decades. However, other than individuals thinking out of the box, a lot of work can still be done at the government level to prepare Hong Kong for the future, he said. One of the ways is for the government to make greater effort to carry out more infrastructure projects, such as the third runway of Hong Kong International Airport and the 29.6 kilometers dual three-lane carriage way Hong KongZhuhai-Macao Bridge, which are crucial to improve Hong Kongs connectivity and handling capacity, Thompson said. The Airport Authority of Hong Kong has submitted a proposal to the Government to adopt, for planning purposes, the third runway option as the future development option for Hong Kong International Airport, and also recommended proceeding with the statutory Environmental Impact Assessment process and the preparation of associated design details. Regarding the Hong Kong-Zhuhai-Macao Bridge project construction, Hong Kong legislators approved in November a HK$48.5 billion funding proposal to expedite the project. The whole bridge, which will be made up of a series of bridges and tunnels that will connect Hong Kong, Macao and Zhuhai areas, is scheduled for completion in 2016. The infrastructure will carry both passenger and cargo. As a way forward to improve its competitiveness, Thompson suggested that the government may also consider designating more areas for logistic purposes, as a lack of adequate space could cause bottle necks for further developments.

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/: HK Business/H02

: 2012-01-31

Hong Kong is already the top player in the cargo industry, and this was reflected when Hong Kong International Airport overtook Memphis as the worlds busiest cargo airport in 2010. On the maritime front, Hong Kong port is the worlds third largest container port, after Shanghai and Singapore. In order to handle increased cargo volumes, both air and sea facilities need more land for processing and consolidation of goods as there is a shortage of land in Hong Kong. David Kuk, managing director at Hong Kong-based DCH Logistics Company Limited, said that as China is boosting its domestic consumption, Hong Kong logistic firms should grab the new opportunities that have opened up and should think of being more proactive in serving clients. Kuk, a veteran in the business, said that although logistics is clear-cut in Hong Kong, it can be very complicated across the border and therefore companies in the city should help foreign suppliers to deal with the unfamiliar mainland custom clearing procedures, inspection, quarantine and labeling requirements, and in doing so, boost Hong Kongs competitiveness. The Hong Kong firms expertise and network, which can be offered as value-added services, was one way to enhance the citys position as a regional distribution and logistics center, he said. Kuk cited his own experience as an example, where his company offered repackaging value-added services to a US chocolate maker. After receiving bulk supplies from the client, DCH carries out design and the repackaging process with mainland sourced low cost materials in warehouses either in Hong Kong or on the mainland. He said in doing so, this practice allows his client more flexibility to meet market demands, by being able to offer different packaging looks for the chocolate products during holidays like the Spring Festival, Easter and Christmas season to boost sales while keeping costs under control. Stanley Hui Hon-chung, chief executive officer at Airport Authority Hong Kong, also confirmed that imports to the mainland are rising and that this new trend had opened new opportunities for Hong Kong companies. In 2010, Hong Kong re-exports to the mainland reached HK$861 billion, more than double in a span of 10 years. Over the same period, re-exports from the mainland increased 47 percent and reached HK$1,115 billion. A two-way traffic flow to and from the mainland is under way, offering greater opportunities for the Special Administrative Regions companies. Thomas Lutje, Managing Director at HHLA Container Terminals GmbH, a German terminal operator, pointed out that what makes a good a regional distribution center is excellent hinterland connection. Citing Hamburg as an example, Lutje said the port, which is Germanys largest facility, had earned a nickname as Germanys gateway to the world as it had successfully tapped its hinterland, namely central and eastern European countries, and offered them connectivity to Asia and vice versa. For Hong Kong, the hinterland is the mainland. And that is crucial, Lutje said, adding that the marriage of the city and the mainland evolve into a partnership like Hamburg had with its neighbors. In the past Hong Kong was primarily engaged in exports and re-exports of made-in-mainland goods, but today, the reverse is taking shape with the rest of the world eyeing Chinese consumers.

The copyright of this content is owned by the relevant media organization / copyright owner. Any reproduction, adaptation, distribution or dissemination of this content without express authorization is strictly prohibited. All rights reserved. This content is sourced from Wisers' electronic services. / Print out of Wisers Information