The most recent Asian Logistics, Maritime and Aviation Conference looks at how to best deal with the many disruptions of the past years
Written by Henrik Batallones
The latest edition of the Asian Logistics, Maritime and Aviation Conference – co-organized by the Hong Kong Trade Development Council and the Hong Kong SAR government – reflected the supply chain and logistics sectors being in a crossroads.
Held last November 2-3, it saw delegates return to the Hong Kong Convention and Exhibition Centre for face-to-face sessions and networking. However, with most of the world still facing travel restrictions due to COVID-19 at the time, the vast majority of delegates were watching online – over 11,000 viewers in 60 countries.
The topics discussed, inevitably, also reflected this reality. Between the pandemic and the resulting disruption in world trade, as well as long-term developments that promise to do the same, industry experts gathered to discuss trends such as the reconfiguration of global supply chains, the continued rise of e-commerce, and sustainability. The spotlight was also shone on new innovations in shipping and logistics, as global value chains see the need to be more responsive to ever-changing customer expectations.
As always, Hong Kong – a city that has long played a critical role in global trade – served as the backdrop to these discussions. Despite the circumstances the city remains committed to developing its logistics sector, furthering its role as a gateway between mainland China and the rest of the world. The city’s chief executive, Carrie Lam, cited continuing investment in infrastructure both within Hong Kong as well as the Greater Bay Area, and increased stability due to the controversial National Security Law passed in 2019.
“Hong Kong will continue to serve as the business and logistics gateway between the mainland and the world of opportunity,” she said in her remarks. “That connectivity and our deepening integration with the mainland will create fresh opportunities for Hong Kong and for the economies and companies that work in Hong Kong.”
New trade order
The city may have a lot more on its hands considering the seeming reconfiguration of global supply chains caused for the most part by the COVID-19 pandemic. Increasing costs, geopolitical challenges and evolving preferences have put the onus on supply chain players to adapt, and adapt fast.
However, the disruption is not entirely a new thing. Kelvin Leung, chief executive officer of DHL Global Forwarding Asia Pacific, pointed out that issues such as port and road congestion, has been a problem even before the pandemic, and has led companies to reconsider their supply chain networks.
What the pandemic did, according to Li & Fung chief executive officer Joseph Phi, is to put supply chain front and center. He says it has provided an opportunity for companies to rethink and reposition their supply chains. “The pandemic is a perfect occasion to reset their strategies and refresh the way they execute their strategies, so they are trying their very best to make their supply chains more resilient and agile,” he said.
A key strategy, according to Orient Overseas Container Line’s Raymond Fung, is to expand communication with customers and other partners, particularly smaller players who are new to dealing with these challenges. He believes the rise of e-commerce and the emergence of artificial intelligence has empowered logistics providers to better anticipate demand and cater for customer requirements.
E-commerce still rising
Certainly the adoption of e-commerce has accelerated because of the pandemic, with both business-to-customer and business-to-business models becoming more viable.
Southeast Asia has seen phenomenal growth, particularly in areas that weren’t previously heavily served by online retailers. In Indonesia, for instance, 50% of the sector’s growth in the past couple of years were in remote cities. Hita Supranjaya, director of Indonesian e-commerce giant Bukalapak, believes the growth is buoyed by mobility restrictions resulting to a shift in consumption to online channels, particularly for health products. In response, he said, businesses moved to expand and deepen their product portfolios, and to implement changes in their processes, particularly through digitalization and emphasis on continuity of business.
China’s e-commerce market has been leading the region even before the pandemic, both domestically and internationally. Now Cainiao Network, the Alibaba-backed logistics company, is training its sights on improving its service levels to its cross-border customers. One of their plans is to establish hubs in China’s major export-oriented cities, and leverage on its networks with other transport and logistics partners, to allow service levels for international deliveries to be at par with domestic ones.
“It’s a great foundation for overseas delivery,” Cainiao global supply chain director Kenny Ng said. “With the help of the high efficiency in the domestic market, we are able to build a better network overseas.”
He also stressed the need to continue digitalization efforts, making sure it is well-integrated with the customer experience. “It can really help us overcome our chalenges and the problem of instability,” he said.
Working towards net-zero
With greater awareness of the wider ecological impact of our supply chains – particularly from end consumers who demand that these issues be addressed – the move towards sustainable supply chains were also accelerated.
An approach commonly taken is to assess all points of the supply chain and implement measures to reduce its ecological footprint. Tony Domingo, senior vice president for supply chain and procurement of Nestlé China, talked about efforts both implemented globally and in his jurisdiction, including rapid elimination of plastics, water stewardship programs, utilizing greener transport fleets, and partnerships with other stakeholders.
He believes it is key for any business to truly espouse the values of sustainability, allowing employees and partners to work towards those goals. “What’s really key is to have a common understanding, a common interest in this area,” he said.
Another approach is to disrupt the supply chain itself. Ed Lam, chief executive officer of LFX, talks of deploying innovative measures such as new production methods, as well as an overhaul of traditional retail models. For one, he advocates for the disruption of the design, make, sell cycle by making selling the second step, utilizing digitalization to better anticipate customer demand and reduce wastage in the production process.
Both agree that it is critical to see efforts to ensure sustainable supply chains as a long-term investment that is necessary to a business’ competitiveness. “The question really is, do you look at costs as expenses, or do you look at them as investment?” Lam said.
Indeed, in a time of continued disruption and uncertainty for global supply chains, there is an opportunity to rethink what is currently being done. If there’s one key takeaway from the conference, it’s that the best way to reshape your supply chain in response to evolving demands is to better understand every point – and that means engaging more closely with partners, identify common goals, and work towards their fulfillment.