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| Talking Point | Interviews | Success Stories | China Today | Import & Export | Legally Speaking | Regional Development |
Supply-chain Collaboration Across the Border
In Hong Kong, the formation of the Hong Kong Logistics Development Council (LDC) in October 2001 has lifted Hong Kong's vision to become a logistics hub to new heights. The use of supply-chain management to cut costs and boost profits is now widely recognised - as evident from the US example that it spends a mere 9.5% of GDP on logistics, roughly half of that of countries less advanced in logistics.

But while the LDC has identified Hong Kong's inland transport network as a strategic priority, the competitiveness of current cross-border transportation is hampered by inherent bottlenecks. Currently, a trucker carrying a laden container northbound to the Mainland must return the empty container to Hong Kong. In the case of a southbound order, he has to pick up an empty container from Hong Kong, transport it to China, where they fill it, and then carry it back to the SAR. In both instances, it takes one laden trip and one empty trip per transaction. This means valuable time wasted queuing at the congested border crossings, unnecessary work for customs officials and high transportation costs for shippers.

The potential for cost savings here is huge. Right now, some 15,000 container trucks cross the border between Hong Kong and China every day, with roughly half of them travelling northward to China and half heading south to the SAR. Of the 7,500 that travel north, approximately 2,000 are laden and 5,500 are empty. In the opposite direction it is the reverse, with 5,500 full and 2,000 empty.

If an effective matching service were in place and ALL the empty container trips were full loads , the 4,000 very costly empty trips per day would be turned into revenue-generating "matched orders". This means that each trucker would be able to carry out two shipping orders instead of one in each round trip across the border. Such a new supply-chain model would also allow the trucker to fill each shipping order at a much lower cost. Assuming that, currently, an average trip costs a shipper HK$3,000 and that the new model might save the shipper 15% overall, the savings per single delivery trip would be HK$450. Using this simple formula, the savings for Hong Kong shippers over a year could amount to the huge sum of over HK$600 million.

Transport Link, LINE's1 cross-border truck-load matching service, addresses this very issue by providing a matching service for truckers and shippers - and it requires no upfront investment or registration fees. For truckers with a northbound order, Transport Link matches their idle southbound capacity with a southbound order from another shipper. So, the trucker transports the northbound laden container and unloads it in China as normal. He then simply returns the empty container to a nearby depot - the Guanlan Inland Container Depot (GICD)2 . There, he picks up another empty container, drives to the second shipper's factory for loading, and carries the second revenue-generating order back to Hong Kong. In one round trip, he has filled two orders.

While it is too much of a quantum leap to expect most companies to do their transactions on-line in order to achieve cost savings, Transport Link combines an advanced load-matching system with a friendly, professional Operations Centre. The Centre is open from 7:00 a.m. to 11:00 p.m., seven days a week, while the GICD operates from 7:00 a.m. to 10:00 p.m. - longer hours than those of most trucking companies and container depots in Hong Kong. Shippers can place orders via their preferred mode of communications - be it phone, fax, e-mail or via the Internet. Orders are confirmed verbally, as well as in a clear written format by dedicated staff. Shippers can also use the service to enquire about the latest status of their containers. In this way, both shippers and truckers can benefit from personalised customer services that provide a better overall view of the shipping situation.

"This a collaborative model whereby all participants benefit"; said LINE CEO Aaron Mak. "Shippers can save approximately 15% on normal market prices by placing their orders with Transport Link. They then get better service at lower cost, and truckers enjoy more business opportunities with their previously unused capacity. Hong Kong as a whole benefits from less congested border traffic, less pollution and improved competitiveness in international trade."

  1. LINE - Logistics Information Network Enterprise - is a wholly subsidiary under Hutchison Port Holdings
  2. Located in central Shenzhen and in close proximity to the manufacturing hinterland in southern China, GICD is the first depot in the region officially approved by the Beijing Ministry of Communications and endorsed by the Shenzhen Customs as the official container exchange depot, with Shenzhen Customs office serving within the premise.
Further information on how to register for free as a Transport Link shipper / trucker can be obtained from http://transportlink.line.net or by calling (852) 8128 8688.
Mar 2002
 
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