MS3108 Transportation Logistics

Introduction to Transportation Logistics

LOGSCOUNCIL Logistics Hong Kong

The Chief Executive in his Policy Address 2001 stated
With Hong Kong's excellent transportation facilities and the PRD's high
productivity, we can promote the development of an inter-modal system
and consider other supporting facilities to strengthen Hong Kong's
competitive advantage as a supply-chain base.

Logistics services span over sea, air and land transport and involve
various policy portfolios and services areas, including distribution,
supply chain management and information technology.
Building on Hong Kong's connectivity and infrastructure, the objective of
Logistics Hong Kong is to create an even more conducive environment
so that Hong Kong would remain as the preferred international and
regional logistics hub and a supply-chain base.

Source: http://www.logisticshk.gov.hk/about/index.html

Learning Objectives
Understand the development of supply chain
management and logistics
Examine the role transportation in logistics
Analyze the importance and role of transportation
logistics in Hong Kong
Understand
the
career
development
in
transportation logistics

Integrated Supply Chain

Supplier

Manufacturing

Wholesaler

Retailer

Consumer

Products / Services Flow

Information Flow
Funds Flow

The supply chain can be viewed as series of integrated

enterprises that must share information and coordinate physical
execution to ensure a smooth, integrated flow of goods,
services, information, and cash through the pipeline.

Supply Chain Management

Supply chain management builds upon this
framework to integrate processes of business
entities in the enterprise.
The supply chain for a given enterprise is the set
of enterprises, facilities and transportation
systems connecting the sellers suppliers to the
buyers customers for that enterprise.
Supply chain management is concerned with
coordinating the product, information, cash
movement, and flow activities in a logistics
channel environment at least cost.
5

Definition of Business Logistics

Logistics is a military term since World War II,
describing the distribution and transportation system on
human and materials, including the setting up of military
bases, deployment of troops and supplies, etc.
The definition of logistics
Logistics is the process of planning, implementing, and
controlling the efficient and effective flow and storage of goods,
services, and related information from the point of origin to the
point of consumption for the purpose of conforming to customer
requirements.

This definition specifically includes the importance of

transportation in business logistics.
6

A Simple Logistics Channel

A Multi-Echelon Logistics Channel

A Complex Logistics Channel

Logistics Activities

Transportation
Storage
Packaging
Materials handling
Order fulfillment
Forecasting

Production planning
Purchasing
Customer service
Site location
Other activities

10

Evolution

Workplace Logistics (1950s)

Facility Logistics (1960s)
Corporate Logistics (1970s)
Supply Chain Logistics (1980s)
Global Logistics (1990s)
Cyber Logistics (2000s)

11

Evolution (contd)
Facility logistics is the flow of material, product and
information within a facility.
ex. Material Resource Planning (MRP)

Corporate logistics is the flow of material, product and

information between corporate functions and departments.
ex. Enterprise Resource Planning (ERP)

Global logistics is the flow of material, product and

information between global consumers and global sources.
Cyber logistics
Technological knowledge advancement for the logistics industry
(e.g., e-Platform development).
12

Evolution (contd)
50s/60s

70s

80s

90s/20s

Logistics

Facility
Logistics

Corporate
Logistics

Supply Chain
Logistics

Global, Cyber
Logistics

Supply Chain
Management

Vertical Process
Integration

Distribution

Vendor Managed
Inventory

Supply Chain
Integration

Communications

Mail

Phone

Fax

EDI, XML

Platform

Mainframe

Minicomputer

Client/Server

Internet,
Wireless Internet

Procurement

Vertical
Integration

Competitive
Sourcing

Supplier
Rationalization

Exchange

Warehousing

Warehouse

Distribution
Center

Cross-Docking

Logistics
Center
13

The Role of Transportation in Logistics

Transportation is the physical link connecting the firm to
its suppliers and customers.
In a nodes and links scenario, transportation is the link
between fixed facilities (nodes).
Transportation also adds value to the product by
providing time and place utility for the firms goods.
As firms engage in global competition, transportation
costs are becoming even more significant.

