Ryan IpandMonte Mu

Opinion | Hong Kong needs an industrial policy to keep up with rapidly evolving trade logistics

Without an industrial blueprint and economic planning, Hong Kong may miss the opportunities in modern logistics, as a land shortage restricts the growth of the larger warehouses and data centres needed in the evolution

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Workers in an Amazon fulfilment centre in Peterborough, England. Demand for land has changed as traditional storefronts are gradually replaced by online shopping platforms. Photo: AFP

Ryan IpandMonte Mu

Published: 9:15am, 9 Aug 2020Updated: 12:45pm, 20 Aug 2020

While the world economic outlook remains uncertain, one thing for certain is that the Covid-19 pandemic has fuelled the growth of the stay-at-home economy. From groceries to clothes, more shoppers now realise these can all be delivered with a few clicks of a mouse.

As e-commerce gains momentum, this also presents enormous opportunities for the logistics industry. However, Hong Kong, despite being a renowned trading and logistics hub, may miss out, given the shortage of modern facilities.

As manufacturers allocate different production processes to different countries to take advantage of the international division of labour, logistics have become an essential link in the supply chain. And, as more shoppers move online, product delivery is increasingly relying on logistics services such as last-mile delivery. Meanwhile, demand for land has changed as traditional storefronts are gradually replaced by online shopping platforms.

Larger modern warehouses and logistics centres are crucial to the operation of e-commerce platforms; they accommodate a greater number and variety of products and make it easier to centralise order management. This saves on delivery costs by reducing the need to deploy goods to different warehouses and improves customer experience as they receive their orders in one go.

Technology such as 5G communications, the internet of things, artificial intelligence and big data analytics can significantly improve logistics operators’ productivity. They may even have profound implications on the retail model. Smarter demand forecasting and anticipatory shipping is just one application of data analytics in modern logistics.

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Data about customers’ purchase history, shopping cart status and even real-time mouse clicking behaviour can be used by companies to predict where certain products may be sold, and where certain products can be shipped closer to potential customers, shortening delivery time. As more analytics are embedded in the business process, more space for data centres will be required.