Hong Kong Government Logistics Polices
Existing logistics policies are established by Hong Kong Government:
- Hong Kong-Zhuihai-Macau Bridge, which is planned to link to the second export cargo sources in PRD, to provide an alternative transshipment way and speed up the transshipment time between factories and Hong Kong terminals.
- Hong Kong Logistics Park, which will be located halfway between Hong Kong International Airport and the container terminals, to facilitate the cargoes to using different transportation modes.
- Digital Trade Transportation Network (DTTN) system is a unified electronic trade platform, to provide to the logistics stakeholders in Hong Kong to exchange their information seamlessly and efficiently.
- Closer Economic Partnership Arrangement (CEPA)
It is an arrangement to promote the economic development, strengthen trade and investment co-operation between Hong Kong Government and China in different areas. The cooperation areas within CEPA directly affect the Hong Kong logistics industry are included: customs clearance facilitation, small and medium enterprises, electronic business promotion, commodity inspection and quarantine.
- Hong Kong Logistics Development Council
It is an organization to implement the policies set up by the Steering Committee on Logistics Development. It co-ordinates the Hong Kong logistics development issues, and handles the joint projects between the government and commercial sectors.
- Hong Kong & Greater Pearl River Delta Business Council
It is a joint conference between Hong Kong and nine regions of PRD. Their major responsibilities are to monitor and take part the development of different joint projects between Hong Kong and Great Pearl Delta River Region.
Except Hong Kong-Zhuihai-Macau Bridge not confirm the construction details, the other projects mentioned above are scheduled and implemented.
Policies Evaluation
There are different approaches for strategy formulation, each of them are for different circumstances. “BCG Matrix” is the portfolio approach to corporate strategy, while “Porter’s Competitive Model” approach is for industry or business competition evaluation. Thus, Porter’s Competitive Model” is suitable for this case and selected to evaluate the effectiveness of Hong Kong Government logistics policies. By considering five forces in Porter’s Model, some policies could be complied with the forces:
- New Entrant Barrier
The DTTN is just launched to the stakeholders in Hong Kong. If it
could be introduced and integrated with the manufacturers and Chinese
official organizations in the PRD region, the cargo sources would be tied up
by Hong Kong logistics facilities. They must use the Hong Kong logistics
services to export their cargoes to the destinations.
However, the responsible party – Hong Kong Logistics Development Council
has no any schedule to promote this electronic platform to the PRD region.
- Determinants of Supplier Power
The Hong Kong & Greater Pearl River Delta Business Council has
established new facilities to enhance the cargo flows at various cross-border
control gateways, such as a new boundary bridge and special customs
clearance channels for cargo trucks. Under the negotiations by the Unit, a
new automatic toll system will be launched during September 2006, the cross-boarder truck drivers will be able to pay tolls in PRD and Hong Kong’s electronic toll collection gates by means of same smart card, this could smooth the road traffic and facilitate the flow of cargo in both regions.
Hong Kong-Zhuihai-Macau Bridge is an alternative linkage between Hong
Kong and the second large export source – western part of PRD. It will
shorten the transshipment time by two or three days, to truck the cargoes
to Hong Kong, instead of transshipping by small vessels right now.
The supplier power will be greater by using the above moves, indeed their
service quality and profitability will be improved.
– Determinants of Customer Power
One of reasons why the shippers in PRD use the PRD logistics facilities to
ship out their cargo is the complicated export customs clearance procedures
through the Hong Kong entrance. Their cargoes are always stuffed in the
cross-border check points, sometimes one whole day, in turn they could not
catch the vessel they booked. Their shipment time then is prolonged.
Under the implementation of Closer Economic Partnership Arrangement
(CEPA), Hong Kong Government has negotiated with the Chinese officials to
simplify their procedures, as well as speed up the clearance procedures in our
own check points. This could smooth the cross-border traffic of the cargo
trucks, and cope with the shippers’ requirement. Then CEPA could exert their
influence to the customer power to improving their service standard.
- Threat of Substitute Services
Many PRD shippers have complained that the handling fee of Hong Kong logistics services are too expensive to compare with that of PRD, it is almost double of the charge in the PRD logistics services, i.e. around USD100 for each laden cargo container. It is one of reasons why they choose the logistics facilities in PRD to ship their cargoes out to China, instead of using Hong Kong’s facilities. The operation unit of Hong Kong Logistics Development Council have contacted and negotiated with the concerned service providers such as carriers, airport and container terminal operators to deduce the charges as low as they could. This could enhance our competitive advantage from our direct competitors in the PRD region.
Unfortunately, Hong Kong Logistics Development Council could not
persuade some service providers such as container terminal operators to
lower their handling fee.
Arguments
There are favorable and unfavorable situations to implementing the polices
mentioned above for the Hong Kong logistics industry:
In the positive point of view, the policies could benefit the Hong Kong
logistics development:
- Build up the efficient distribution network between Hong Kong and the PRD regions. More alternative transport modes could be connected to the
Hong Kong logistics facilities.
- Support Hong Kong as international transportation and logistics hub within
Asia region.
- Strengthen Hong Kong position as a gateway or spring board for foreign
investors to China market.
In the negative point of view, the polices may incur the disadvantages to the
Hong Kong logistics industry:
- The PRD region would replace Hong Kong position of international
transportation and logistics hub.
- The number of employee in the Hong Kong local logistics industry would
be reduced as more Hong Kong logistics companies move to the PRD
region. Then, the unemployment rate in Hong Kong would be increased.
Credit:ivythesis.typepad.com
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