14

Fig. 1.4
Typical Logistics Network Physical Distribution

Movement/
Movement/
Transportation
Transportation

Movement/
Movement/
Transportation
Transportation

Movement/
Movement/
Transportation
Transportation

Movement/
Movement/
Transportation
Transportation

15

Transportation Logistics
The flow of commodities, services, documents,
information and money between sellers, buyers
and service providers.
Performance criteria of transportation logistics

Cost
Time
Security
Services

16

Air Cargo Logistics Community

Buyer

Multiple parties
Interrelated and integrated activities
Terminal

Carrier

Shipper
Forwarder

Terminal

Warehouse
Terminal Op

Carrier

Customs
Manufacturer

Customer

Carrier

Bank & Insurance

17

The Export Environment

ACCS

Shipper

Tradelink

Customs

SAP

Forwarder

Information
Flow

Warehouse
Terminal Op
COSAC

Carrier

Physical Flow
Shipper
Warehouse

Traxon

Term Op

Carrier
18

The Import Environment

ACCS

Tradelink

Buyer

Customs

SAP

Forwarder

Information
Flow

Warehouse
Terminal Op
COSAC

Carrier

Carrier

Physical Flow

Traxon

Term Op

Warehouse

Buyer

19

Total-Cost Analysis
Cost Perspective
Keep in mind that the most efficient systems are not
always comprised of each system component operating
at its lowest possible cost.
The critical concern is to have the entire system
operating at its lowest total cost.

20

Analysis of Total Cost with a Change to

Higher Cost Mode of Transport
Cost Centers

Rail

Motor

Transportation

$ 3.00

$ 4.20

Inventory

$ 5.00

$ 3.75

Packaging

$ 4.50

$ 3.20

Warehousing

$ 1.50

$ 0.75

Cost of Lost Sales

$ 2.00

$ 1.00

Total Cost

$ 15.00

$ 13.00
21

Logistics Industry in Hong Kong

Hong Kong is a premier international and regional
transportation and logistics hub.
Hong Kong offers more comprehensive, high
quality, more reliable, efficient, safe, secure and
flexible services.

22

Cargo Throughput (2012-13)

Sea cargo
Cargo throughput amounted to 22.352 million 20-foot
equivalent units (TEUs) in 2013, making Hong Kong the
worlds third busiest container port, 3.31% decrease compared
with 23.117 million TEUs in year 2012.
(Source: http://www.pdc.gov.hk/docs/summary_statistics.pdf)

Air cargo
Hong Kong International Airport (HKG) ranked first in the
world in terms of International Air Cargo throughput since
1996. Compared to the year before, 2013 saw a record 4.166
million tonnes, a 2.4% increase.
(Source: http://www.aci.aero/Data-Centre/Annual-Traffic-Data/Cargo/2013-final)

23

World Top 10 Container Ports 2011-13

Source: Marine Department, HKSAR Government, Port and Maritime Statistics, Container Throughput
(http://www.mardep.gov.hk/en/publication/pdf/portstat_2_y_b5.pdf , Table 5)

24

World Top 10 Airports 2013

ACI Traffic Data: World airports ranking by total cargo - 2013
Loaded and unloaded freight and mail in metric tonnes
Airports participating in the ACI Annual Traffic Statistics Collection.

