Monday Nov 25, 2024
Monday Nov 25, 2024
Monday, 10 November 2014 00:00 - - {{hitsCtrl.values.hits}}
The ceremonial inauguration saw Defence and Urban Minis
try Secretary Gotabaya Rajapaksa, the event’s Chief Guest, deliver the keynote address titled ‘Redefining Logistics - Learnings from Defence’.
The sessions proper were kicked off by Chairperson CILT International and Former Transport Commissioner of Hong Kong, Dr. Chan. She made an informative presentation on the topic ‘Modern transport developments to manage urban congestion- A case study from Hong Kong’. She presented her insights based on the immense experience she gathered as the former regulator of transport services in Hong Kong.
Setting the scene to her presentation she said: “The main cause of congestion is the volume of traffic exceeding the capacity of roads. Congestion is likely to get worse as the city develops. Traffic is growing faster than road capacity and you can imagine the frustrations to manoeuvre in saturated roads. This situation can also happen in Colombo if you’re not careful.”
In many developed cities the more roads built, the more traffic there will be to fill up the space. It’s simply not possible to match the road capacity to the unrestricted traffic. For example in China the cities are growing fast and so is the purchasing power of people. The private cars in China have grown from one million in 1994 to 33 million in 2008. As a result Chinese cities experience serious traffic congestion and as congestion worsened, bus fees in major cities fell by 60% and bus punctuality fell by 88%, she explained.
Going into details of the issue, she highlighted that our challenge really comes in the following areas: increasing public vehicles, incomplete public transport networks, inefficient management of road space and the residential scheme which is not favourable for developing an integrated transport system, and further affecting our accessibility and urban mobility. Road congestion generates an external cost at a local, regional and global level.
“In cities, traffic congestion causes pollution, greenhouse gas emission, accidents, delays and deterioration in urban mobility which in turn increases the cost of production of goods and services. When this happens, government intervention is needed to increase efficiency. This should be supported by strategic action taken to reduce traffic volumes and practical measures to provide good alternatives,” she added.
She shared her experiences in Hong Kong and discussed measures that can be taken in other Asian cities. “Maintaining mobility under the broader concept of sustainability is challenging but possible if we act on the three guiding principles. First we should continue to improve our transport infrastructure, that is ports, airports, rail networks and bus stations. Secondly, we need to expand and integrate the public transport system. Thirdly we need to encourage the efficient use of road space,” she said.
Looking at the transport infrastructure in Hong Kong she mentioned that their policy is to develop the railway as the backbone of their transport system. Last month the market share of the railway increased beyond 43% as everyone cannot use the road and had to switch from cars and even buses to the railway, resulting in a 30% increase in railway usage during that period.
“We are continuing to build new railway lines and of significance is the express railway between Hong Kong and China giving us the travel time of just 15 minutes from Hong Kong to the closest neighbouring city in China. Constructing railway is very expensive. So where does the money come from? We have an interesting financing model from various projects. Finance through property development of our railway stations. The ease of access to railway stations has also encouraged public transport ridership. We call this the R+P model which helps to finance construction and promote sustainable urban living and growth,” she added.
Elaborating on her point, she explained that property development is too narrow thus we should be looking broader.
“My suggestion is that we should migrate from the R+P model to a railway and community model. If you look at the Capstan way sky-train station in Richmond City, it was a precedent-setting achievement for Canada. Property developers were allowed a density bonus and in return constituting 25 million Canadian dollars to a dedicated capital fund to build a station. So they do not own the station, they do not entirely fund the station but it makes a contribution to a capital fund. This introduction of flexibility enables market forces to play a large role in constructing timelines. This is the first transit-related land value deal that does not burden the tax payers.”
Shipping industry trends
Maersk Line India Cluster Managing Director Franck Dedenis delivered his presentation on ‘Emerging trends in the shipping industry’.
Franck spoke about the growth seen in the shipping industry during the last several decades and pointed out how the financial crisis impacted this growth. Since the creation of the shipping industry in the late 50s, especially as of the late 70s and beginning of the 80s and consumarised shipping lines, we have been able to see double digit growth. This was driven by GDP growth. These led to a healthy two decades of growth but only went on unti the financial crisis hit in 2008, he said.
He further explained that slower growth rates lead to financial difficulties in the industry. Giving examples he illustrated how slower growth, over capacity, depleting trip lines and high rates, cyclically depressed situations and lower order books can affect the shipping industry.
Moreover, he discussed matters like cost reduction and commercial excellence. He emphasised on the points of inter-coastal focus on cost reduction, focusing on business and profitable trades, as well as methods of streamlining backend processes and innovative technology to transform evolving customer service.
Describing how Maersk stands out in the industry he said: “Today if you look at Maersk, 95% of the bookings of the customs and shipping instructions are done online. We just want to bring shipping closer to the customer, meaning that they have the opportunity to reach out to the world from their desktop. One aspect of the shipping industry is, if you compare it to other industries like airlines or banking, this industry has not evolved a lot. There are a lot of innovations to do in terms of customer service and experience, proximity is one of the main things we are working on.
“The most important thing is that as a company we also changed our policy; before the crisis we clearly were on the market share game but today we want to grow with the market. This is because we need stability, we as in, not only the shipping line but also the customers and logistics professionals. This stability will help us gain efficiency over time and that’s what we all need.”
