Asian Logistics, Maritime and Aviation Conference concludes

Jointly organized by the Government of the Hong Kong Special Administrative Region (HKSAR) and the Hong Kong Trade Development Council (HKTDC), the 11th Asian Logistics, Maritime and Aviation Conference (ALMAC) has concluded, successfully running in an online-and-offline hybrid format. Sixty-three industry experts and leaders shared their insights at close to 30 sessions at the two-day conference, attracting more than 11,200 viewers from some 60 countries and regions. They included participants from Hong Kong, Mainland China, newcomers from Mexico, Nigeria, Romania and more, highlighting how the event offered networking opportunities spanning the globe.

The conference’s hybrid format enabled industry players from around the world to expand their business connections and explore partnership opportunities both virtually and face to face. Six satellite venues were set up in collaboration with different industry organisations to enhance participation. Representatives could join the event at the main venue in Hong Kong or satellite venues in Chengdu, Chongqing, Guangzhou, Wuhan, Hamburg and more. In addition to running a live broadcast of the conference, some of the satellite venues invited experts to address logistics issues and experiences from a local perspective and enabled participants to enjoy face-to-face exchanges and business matching activities at the same time. Virtual roundtable meetings were also organised, connecting participants from Belgium, France, Germany, Italy and Luxembourg with industry players from Hong Kong and Mainland China, helping the industry react to new market trends.

New Trade Order and Evolving Intermodal Networks in the Asia-Pacific

The COVID-19 pandemic has raised existential questions about globalisation and added weight to the topic of supply chain shortening, including near-shoring and re-shoring. As a consequence, supply chains are now becoming more regional than global - a development that is particularly noticeable in the Asia-Pacific region.

In the first Power Dialogue session, titled “New trade order and evolving intermodal networks in the Asia-Pacific”, three industry luminaries - Raymond Fung, Director of Trades, Orient Overseas Container Line; Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific; and Joseph Phi, Group CEO, Li & Fung - discussed how shippers and other industry players are adjusting to the post-pandemic era and how the region’s supply chain network will evolve in the coming years.

Fung said businesses have needed to increase dialogue with each and every customer and have also had to cater for certain SMEs they previously wouldn’t have dealt with over the past couple of years. As service providers, he said shipping lines must live with what the customer wants and adjust accordingly. “For example, we have been using big-bulk vessels, as long as they are seaworthy, to run short-distance trips for certain customers,” he said. With the growth of e-commerce and the use of artificial intelligence by some carriers and customers, he hoped it would be easier to forecast demand, with shipping lines able to come up with different sizes of vessels and different routings to better cater for customers’ requirements.

Leung said that a lot of issues, such as port congestion and traffic congestion, were happening even before the pandemic. Infrastructural issues already existed but have been amplified by the pandemic. Even before COVID-19, many industries and companies had been rethinking how to position their supply chain, sourcing models, manufacturing models, and so forth, focusing on enhancing the transparency of their supply chain and the resilience of the supply chain model. “Digitalisation is going to change the way we operate going forward, and ESG is becoming more important because our industry creates a lot of emissions, and we have to address that,” Mr Leung said.

Phi explained that for many companies, the worst affected area has been the supply chain. Before the pandemic, the supply chain was largely invisible and for many companies it was never part of the corporate agenda. But today, the supply chain is front and centre. “We have surging demand, rising transportation costs, manufacturing delays, port congestion, labour shortages, trade disputes, trade policies, inflation, and so on, so the whole supply chain is facing the perfect storm,” he said. “The more progressive companies are doing things to create value in their supply chains. The overarching theme they have adopted is they have hit the reset button, concluding that 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.”

Moving Forward to a Smart Air Cargo Future

With the accelerated adoption of e-commerce worldwide and growing industry demand for more efficient and transparent logistics, digital transformation and collaboration among supply chain stakeholders has become a necessity in this fast-changing global trade environment. Victor Mok, Chairman and CEO, Asset Service Platform, GLP China; Mark Slade, Managing Director, DHL Global Forwarding Hong Kong & Macau; Brendan Sullivan, Global Head of Cargo, International Air Transport Association; and Yvonne Ho, General Manager, Hong Kong & Macau, International Air Transport Association, examined the future for smart air cargo and shared their insights on air cargo digitalisation development trends and the impact of innovation.

Sullivan said that as the world emerges from the COVID-19 crisis, a number of supply chain issues have also surfaced. There is strong consumer demand in the United States, which must be filled by Asian producers, but there are production slowdowns, personnel issues, and a re-emergence of the virus and its variants, which are creating additional challenges for the supply chain on both the manufacturing side and also in the US, which is seeing congestion in ports throughout the country. “Air cargo continues to rise and is trending above the rate of overall trade, so air cargo revenues are expected to be still close to one third of airline operating revenues. This is up significantly from the previous average of 10% to 15% growth,” Mr Sullivan said.

Mok mentioned that over the past five to 10 years, Chinese logistics providers have implemented digital solutions to enhance the digital transparency and safety of cargo movements. Cross-border e-commerce has greatly accelerated progress in this area. “Digitalisation is a big word, but it doesn’t mean just moving things like processes from paper to online platforms. That is only the first small step,” Mr Mok explained. “The key is how you optimise the processes, using technology and data to improve the processes and therefore efficiency and transparency, to make better decisions than in the past.”

Slade, meanwhile, told conference delegates that up to 60% of supply chain disruptions come not from direct suppliers, but further upstream from second- and third-tier suppliers. He explained that DHL uses an analytical tool to allow companies to get deeper into the supply chain and identify risks with suppliers that are actually two or three layers removed from their operations.

Global Recovery and Outlook for the Shipping Industry

Global maritime trade experienced large swings in volumes due to the unprecedented disruption caused by COVID-19. The pandemic has sent shockwaves through supply chains, shipping networks and ports. In addition, fluctuations in cargo trade brought an additional challenge to pandemic-related disruptions in the global supply chain. Jeremy Nixon, CEO, Ocean Network Express Pte Ltd, and Tim Power, Managing Director, Drewry Shipping Consultants, discussed the broader impact of the pandemic on the shipping industry.

Nixon said that COVID-19 is still having a huge impact on global shipping and global logistics. but there is a misconception that it’s the container lines that have run out of containers and ships. The real issue, he said, is more on the land side, where there is a tremendous shortage of labour availability in warehouses, distribution centres and trucking companies, and on the whole logistics network in many countries around the world. As a result, container ships cannot get unloaded. “The challenge is not so much on the manufacturing side in Asia; it’s more on the destination market side, whether its North America, Europe or Latin America,” Mr Nixon explained.

Power mentioned that in the period from 2010 to 2019, shipping lines barely earned its cost of capital. That meant no money was going into creating spare capacity, so when a disruption like COVID-19 came along, coupled with a demand surge, it was inconceivable that the system could cope. “In the short run the shipping industry is inelastic, as it takes two years from the time an order is placed to that when a new ship arrives. One big change we may see in the future is that production may be sourced back onshore or near-shore to avoid being totally exposed to long-haul supply chains,” he said.

In addition to the seminars, physical and virtual exhibition showcased different logistics technologies, including 5G technology for warehouse management, smart logistics solutions, international payment solutions and the latest smart port developments, connecting participants with the best business solutions. The ALMAC virtual platform also provides several interactive functions including artificial intelligence (AI)-driven business-matching services.

The Exclusive Dialogue sessions during the conference looked into the challenges faced by shippers and shared information on how corporations can develop new business models, operations and measures to minimise disruptions and risks. These new sessions allowed local participants to interact with conference speakers face-to-face.