Jardine unit sees increasing demand for its supply-chain management services

Jardine Logistics has increased its total logistics business 15 per cent this year.

Kevin McDonagh, Jardine Logistics international sales director, said there was an increase in local and foreign firms seeking supply-chain management services rather than merely forwarding or warehousing and distribution.

'This shows there is an increased demand in total logistics, but sales lead time is much longer,' he said.

'This is particularly true in China as there is a high expectation from customers to increase sales once China becomes a World Trade Organisation member.'

In response, Jardine Logistics is expanding its mainland operations, with more people and offices. Turnover this year rose 32 per cent year on year to US$266 million.

Sea-freight volume increased 32 per cent to 134,000 teu (20 ft equivalent units), while air-freight volume was up 29 per cent to 54,000 tonnes.

Mr McDonagh said the fastest growth was in sea freight, followed by air and then logistics. It has been asked by e-commerce companies to act as fulfilment agents, and so has set up a Jardine Logistics e-commerce team.

The company also is a leading player in Hong Kong's wine and spirits logistics market, providing supply-chain management services from the vineyard or wine cellar to the customer's home.

'With WTO, we expect the volume of legally sold wines and spirits to increase in China,' Mr McDonagh said.

In terms of warehouse facilities, Mr McDonagh said the company was managing more than 680,000 square feet of leased warehouse space in Asia.

Jardine Logistics is planning similar facilities at Penang in Malaysia, as well as in Guangzhou and Shanghai.

The company has joined Hongkong Land, China National Aviation, Frankfurt Airport and Schipol Airport to form a consortium - Tradeport Hong Kong - one of the three short-listed bidders for the Chek Lap Kok Airport Logistics Centre. The successful bid is expected to be known next month.

Mr McDonagh said total logistics, or supply-chain management, was a new concept in Asia and many customers did not understand its true value.

Jardine Logistics spent a lot of time educating the market on its advantages and the efforts were beginning to show good results. However, most of its logistics customers were still foreign companies accustomed to using out-sourcing activities.

Mr McDonagh said the company's system was Web-based, making it easy for customers to access via the Internet.

As Jardine Logistics provides tracking and tracing as well as electronic booking and tariffs, the system helped provide statistical information, monitor customer activity as well as enable efficient responses to changing needs.

The company also is replacing its warehousing management system.

Mr McDonagh said this was due mainly to the development of global trade and competition, as well as technology allowing cheap and easy access to information, and also the availability of carriage capacity worldwide to handle the huge volume.

'The degree of development, however, will vary between countries. For example, Hong Kong will definitely be moving faster than Indonesia,' he said.

Mr McDonagh said the Government was not doing quite enough for the industry.

'Hong Kong is seriously handicapped by the high cost of land and labour. Also, in terms of IT, it is behind Singapore, as it is in education for training professional logisticians,' he said.