As the world’s leading cargo transshipment hub, Hong Kong manages on an annual basis over 4m tons of air cargo and almost 24m teu of ocean freight. The International Air Transport Association predicts that Hong Kong will continue to be the world’s fastest-growing air cargo market, whilst the cluster effect of 200,000 vessel calls combined with the extensive network of connections to over 550 container ports around the world, will ensure increasing volumes of ocean freight transshipments.
Hong Kong’s competitive advantage as a global logistics hub will revolve around three competencies – best-in-class transshipment hub, centre of excellence for logistics talent development and global leadership in e-logistics.
As skills shortages impact supply chain execution in the emerging markets around the Asia region, companies are increasingly seeking to nurture and retain their home-grown intellectual capital in logistics and supply chain management. Firmly reinforcing its position as a leading regional centre of excellence for logistics industry skills and talent development, Hong Kong is home to 60 educational and vocational training institutions, offering more than 1,000 programmes and courses related to logistics and shipping.
From the e-logistics perspective, Hong Kong’s increasingly widespread adoption of e-freight initiatives throughout the international air and ocean cargo sectors is generating operational efficiencies whilst providing environmental benefits such as decreasing the amount of paperwork and improving vehicle utilisation, thus reducing emissions. Within the cross border trucking sector, electronic submission of road cargo information enables seamless customs clearance at the land boundary control points. GPS communications technology is widespread in the fleet management of trucking companies, with the On-Board Trucker Information System.
Regional Logistics Leadership serving the Asia Pacific Region
Being strategically located in-between Singapore in Southeast Asia and Shanghai in Northeast Asia, Hong Kong is geographically blessed and has a position-unique opportunity to become ‘The Super Hub’ for the Asia-Pacific region. Over 600 international transport and transport-related companies have established regional office infrastructure in Hong Kong.
Leveraging Hong Kong’s extensive connectivity and privileged free-port status, provides companies with an ideal regional distribution centre platform from which to serve all the markets in Asia with efficient and competitive warehousing and distribution services, coupled with cost effective multi-modal transportation options.
With it’s unique on-airport location, Tradeport provides modern warehousing and logistics services at its purpose-built regional distribution centre, and is the only facility of its kind at Hong Kong International Airport, the world’s busiest cargo airport.
Located minutes away from the air cargo terminal operators, only 20 minutes from the container port and just 40 minutes from the mainland border, the Tradeport Logistics Hub provides multi-modal connectivity for the whole of the Asia region. With both ambient and air-conditioned processing and storage areas, and the latest international accreditations including AEO, C-TPAT and TAPA certifications, Tradeport is considered to be a world-class regional distribution centre facility.
Mainland China’s International Gateway, in and out
Hong Kong and Mainland China are each other’s major trading partners – with Hong Kong providing the bi-directional international gateway for substantial movements of trade in goods and services into and out of mainland China – together with the related commercial and financial flows.
Mainland China is also the largest source of inward direct investment, with last year’s $460bn representing 37% of Hong Kong’s total inbound investment.
As at June 2013, there were 114 companies from the Mainland with regional headquarters in Hong Kong, mainly engaged in import/export trade, wholesale and retail, transportation, storage and courier services, finance, banking and professional business services. Another 148 Chinese companies had set up regional offices in Hong Kong to oversee business activities for the Asia region.
From the trade perspective, Hong Kong is China’s second largest trading partner after the United States, accounting for 9.6% of the Mainland’s total trade in 2013. Through the Mainland and Hong Kong Closer Economic Partnership Arrangement, known as ‘CEPA’, all Hong Kong-origin goods meeting the CEPA rules of origin are entitled to tariff free treatment.
Hong Kong is Mainland China‘s largest export market at $384.8bn, representing 17.4% of total exports in 2013; whilst the Mainland is Hong Kong’s largest domestic export market reaping $3.2bn worth of goods, or 45.6% of total domestic exports in 2013.
With its free port status, Hong Kong plays a major entrepot role for trade between Mainland China and the rest of the world- providing a trading post through which merchandise can be imported and exported without attracting duties. In 2013, $403.6bn of goods were re-exported through Hong Kong to and from the Mainland, representing 89.3% of Hong Kong’s total re-export trade value.
International Maritime Centre
The Hong Kong Government has recently explored ways to enhance Hong Kong’s position as an International Maritime Centre resulting in a strategic development blueprint for Hong Kong to reinforce and maintain its position amid intense competition in the region.
The maritime industry is global and competitive, between companies, and also between countries and cities, all wishing to grow as IMCs.
Hong Kong has the potential to bring together a diversity of high value-added maritime services and become a preferred base in Asia for international maritime business, but is facing keen competition from other IMCs in the region who aggressively seek to expand their maritime business base.
The maritime services cluster is economically significant, with Hong Kong being home to Shipowners that own and manage 10% of the world’s merchant fleet by dead weight tonnage and also being the fourth largest Shipping Register worldwide, comprising 7.7% of the world’s merchant fleet by gross tonnage.
Leveraging its strategic location, defensible competitive advantages and business-friendly environment, Hong Kong is extremely well positioned to continue to develop and strengthen its logistics leadership role, thus enabling and empowering the global supply chain ecosystems that drive international trade and worldwide commerce.
Mark Millar is the managing partner of M Power Associates, an exclusive network of experts that provide consulting, advisory, education and recruitment services for the supply chain and logistics sectors across the Asia region