The CILT Forum was also told about growth enablers. Shipping is also dependent on port infrastructures and regulations. In Sri Lanka there are beautiful ports with a lot of capacity and this need to be fully utilised. It’s important that we take advantage of that infrastructure and potential. For this to happen, regulations which promote free trade and competition and not imposing tariff or pricing settings, to hinder the logistics operations should be in place, he said.
Kicking off the second session, Li & Fung Logistics Executive Director Tommy Lui made a presentation on the topic ‘Empowering business strategy through logistics solutions’.
“Hong Kong is very much able to relate with Sri Lanka. We are all a small place but want to think big. Hong Kong has been small but relatively successful because for a city of seven million people we are almost ranked amongst the top ten in the world in terms of GDP. We have been at the top of finance and logistics,” he said as he began the presentation.
He explained that most of the CEOs recently surveyed have identified that the biggest threat upon their business is technological changes on top of demographic and economic changes. Moreover, in terms of economy the Asian markets are rising. USA is growing strong and steady while Europe is slowly recovering, yet steady.
Emergence of China
The biggest trading nation in the future will be China and there will be more countries trading with it to actually benefit from the growth. The top rising giants in the next 15 years would be China and India. Of course South East and other regions are also trading with China too and the growth will increase. In the midst of all these trading is Sri Lanka.
“If we look at the forecastable disposable income in the future, there is only country scoring substantially over the average and that would be China. The reason is the proliferation of the middle class. In the next 5 to 15 years there will be huge increase in the middle class in Asia Pacific compared to other regions and the majority of them will come from China,” he said.
Lui said a lot of countries in South East Asia such as Cambodia, Vietnam, Thailand and countries in South Asia such as Bangladesh are increasing minimum wages. Pakistan and India increased their minimum wages too but after the effect of the American dollar which grew stronger within the last two years, the impact is shown to be less.
It should be noted that in the long-run all these countries will increase their minimum wages above China’s. When the wages increase in China, the products will become a lot more expensive.
To illustrate this, he drew the example of how much the US imported apparel from the rest of the world. China was at the top followed by Vietnam, Indonesia, and Bangladesh etc. Nevertheless, China was leading by a large number. He mentioned that the implication of this matter has been questioned many times; because if sourcing from China drops then manufacturing will go to our countries.
Expanding his discussion about the situation in China he said: “Four years ago the Chinese Government made a very conscious decision to double the minimum wage in five years. A lot of people asked why China had to do this because they have already monopolised most of the industries. There were a few reasons. One is China has to win aggressively the dispute in income from the affluent coast to the poor inner country. Secondly, China wants to take away the currency issue and appreciate their currency value. Thirdly, China needs to grow from qualitative rapid growth to qualitative balance growth because the economy and environment has to be ready to support growth when it comes. China is going to a B2B stage. They are looking at upgrading their industrial structure. This will in turn send the low profitable industries out from the country.”
Then he showed that consequently, the countries next to China that is Vietnam, Indonesia, Bangladesh and India are going to benefit from this as there is going to be an influx of factories going to these countries.
He further discussed other factors such as population. In the second generation China will have lost 150 million workers while India will gain 317 million workers. Obviously sourcing will switch from China to low-cost economies and India and Nigeria are the low cost frontiers of this trend.
Lui also discussed in detail how technology offers the power of choice and can be used to optimise processors to gain business advantage.
Concluding the presentation, he highlighted that Sri Lanka could have a bright future in logistics. He briefly mentioned ways to reap the advantages of Sri Lanka’s fantastic geographical location, how specialised technology can be used to cut off competition and methods of improving on-the-ground logistic capabilities.
Aviation
The final speaker of the forum was Airbus Helicopters Southeast Asia Commercial Director Sinai Sinelnikoff, who shared his thoughts on the ‘Latest developments in the aviation industry’.
Firstly, he gave an introduction to the Airbus Group.
“We are proud to be in the industry as European originally and more and more global,” he said.
After showing a short video of a range of helicopters by Airbus, he said Airbus produces helicopters to suit the needs of the future. It’s a big investment thus needs to cater for existing needs and the ones to come. Airbus helicopters are absolutely multipurpose. It’s not a cheap solution but the safest. After all, helicopters have one main role; transport fast and safely.
“The great advantage Sri Lanka has in terms of helicopters is size. I can show you that within a two-hour flight you can cover the country.” Referring to a table of estimated travel times, he stressed that compared to the means of travel in Sri Lanka, the roads for example it would a lot faster.
Currently, helicopters are used for a few civil operations in Sri Lanka and for Air Force support.
“As you see the docks are all around in Sri Lanka, and it could be a great source of revenue and growth during the next few decades. The country has to be ready for this,” he said. Having said this, Sinai explained how Sri Lanka can greatly benefit in investing in helicopters. For starters there will be a boom in tourism, as tourists will be able to reach their destinations faster and enjoy the unique experience of visiting places which could not be visited otherwise. Also, it can help avoid the heavy traffic conditions which delay operations in the corporate world.
The CILT Forum concluded with a panel discussion moderated by Consultant in Logistics and Transport, Gayani De Alwis. The panellists were Chairman/ Managing Director of Lanka Shipping and Logistics, Saliya A. Senanayake; Managing Director, Sathsindhu Group, Rohann J. Abeywickrema; the President Transportation Group, JKH Romesh David and the President CEO Freight Links International, Niral Kadawatharatchie, who is also the Chairman of CILT SL.
Pix by Lasantha Kumara
