Frost & Sullivan is forecasting the Asia Pacific transportation & logistics market of 12 countries (Hong Kong, Singapore, Australia, Japan, Taiwan, South Korea, India, Malaysia, Thailand, China, Vietnam, Indonesia) to grow at a compound annual growth rate (CAGR) of 7.6 per cent (2011-2016) to reach US$4.09 trillion in 2016.
Mr. Gopal R, Vice President, Transportation & Logistics Practice Asia Pacific at Frost & Sullivan said that sea freight is the key transport mode for freight movement in Asia Pacific, handling more than 60 per cent of total freight traffic in the 12 countries researched.
He forecasts total cargo volumes in Asia Pacific (12 countries) to increase 5.1 per cent year-on-year to 19.67 billion tons in 2012.
Key Industry Trends in Asia Pacific
Mr. Gopal said logistics end-users are becoming much more sophisticated and demand more from their service providers. He added that customers want more visibility in supply chain from their logistics service providers to optimize inventory, improve forecasting, increase communication and establish smoother supply chains.
He added that with rising awareness of green issue globally, industry players will need to co-ordinate sustainable logistics practice in a way that meets customer requirements at minimum cost.
"Greening logistics operations include lower CO2 emission, more efficient use of fuel and also cutbacks in consumption of power, water, paper and other commodities," he said.
Mr. Gopal noted that the Japan's earthquake and Thailand's flooding last year have demonstrated the vulnerability of supply chains and the importance of risk management.
"With rising awareness of the cost of supply chain disruptions, companies are looking at re-designing the supply chain and focus intensively on calculating risk," he said.
He added that shorter supply chains allow companies to monitor production and respond faster to demand fluctuations as well as to production problems that emerge.
Hong Kong Transportation & Logistics Market
Mr. Gopal said that Hong Kong's transportation & logistics market is projected to grow at a CAGR of 6.7 per cent to reach US$40.58 billion in 2016, supported by growth in external trade.
He noted that Hong Kong's external trade recorded a double digit growth in 2011 to reach US$915.52 billion despite the slowdown in global trade. He is forecasting Hong Kong's total external trade value to hit US$970.45 billion in 2012.
"Growth of Hong Kong's external trade signifies the growth of the transportation and logistics industry especially for import/export forwarding, air freight and ocean freight-related business," he said.
He added that Hong Kong, as one of the leading logistics hubs in Asia, saw its transport, storage and courier sector account for 6.7 per cent of total GDP in 2011.
Mr. Gopal said that the Hong Kong transportation & logistics market is fragmented in nature with a high number of business establishments in each logistics sub-segment. There is an estimated 161,500 people involved in the sub-segment of transportation, storage, postal and courier with about two thirds of the workforce are male.
He added that the number of business establishment in the transportation & logistics sector increased marginally at 4.5 per cent in 2010, with the highest number in support services segment, followed by freight forwarding and land transport segments.
Freight Movement in Hong Kong
Mr. Gopal said that total freight volume in Hong Kong has grown at a CAGR of 2.4 per cent from 2006-2011. He added that collectively, freight volume by different transport mode is projected to rise 5.8 per cent year-on-year to reach 332.38 million tons in 2012.
He said that cargo volume by sea is expected to increase 5.5 per cent year-on-year to 293.84 million tons in 2012. He added that Kwai Tsing Container Terminals probably handled an estimated 72 per cent of total container throughput in 2011.
Mr. Gopal noted that HK International Airport, ranked as the world's busiest airport by cargo traffic in 2010, has reported a decline of 4.6 per cent in cargo traffic in 2011 due to the global economic uncertainty in US and Europe. He is forecasting cargo volume by air in Hong Kong to increase minimally at 1 per cent year-on-year to 3.98 million tons in 2012.
He said that cargo volume by road is estimated to grow 8.7 per cent year-on-year to 34.56 million tons in 2012, adding that Lok Ma Chau will remain as the busiest land boundary control point, connecting Hong Kong to Mainland China. He added that Lok Ma Chau probably accounted for 70.5 per cent of total road cargo throughput in 2011.
Key drivers & restraints for the transportation & logistics market in Hong Kong
Mr. Gopal noted that Hong Kong operates the world's busiest cargo airport with 4.1 million tons cargo throughput, and ranked third in the world's busiest container seaports with 23.7 million TEUs in 2010. "With the world-class logistics infrastructure and comprehensive transportation connectivity, freight volume by air and sea experienced a steady growth over the years," he added.
He added that Hong Kong's open and free trade policy makes trading and logistics the largest sector among the country's economic pillar industries.
Mr. Gopal also said that the Hong Kong Government's various initiatives have also boosted growth in the logistics industry.
He noted that Hong Kong port is facing increased challenges from neighboring ports within Pearl River Delta and mainland regions. He added that Shenzhen Port and Guangzhou Port have brought stiff competition to Hong Kong.
Mr. Gopal said that the emergence of other hub for logistics and supply chain operations in the Asia Pacific region such as Singapore is also threatening Hong Kong's role as one of the leading logistics hub in the region.
"In addition to its excellent connectivity, state-of-the-art infrastructure, and pro-business environment, Singapore has attracted many leading global logistics players to set up their regional distribution centers in the country, putting pressure to Hong Kong logistics market," Mr. Gopal said.
He also said that Hong Kong's manufacturing sector has experienced slow decline over the years due to the continued relocation of manufacturing establishments to China. The manufacturing sector contribution to Hong Kong's GDP has steadily declined to 1.8 per cent in 2010 as compared to 2.7 per cent in 2006.
"The demand for transportation and logistics services generated from manufacturing activities has also shifted along with the factories relocation to China," he added.
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