If transportation and logistics are to be among the pillars on which Hong Kong's future prosperity is to rest, then the Government cannot afford to ignore the wake up call delivered in a recent study commissioned by the Economic Services Bureau. Chief Executive Tung Chee-hwa has described logistics as the SAR's backbone, but there is still uncertainty about what policies he intends to follow to help Hong Kong retain its edge over competitors in Shenzhen and Shanghai. As a logistics centre, Hong Kong's future depends on being able to cheaply and efficiently transport goods to and from factories in the Pearl River Delta to markets the world over. It already has an advantage in the form of the world's largest container port and a major air freight centre. Two broad sets of measures are required to maximise this advantage. The first is to ensure that shipping goods through Hong Kong remains a cost-effective option for companies in the Pearl River region. The other is to ensure that there is adequate infrastructure in terms of a road, rail and water network linking factories in the delta and places further north, to Hong Kong. To maintain Hong Kong's cost-effectiveness, one issue the Government needs to look at urgently is the demand from the aviation cargo industry to open up the SAR's skies and grant more-flexible carrying rights. Similarly, new technology and more efficient handling are a priority in order to lower port costs. The other issue is to build up the physical infrastructure required to transport goods from Hong Kong's industrial hinterland in the Pearl River Delta to the airport and container port. This might require the SAR Government investing in roads and railways in the mainland, perhaps in co-operation with the Guangdong Government. There will no doubt be a great deal of shortsighted opposition in Hong Kong to investing in infrastructure on the mainland. But this is an investment that if wisely done will pay off handsomely in the long run.