Logistics sector demands a global perspective

by Nicole Wong

Markus Muecke, managing director, China, Southern /Taiwan, Panalpina China Limited

Trade patterns and cargo flows determine growth prospects for the industry

With intensifying competition from regional airports and the numerous container ports strung along the Chinese coast, the logistics industry in Hong Kong will definitely have its work cut out to maintain its status as a world-class international cargo hub. Therefore, major industry players are hedging their bets by making new investments in everything from systems to staff recruitment as part of an active plan to expand their scope of business in the mainland.

According to Markus Muecke, managing director of China Southern/Taiwan for Panalpina China Limited, Hong Kong still enjoys a privileged position. The local airfreight business has shown steady growth in 2005 and continuous growth is forecast for 2006. With a world-class airport and extensive route network, the city still attracts far more international flights than the competing facilities in Southern China.

However, sea freight business is showing signs of comparatively slower growth with an increasing number of exporters shipping cargo directly from South China ports, such as Chiwan, Shekou and Yantian, which are offering lower total costs and still excellent services. Mr Muecke notes that Hong Kong may have generally high efficiency, good systems and experienced employees, but recognises that China's ports are becoming more competitive and seeing the benefits of substantial investments in technology and extensive staff training programmes. For example, Yantian port is already the most efficient port on earth in respect of lifting containers at a speed of 35 moves per hour.

"There should still be room for Hong Kong's logistics industry to expand despite the cross-border competition," he says. "Our port handles around 22 million TEUs (twenty foot equivalent units) of cargo every year, and there is a long history of expertise and great flexibility." Another clear advantage lies in Hong Kong's status as a free port and its well deserved reputation for fast and efficient operations.

"Customers can also consolidate deliveries from numerous suppliers and enjoy a wide range of value-added services, which still distinguish Hong Kong as a preferred choice," Mr Muecke adds. "If we can strengthen that aspect of our business, then prospects for the sector should be promising, despite the higher cost factor."

Overcoming challenges

The worldwide logistics industry can always expect to experience ups and downs. In 2004, for example, there were problems related to port congestion and delays in Los Angeles and elsewhere in the US, while new security requirements and changes to the system of quotas for textiles have had an impact on pre-shipment procedures and delivery schedules. Nevertheless, the industry has learned to take such developments in its stride and Mr Muecke is confident that the consistent growth of business seen this year will extend throughout 2006.

One constant challenge is to predict business needs and prepare for peak season volumes. Panalpina therefore makes it a top priority to cooperate closely with local chambers of commerce, government authorities and overseas customers, in order to track import and export trade flows and adjust for peak and low season demand. "It is also essential to have the right number of properly trained staff and sufficient capacity from carriers to handle our air freight and ocean freight business without problems," Mr Muecke adds.

Staff recruitment is ongoing and driven in part by the relocation of some more experienced personnel from Hong Kong to other company offices in the Pearl River Delta region. "The local logistics sector is investing in China's ports, so that we can compete effectively for the growing volumes of traffic," he says. "There will be many career opportunities across the border."

Expanding horizons

While the industry requires specialists in the different areas of airfreight, sea freight and logistics planning, Mr Muecke points out that there is growing demand for people who have experience in all three major disciplines. Many logistics companies have therefore introduced cross training programmes in order to develop a team of professionals capable of offering fully integrated services to customers. Another discernible trend is to separate customer service functions from documentation processing, allowing greater efficiency and accuracy and a more even distribution of the day-to-day workload.

"This separation has created new openings in the back office for people familiar with airway bills, documentation and the tracking system, and is an essential development for companies which aim to expand in size and scope of service," Mr Muecke explains. "For a customer, it is very important to get accurate information and correct documentation and invoices."

He advises individuals who are keen to join the sector or want to further their careers to attend appropriate training courses, since many upcoming vacancies will require a thorough understanding of logistics principles and practices. Work experience in China, especially in cities such as Shanghai and Beijing, will also definitely be beneficial for career development in the years ahead.

"We operate in a very dynamic environment, so it is important to be flexible in shaping a career in Hong Kong or across the border," Mr Muecke says. "There will also be great opportunities and career prospects around the globe for those who accept the challenge."

Balancing act

  • Despite competition from China, Hong Kong remains a key international cargo hub
  • Value-added services play a major part in keeping the sector competitive
  • International factors affecting trade flows can have a big impact on business
  • The current trend is towards cross training for staff in different areas of the industry

Taken from Career Times 16 December 2005
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