Movers and Shakers

The value share of Asian imports and exports in world merchandise trade increased from 25.5 per cent in 2001 to 32.5 per cent in 2011. China's share alone expanded from four per cent during the same period to nearly 10 per cent over the past decade.

“This reflects both the rising consumption power of Asian economies, as well as the changing production patterns in a globalised world, particularly the application of supply chains management,” said Hong Kong Financial Secretary John Tsang, speaking last November at the HKTDC Asian Logistics & Maritime Conference. “Today, sourcing, manufacturing and distribution are constantly reconfigured to take advantage of lower costs and to serve promising markets.”

Hong Kong is well-placed to help Asia’s myriad supply chains and growing consumer markets, he said. “Our prime location, world-class infrastructure and extensive multi-modal transport network make our city an efficient logistics hub in the region. We have the world's busiest airport, with cargo throughput reaching almost four million tonnes [in 2011]. Our seaport is the third-busiest in the world, handling about 24.4 million TEUs [in 2011]. We also have direct cross-boundary links to the economic powerhouse of the Pearl River Delta region.”

Hong Kong’s Russian Connection

Logistics companies choosing Hong Kong as the hub of their regional operations agree.

Air Rail and Truck (A.R.T.) Logistics Ltd moved its global headquarters from Switzerland to Hong Kong last October. The company provides a broad range of freight logistics services across Russia, Central Asia and the Commonwealth of Independent States (an organisation made up of former Soviet Republics), handling complex shipments in hazardous environments. In the Asia-Pacific, it focuses on oversize equipment, particularly for the oil and gas and mining sectors.

“We are growing quickly in Central Asia and into Mongolia, and Hong Kong has the connectivity, infrastructure and professional services to provide a good platform for our business,” said Tatiana Serova, Commercial Director of A.R.T. Logistics.

After three years in Hong Kong, the office was expanded to serve as both A.R.T.’s global headquarters and its operations hub. “We are able to access the professional services, skilled personnel, financial services, communications and IT services required to manage a global business,” Ms Serova said.

Hong Kong was viewed as the best location for the company’s headquarters because of its strategic location and its gateway role to the Chinese mainland and Southeast Asia. “There are also many opportunities for international business communications. Even though Hong Kong is currently not the territory of origin for the majority of projects we manage, it is the place where many of our business contracts have been negotiated and agreed,” she added.

Competitive Advantage

Another reason for relocating its headquarters to Hong Kong, added Ms Serova, “is that some of our service products are very popular with other freight forwarders. As one of the very few specialists on Russia and CIS trade lanes in Hong Kong, we are leveraging this service exclusivity in the city as a competitive advantage.

“Hong Kong is a leading logistics hub in the Asian region and is the leading global air cargo hub. The port is also one of the world’s biggest in terms of volume, and this means we have the flexibility to access global markets through Hong Kong.”

She also noted that Hong Kong provides the expertise needed for working on the mainland. In the near term, as new air-freight products and services come together, “we may invest in operational infrastructure in Hong Kong, too,” Ms Serova said.

Goodman Expands

Australian integrated property group Goodman, a specialist in the development of logistics and warehousing facilities, with assets totalling US$21-39 billion, last year completed the construction of Hong Kong’s fourth-largest warehouse.

The massive Goodman Interlink, a US$640 million facility, with lettable floor area of more than 2.4 million square feet over 24 levels, opened last March, with 99 per cent of its space already leased. ( Tall Order)

Good for Business

Goodman has been operating in Hong Kong since 2005, and Phil Pearce, Goodman Managing Director, Greater China, said that the city has been good for the business.

“We came in at a time when ownership of warehousing was quite fragmented, and were able to consolidate quite quickly as a result. After 18 months, we started looking for a suitable site to develop,” he said.

Goodman Interlink is strategically located in Tsing Yi, adjacent to Container Terminal 9 and Stonecutter’s Bridge, and close to Hong Kong’s container ports, international airport and major highways to the mainland. The facility serves all of Goodman’s Asia markets except Japan, accounting for 14 per cent of the company’s global business.

Mr Pearce said Hong Kong remains an important regional distribution centre for Asia. DHL Supply Chain, which opened a state-of-the-art mega hub at the Goodman Interlink facility, agrees.

DHL Targets Growth

Deutsche Post DHL CEO Frank Appel said Asia continues to be one of the most dynamic regions in the world, its rapid growth demanding a constantly developing network to keep pace with its needs. “Both international and local customers require effective and efficient solutions to establish their supply chains in the region,” he said. The company’s Hong Kong expansion, representing a total investment of US$630 million, will enable DHL to better serve the market, Mr Appel said.

Goodman is also finding opportunities to expand its Hong Kong business. “We are currently converting a building from a warehouse to a data centre,” said Mr Pearce. “We have a big portfolio in Hong Kong, and we are constantly looking for ways to add value.”

Continuing Expansion

The company is focusing much of its expansion plans on the mainland, and Hong Kong “absolutely” helps in that regard.

“We have been able to move into the market and build critical mass very quickly, becoming a major player in a short period of time,” Mr Pearce said.

Research by Business Monitor International (BMI) published last December, noted the latest developments in Hong Kong’s air freight and port sectors: a new air cargo centre, due to open at Hong Kong International Airport this year, and the redevelopment of the old runway at Kai Tak as a barge-loading dock. Given the continuing expansion of the city’s role in the global logistics supply chain, BMI’s conclusion is that foreign operators will keep expanding as well.

Related Links
Air Rail and Truck Logistics Ltd
DHL
Goodman
HKTDC Asian Logistics & Maritime Conference