Terminal operator plans for expansion

by Alex Chan

Craig Grossgart, chief executive officer, Asia Container Terminals Ltd

Unique labour strategy provides the basis for high levels of productivity

The Hong Kong logistics industry consistently ranks as one of the most important in global terms, but must remain constantly aware of the competitive threat posed by other cities in Asia and, in particular, by the development of new facilities in mainland China. Some analysts say the industry in Hong Kong has already peaked and faces an inevitable period of decline, but that is not the view of Craig Grossgart, chief executive officer of Asia Container Terminals Ltd (ACT). He believes that any talk of a decline is wide of the mark and that the overall logistics sector can still continue to grow at an annual rate of three to seven per cent. "At the end of this year, we may even see eight per cent growth in Kwai Chung port alone," he adds.

Mr Grossgart emphasises that the industry is mature but thriving. In fact, ACT has seen rapid growth in its own container terminal operations and is on course to handle over one million TEUs (twenty-foot equivalent units) annually, while operating at approximately 60 per cent of capacity. To meet anticipated demand, the company will make significant investments in 2006 to boost cargo-handling capacity and cater for new shipping tonnage which is currently being built in Korea, China and Japan.

"We began operations in July 2005 and, on a crane productivity basis, which is the standard measure within the industry, our productivity is up to the norm in Kwai Chung after only four months of operations," he says.

Winning strategy

The company owes much of its success to its people and an "unprecedented" labour strategy, which was initially seen as a risk but has clearly paid off. "ACT has done something unique by outsourcing most of our labour, which has given us the ability to plan our labour requirements to match container throughput in a way which is unparalleled in Hong Kong," Mr Grossgart says.

By taking this decision to outsource early on, the company was able to benefit from having increased flexibility. "During peak season, we can bring in additional manpower, and when things are not so busy, we have the ability to control costs more tightly," Carol Chan, human resources manager, explains. She adds that it has also been possible during the start-up phase to draw on the expertise of subcontracted workers who have many years of accumulated experience in the industry. "If we had to hire and train new recruits, it would take much longer because of the specialised knowledge that is needed," she adds.

Nearly 75 per cent of ACT's container yard workers and almost 50 per cent of those in operational roles are now employed through subcontracting arrangements. Ms Chan notes also that having this type of recruitment strategy prevents labour costs being pushed up too rapidly and ensures competitiveness.

Experience needed

ACT has been able to attract experienced candidates by offering them new challenges and opportunities. They have been given the chance to take on varied responsibilities that allow them to grow horizontally and vertically and have been encouraged to put forward ideas and suggestions for operational improvements. This approach has been supplemented by an emphasis on providing ongoing education for recruits at all levels within the company. One particular strategy used by Ms Chan is to offer management and supervisory training for those whose prior experience has largely been in other areas. "They may be very good ship planners or container yard planners, but not have the necessary skills to supervise other people. We want to train them to have those extra abilities," she says.

In planning for future expansion, Ms Chan will be on the lookout not only for experienced staff for full-time positions, but also those who are young, energetic, keen to learn and aggressive. Candidates with a qualification in logistics from a local tertiary-level institute will have an advantage, even if they have not specialised in terminal operations. "We deal with all parts of the logistics industry and if people have taken those courses, they will have picked up the vernacular used in the business and will already have shown they are committed to a career in the sector," says Mr Grossgart.

Next year, ACT plans to increase the headcount of permanent staff to 130, representing expansion of around 30 per cent, and most recruits will be in the operations and engineering departments. Mr Grossgart advises potential candidates to be prepared to make decisions and take risks, and Ms Chan adds, "If you want to be challenged, ACT is definitely the place."

Boxing clever

  • New terminal operator has used subcontracted labour to increase operational flexibility and keep costs under control
  • This business model has helped in achieving record levels of productivity
  • Training programmes have concentrated on giving full-time employees a broader range of skills for vertical and horizontal growth
  • A 30 per cent increase in permanent staff is being planned for 2006

Taken from Career Times 16 December 2005
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