LOGISTICS, LOGISTICS, LOGISTICS
Kerrys Wong: contract logistics in China
In contrast, the progress being made in development of Shanghai's logistics industry is far quicker. 15 April saw the opening of China's first logistics park, situated close to the city's Waigaoqiao container terminals.
Already P&O Nedlloyd Logistics, Mitsui OSK Lines Logistics, Nippon Express and Kuhene & Nagel have set up operations there, and they will be joined in August by Hong Kongbased Kerry Logistics. The firm will be operating a 13,912 metre-square, twostorey warehouse with temperaturecontrolled compartments.
Vincent Wong, managing director of Kerry Logistics, told PS that the company has invested $8.21m in the 100% owned facility.
"In Shanghai we have been granted a license to handle both import and export cargoes, and are in discussions with a number of foreign companies to take over their contract logistics for China, " he says, adding that the vast majority of contract logistics operations - as opposed to unit load logistics - is for inbound cargoes. He declines to reveal which multinationals Kerry was in talks with, but given that it recently won the contract to handle San Miguel Brewries for Hong Kong, there seems a high likelihood that that may be extended to Shanghai.
Wong further believes the opening of the logistics park will also have a positive effect on the provision of landside transport. Kerry has its own trucking operation, one of the largest in Hong Kong, and some of it is to be deployed in China. "China is so huge it is obviously impossible to cover all of it through our own resources, so our ratio of owned and subcontracted haulage is 30% and 70% respectively. But that industry is going through a change. In the past there were more trucks than business, but since the beginning of May a new road transport safety policy has been put in place and a number of older trucks have been decommissioned. As a result there is a shortage of haulage currently and that means rates have gone up. In the long run though, this is a good thing because it means the trucking companies can re-invest in their equipment and expand the business to serve the market better. And Shanghai needs this."
Turning his mind to Yangshan, Wong says:
"It's far too early for us to be talking about that. We will wait and see; the timing of investments in this will be the key." And herein lies one the great challenges for Shanghai. While the demand for quay space from importers and exporters seems destined to be met by Yangshan, the ability of landside transport operators to adequately serve Yangshan, as well as the existing container facilities at Waigaoqiao and Pudong International Terminals, will come into sharp focus. Traffic in and around the city is already terribly congested and there will have to be further infrastructure investments made by the municipal authorities if it is to avoid becoming gridlocked. While it is currently the city's berths which are feeling the strain, it may soon be its roads.
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