Logistics dons hit wrong note
The people at Lingnan University do not like your correspondent's criticisms of their plea for subsidies to the logistics industry (Monitor, July 11) and, fair is fair, he did load up both barrels when he had a go at them.
They therefore responded with a letter to the editor published on Tuesday, restating their case for government support. That should have been all, one shot their way and another shot back, except that they still don't get it.
But first, just what is logistics if not a military term alone? The Lingnan definition, taken from something called the Council of Logistics Management, is 'the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements'.
Whew, that was a quite mouthful. Try it again. Let's see now, have you figured out yet how to distinguish the difference in meaning between efficient and effective when they are juxtaposed like that and do you know of any place where you can store services? These must be the same people that your correspondent once heard describe a lift-boy as an 'operational vertical transportation systems technician'. Let's just call logistics the how-to of trade.
And now to the main point. Here are the Lingnan professors again - 'The logistics industry distinguishes itself from many other industries in that while it requires very heavy overhead investments, the marginal costs of providing services are rather low.
'This combination leads to cut-throat competition with the result that the profit margins of the logistics industry are very low. Unless the costs of investment are reduced by government support or otherwise, the industry tends to under-invest.
'Even so, we are not asking the Government to subsidise the industry directly beyond the provision of land at strategically located sites on more favourable terms and education and training for industry personnel.' So, you see, it is not much they want. We may be a wealthy society squeezed into shoebox flats of an average size of 450 square feet because there is so precious little land to go around but what of that? All these people want is some strategically located sites. Surely we can't begrudge them these? After all, if our Chief Executive can spray out land grants for a Disney Park, a Cyber-Port, a Science and Technology Park and who knows what other grand ideas to come, why should the logistics industry not join the queue? Some people are quite comfortable in shoebox flats, you know, and the way things are going in property hand-outs you had better resign yourself to learning to be comfortable in them too.
Don't blame the way Lingnan professors think. They're not greedy. They haven't asked for money, remember. Well maybe they have for logistics education, but not really. All they want is our most valuable treasure.
Their argument that profit margins are very low in the logistics industry is an interesting one too because there is actually a quick solution to this problem. Take it over the border to the mainland. The industry has already gone there. It is about time that the support services did as well.
Oh, but then Hong Kong's economy would lose out and we cannot tolerate falling behind like that.
It's a grand future that lies ahead of us when we think this way. The market may tell us through tight profit margins that this industry makes ever less sense for us and our response is to have the Government play King Canute. It's how you get a vibrant economy, you see.
The fact is that you don't really need to know whether the logistics industry is stretched or why it is. That's the beauty of a market economy. It gives you the right answer every time and takes the appropriate remedial action too.
As that noted economist Milton Friedman once said, in economics there are always some people who know the words but just can't sing the tune.
