Extra services boost logistics sector growth

by Ada Ng

KK Leung, general manager, Hong Kong and Macau, UPS Parcel Delivery Service Ltd

Innovative services will help Hong Kong maintain a dominant position in the air cargo business

The competition from regional airports may be intensifying, but Hong Kong still retains its status as a world-class hub for the handling of international air cargo. The advantage of being able to combine an excellent geographical location, established infrastructure, an extensive route network and a reputation for reliable services mean that Hong Kong International Airport (HKIA) maintains a clear lead over the more recently opened Baiyun (Guangzhou), Huangtian (Shenzhen), Zhuhai and Macau airports, competing for traffic in the Pearl River Delta area.

In spite of this position of comparative strength, local logistics businesses have recognised the need to focus on implementing additional value-added services in order to stay ahead. Most of these new services are linked to the continuing rapid growth of the Chinese manufacturing sector and are intended to transform Hong Kong from a leading air cargo hub to a key procurement centre for the whole Asia-Pacific region.

"Much of the forecast growth in the local logistics industry will be achieved through the re-export of China-made manufactured goods," notes KK Leung, general manager, Hong Kong and Macau for UPS Parcel Delivery Service Ltd. He is also confident that China's accession to the WTO will lead to an increased range of logistics services, especially for exports moving to North America and Europe. Reliable service providers will be able to enhance the overall business opportunities for both foreign buyers and mainland SMEs looking to break into world markets.

In 2003 HKIA already handled 2.5 million tonnes of cargo and about 90 percent of the total was for re-export. "Air cargo volumes are expected to record double-digit growth in the next three years," Mr Leung says. "Hong Kong still provides a better international network than any mainland airport and has comprehensive links to connect airfreight services with sea and land transport options."

As illustration, he points out that airlines currently fly from HKIA to over 100 cities worldwide, while Baiyun Airport in Guangzhou still serves only 20 international routes. This, he says, is partly because of the lengthy process required for air cargo forwarders and operators to reach agreement with the Chinese government on the introduction of new routes.

Expanding network

UPS initially plans to strengthen its own network by starting new services to Japan and Taiwan. "These will serve the rapidly growing demands of businesses which are interested in sourcing parts and products from mainland China via Hong Kong," Mr Leung explains. The question for key players in the local logistics industry is how best to capitalise on the current competitive advantage and exploit these opportunities for growth. Mr Leung believes the answer is to act aggressively in providing value-added services that can make Hong Kong the ultimate one-stop procurement centre. As an example, UPS is acting as an intermediary to offer customers a communication tool which links businesses interested in each other's products or services and provides procurement referral and product delivery information.

More importantly, UPS ensures that business partners matched by the service handle payments properly and promptly. "We have found it is especially helpful for SMEs with limited marketing resources for international promotion or advertising," Mr Leung notes. For instance, a European company may see items of jewellery produced by a small-scale manufacturer in China on the website and the two parties can be brought together.

"We are there to offer a three-part service by providing an introduction, arranging product delivery and then acting as a trustee for payment of invoices," says Mr Leung.

New partnerships

The concept of partnership which this entails is becoming the norm in Hong Kong and the intention is to offer the same to SMEs in China on a trial basis. "We will continue to develop this partnership platform to strengthen Hong Kong's role as a procurement hub and regional logistics centre and, at the same time, help mainland SMEs reach the world," he adds.

Besides this, UPS is able to offer online services in labelling, tracking and controlling cargo shipments by means of the very latest IT systems. The management team can also make use of this technology to achieve greater cost effectiveness and closer monitoring of operational activities in each department.

Talent express

As the logistics sector turns to more value-added services, the demand for a qualified and professional workforce will grow. "While technology and automation can enhance efficiency, people are the key for expanding our client base and improving service standards," says Mr Leung. In particular, additional employees are required to cater for the needs of sophisticated customers with high expectations. "We will have to recruit staff in areas like business development, solution provision and customer service," he adds. "As always, though, the key attributes for success in the logistics industry are strong interpersonal skills, patience and a willingness to listen to clients' needs and concerns."

Keeping a step ahead

  • Hong Kong still a leading centre for air cargo and logistics
  • More value-added services needed to maintain a competitive edge
  • Concept of partnership being used to bring businesses together and promote exports
  • Good staff are the key to further business expansion

Taken from Career Times 10 December 2004
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