Logistics investment a measure of confidence (hktdc.com)


	Clifton Chua of FedEx Express says the group’s additional investments in Hong Kong are a demonstration of confidence in the local economy

	After five years of double-digit growth, DHL Express Hong Kong is building a new facility to up its ground handling capacity by 20 per cent

Two of the world's largest logistics companies, DHL and FedEx Express (FedEx), have announced multi-million dollar investments in Hong Kong to capitalise on continued growth in the region's trade.

The commitment of such global giants underscores Hong Kong's importance as a logistics hub of the region. DHL Express Hong Kong, which ended 2006 with double-digit growth, cited the city's cargo handling capability, efficiency and track record. FedEx concurs that increasing customer demand is driving its expansion in Hong Kong.

Scott Price, Chief Executive Officer - Asia Pacific, DHL Express, said the company would invest US$35 million on a new facility in South Kowloon, increasing ground handling capacity by 20 per cent, and on large-scale office relocation to further strengthen operational synergy.

He said the Hong Kong operation had clearly benefited from the strength of China's growth and the dynamism of other economies in the region.

Continuous growth

"This is the fifth consecutive year that DHL has recorded double-digit growth in Hong Kong. The investment programme brings us close to US$1 billion in our commitment to the Greater China area to position us for the opportunities which abound in this region," Mr Price said.

The expansion lifts DHL's total investment in Hong Kong to US$645 million, which includes the US$210 million Central Asia SuperHub, investment in Air Hong Kong, service centres and office facilities. Hong Kong's position as the centrepiece of DHL's hub-and-spoke network has been further cemented by the company's US$400 million investment in Air Hong Kong, a joint venture with Cathay Pacific Airways, which feeds cargo from around Asia Pacific into Hong Kong for consolidation and transit purposes.

FedEx, as part of its long-term development in Hong Kong, will relocate its Express Distribution Centre to the container port at Kwai Chung, add 30 percent more capacity, and reserve additional area for future expansion. Situated at the focal point of the airport, city and container terminals, the new facility will reduce transportation time to and from the airport and speed up delivery of time-sensitive goods.

Cross-border convenience

At Yuen Long near the Chinese mainland border, FedEx has opened its largest station in Hong Kong. Capable of handling 3,000 packages per hour, the station will enable streamlined cross-border shipments between Hong Kong and China, and extended cut-off times for overseas shipments. The company has also enhanced its Free Export Declaration Service, enabling more customers to save costs when declaring export shipments.

Clifton Chua, Managing Director, Hong Kong, Macau and the Philippines, FedEx Express, said the initiatives would help FedEx customers to be more competitive. "These additional investments are in response to increasing demands from our customers, as our existing and previous operating facilities had reached their full capacities. They provide customers with better access to the international marketplace and demonstrate our confidence in the development of the local economy."

World-class service

Stephen Cheng, Secretary General of Hong Kong Logistics Association, said Hong Kong's role as a value-added logistics hub would increase as Asia's economy develops.

Though emerging logistics centres in the mainland may be cheaper, they could not compete on a service level - an imperative factor considering the world's increasing appetite for high-end goods. Hong Kong offers a more reliable service, greater efficiency, and better security, said Mr Cheng, who is also Chairman of logistics consultancy Superguide International Ltd.

"As the demand for high value products increases, companies can easily absorb higher costs. For example, we have a lot of electrical products, medical equipment and fashion, which all need to get to the market sooner rather than later. With its air cargo capability, Hong Kong is better equipped than its neighbours to meet the growing demands of the world."

Mr Cheng described Hong Kong International Airport as the city's strongest asset. With connections all over the world, if you miss one aircraft you can soon catch the next one, he pointed out.

Air cargo on the move

Hong Kong also has world-class banking and legal systems, which are very important for global trade.

As a further measure of confidence in Hong Kong, Mr Cheng cited Cathay Pacific Airways' application to develop a third cargo terminal "in expectation of future growth", and have it operational by 2010. "Why would they be doing that if they didn't know Hong Kong has a future?" he said.