Logistics is now a buzz word among government officials, although only less than two years ago, that word hardly drew any attention from the authorities. Logistics is defined as a management science which embraces the efficient movement and storage of goods, and provision of services. Its scope extends from manufacturing through to final delivery, including related aspects of information technology and other control systems, also known as supply chain management. For years, Hong Kong revelled in its pre-eminent position as the world's busiest air cargo hub and busiest container port, a position envied by many. 'The downturn of the economy in 1997 resulted in Hong Kong losing its title of No 1 container port to Singapore in 1998 and the drop in air freight volume after opening of the new airport shook up the Government,' legislator Miriam Lau Kin-yee said recently. This forced the Government to re-examine Hong Kong's competitiveness in the light of developments of neighbouring ports and airports. In the course of that exercise, the Government realised the importance of promoting logistics in Hong Kong. Ms Lau said that although Hong Kong regained lost ground last year by achieving total throughput of two million tonnes in air cargo and 16.2 million teu (20-foot equivalent unit) in container traffic, efforts to promote logistics had to continue. The importance of logistics could not be underestimated, she said, adding that with globalisation of markets and production, many multi-national companies were finding it necessary to apply logistics and supply chain management to increase efficiency, enhance productivity and reduce costs to stay competitive. This trend, which was rapidly spreading around the globe, represented one of the most com petitive challenge for businesses in the 21st century, she added. While Europe and the United States had taken pro-active measures to develop their logistics capabilities many years ago, Singapore had only been doing the same over the last few years. Ms Lau said while Hong Kong had some local players which actually provided excellent modern logistics services such as shipment tracking, bar-coding and quality control, the real logistics community, however, remained small. The majority of freight operators could not take on logistics as part of their core business as they lacked the investment and skill to meet the challenges. Recently, the Commission on Strategic Development, headed by Chief Executive Tung Chee- hwa, published a document entitled 'Bringing the Vision to Life', identifying the SAR's long-term development needs and goals. Ms Lau said 'trade transportation and logistics' was identified as one of the areas that was key to Hong Kong's long-term development in this document. Hong Kong companies must stay competitive by continuously upgrading their products and adding more value to their services, the commission said. Ms Lau said nowadays, 'adding value' was the key to achieving competitiveness and this was what logistics meant. According to the Hong Kong Logistics Association chairman, Raymond Leung, many Hong Kong logistics firms were backward compared with their counterparts in Singapore, Europe and the US, and need catching up. 'They need more systems and people,' he said, adding that although some traditional freight forwarders had tried to incorporate more services to their traditional services, it was still insuffi cient. Mr Leung said the establishment of a logistics service development committee under the Hong Kong Port and Maritime Board in December was a move in the right direction. The Hong Kong Logistics Association itself was organising courses and seminars for members to increase their awareness about the logistics industry. Hong Kong Article Numbering Association (HKANA) communications and promotions manager Betty Chan, said a study showed that the SAR's domestic industry alone could save as much as $5 billion from reductions in operating and inventory costs by implementing supply chain management. The study on the domestic supply chain management and export supply chain management was commissioned by the HKANA - a non-profit organisation - in 1996 and 1997 respectively. According to the export supply chain management road map study, through implementation of the supply chain management the export industry has the potential to save $9.2 billion. The HKANA, pushing the adoption of article numbering and bar coding since its inception in 1989, had a membership of 2,800 firms as at end of last year.
