Recessionary alarm bells are ringing across the logistics sector with experts warning that supply chain management must undergo 'rigorous' changes if Hong Kong is to stay ahead as a premier hub.
Official figures show exports plunged 21.8 per cent in January, the biggest drop since 1967, as companies cope with dried up credit lines, and fluctuating commodity prices and exchange rates. The situation has been worsened by suppliers' liquidity.
K.K. Leung, managing director of UPS Hong Kong and Macau, said 2009 was likely to be a 'watershed year' for the industry with 'rigorous cost management, restructuring and business model fine tuning'. He said businesses needed to evaluate how best to emerge from the financial crisis and be more competitive.
The financial crisis has also increased instability and risk in the supply chain, warned Robert Barrett, director of advisory services at PricewaterhouseCoopers China. 'If you think about the supply chain as a series of linked elements across the globe, there's lots of opportunity for failure,' he said.
Josephine Kea, deputy chairman of the Chartered Institute of Purchasing & Supply (Hong Kong Branch), said while some organisations were combating risks and transactional costs by downsizing their procurement teams to centralise functions, the trend of buying locally and moving away from global sourcing could see exports in Hong Kong and the mainland suffer even more.
The credit crunch had seen a lot of the weaker companies 'being booted out' - but the upshot was that 'good companies are starting to make some changes', said Joseph Phi, chairman of GS1 Hong Kong, a non-profit body that sets global supply chain standards.