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Hong Kong logistics leaders look to IT amid market flux

o Chee-Sing Chan
21.02.2013 kl 19:09 | Computerworld Hong Kong

With economies still treading water after the turmoil of Euro-zone crises, the Middle East upheaval and a stagnant US, it was no surprise that the logistics sectors suffered in the last year.

 

With economies still treading water after the turmoil of Euro-zone crises, the Middle East upheaval and a stagnant US, it was no surprise that the logistics sectors suffered in the last year.

For the first time in many years, the CEOs in the industry have not projected industry growth in double digits for any of the three key regions, according to 19th Annual Survey of Third-Party Logistics Providers by the Northeastern University and Emerson College. The survey of 31 respondents represented some of the world's largest 3PLs, collectively generating some $45 billion in revenues in 2011.

While the US and Europe show some recovery in the coming year, CEOs in Asia-Pacific forecast 8% growth over the next three years, down from last year's prediction of 10.3%.

HK recovery

Specifically in Hong Kong, the market is expected to recover slowly from the trials of the previous year.

According to Alison Dack, vice president, Information Technology; CIO, FedEx Express Asia Pacific, as the US and European markets start to show signs of recovery, Hong Kong, will continue to play an important role as a global trade and logistics hub in Asia.

Citing China Daily figures, she observes that Hong Kong's GDP growth is expected to recover to around 3% in 2013 as the drag from exports abates. It is forecasted that container throughput in Hong Kong will increase by 1.9% in 2013, up from an estimated year-on-year decline of 4% in 2012. Hong Kong's air freight volumes are also forecast to increase by 2.3% in 2013 after a projected growth of just 0.6% in 2012.

"The deterioration in cargo markets in the Asia Pacific region is expected to come to an end in 2013, with IATA forecasting cargo demand to increase by 1.4%," said Dack. "The economies in this region remain the most dynamic, driving the continuous shift of global economic power eastwards."

Dack believes that Hong Kong is in a strong position to retain its role as a logistics hub with continued investment and expansion into the air freight and port sectors, and the old runway at the Kai Tak Airport set to resurrect its role in Hong Kong's freight transport sector.

IT spending to rise

On the technology front, FedEx is expected to grow IT spending in response to the rapidly changing and increasingly complex business environment. This is driving demand for data availability across multiple channels, plus a need to rapidly deploy business solutions that support operational and customer needs. "Legacy technology infrastructure and software applications are not always designed in a way that allows IT to meet this demand," Dack noted.

FedEx has introduced a number of applications for its customers across the region. One of the latest FedEx innovations being rolled out in Asia Pacific is SenseAware, which monitors the whereabouts of heart valves, knee implants, and other critically sensitive healthcare shipments. The first-of-its-kind technology provides real-time visibility into customer shipments, including light and temperature signals to notify recipients if a package has been opened before it reaches its intended destination.

Dack stated that the priorities in 2013 will be the modernization of technology infrastructure to a 'cloud-based' environment to deliver readily scalable capacity--using technologies including virtualization--and flexible, consumable software capability based on software oriented architectures (SOA).

"Exploiting cloud-based services to provide flexible, cost effective disaster recovery for business continuity is also a priority. The focus in these areas enables FedEx to quickly respond to business demands while reducing costs through retirement of legacy infrastructure and applications," she added.

Dack emphasized that while some growth in tech spend is anticipated, there will continue to be a strategic focus on driving cost savings through process efficiencies and technology modernization.

Keywords: Business Issues  
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