Rank

Airport

Tonnes

% Change

Rank in 2012

HONG KONG, HK (HKG)

4,166,303

2.4%

MEMPHIS TN, US (MEM)

4,137,801

3.0%

SHANGHAI, CN (PVG)

2,928,527

-0.3%

INCHEON, KR (ICN)

2,464,384

0.3%

DUBAI, AE (DXB)

2,435,567

6.8%

ANCHORAGE AK, US (ANC)*

2,421,145

-1.7%

LOUISVILLE KY, US (SDF)

2,216,079

2.2%

FRANKFURT, DE (FRA)

2,094,453

1.4%

PARIS, FR (CDG)

2,069,200

-3.8%

10

TOKYO, JP (NRT)

2,019,844

0.7%

10

Source: Cargo Traffic 2013 Final (Annual), Airports Council International (Last update: Dec 22, 2014)
(http://www.aci.aero/Data-Centre/Annual-Traffic-Data/Cargo/2013-final)

25

Air Cargo Throughput in China 2013

Rank

Airport

Location

Code
(IATA/ICAO)

Total cargo
(metric tonnes)

Rank
in 2012

%
Change

Shanghai Pudong International Airport

Shanghai

PVG/ZSPD

2,928,257

0.3%

Beijing Capital International Airport

Beijing

PEK/ZBAA

1,843,681

2.4%

Guangzhou Baiyun International Airport

Guangdong

CAN/ZGGG

1,309,745

4.9%

Shenzhen Bao'an International Airport

Guangdong

SZX/ZGSZ

913,472

6.9%

Chengdu Shuangliu International Airport

Sichuan

CTU/ZUUU

501,391

1.3%

Shanghai Hongqiao International Airport

Shanghai

SHA/ZSSS

435,115

1.2

Hangzhou Xiaoshan International Airport

Zhejiang

HGH/ZSHC

368,095

8.8%

Xiamen Gaoqi International Airport

Fujian

XMN/ZSAM

299,490

10.3%

Kunming Wujiaba International Airport

Yunnan

KMG/ZPPP

293,627

10

12.0%

10

Chongqing Jiangbei International Airport

Chongqing

CKG/ZUCK

280,149

4.3%

China's busiest airports by cargo traffic

Source: http://www.caac.gov.cn/I1/K3/201403/P020140324403180721900.xls
26

Policy Address 2010

To support the logistics sectors switch to high-value goods and services, we are
gradually making available long-term sites for the sector to develop a logistics
cluster. As a start, a site in Tsing Yi was put up for open tender last month. In
parallel, we will continue to provide suitable sites for port back-up uses to
facilitate efficient port operations. We will continue to consolidate Hong Kongs
position as an international maritime centre, reinforce the maritime service
cluster, strengthen the training of human resources and promote our quality and
comprehensive maritime services both locally and abroad.
On air transport, the Airport Authority is implementing a midfield expansion
project to provide additional aircraft stands and apron facilities and a new
passenger concourse. Phase 1 works are expected to begin in the third quarter of
next year for completion in mid-2015. In addition, the new air cargo terminal
project is expected to be completed in early 2013. This project will increase the
airport's cargo handling capacity by 50%. We expect more competition in the
industry upon completion of this new terminal, which will help enhance the
airport's competitiveness.

Source: http://www.policyaddress.gov.hk/10-11/eng/p103.html

27

Policy Address 2011

To help the logistics industry provide high value services,
we progressively make available long-term sites for the
construction of modern logistics facilities. The second
logistics site at Tsing Yi is expected to be put up for open
tender by the end of this year. To satisfy the development
needs of the industry, we will continue our efforts to
identify sites for backup facilities.
The Airport Authority has completed the public
consultation on the airports future development,
including the construction of a third runway. It will
submit recommendations on the way forward in late
2011.
Source: http://www.policyaddress.gov.hk/11-12/eng/p167.html

28

Policy Address 2013

In the National 12th Five-Year Plan, the CPG has made clear its support for
Hong Kong to reinforce and enhance its status as an international shipping
centre. I would like to emphasise that the concept of "shipping centre" covers
both aviation and maritime transport. We will continue to improve our aviation,
maritime and land transport facilities and their connectivity, and reinforce and
enhance Hong Kong's role as a regional hub for passenger and cargo traffic.
We will build on the strengths of our existing terminal business to develop our
international maritime services. The business environment in Hong Kong is
highly globalised with a sophisticated financial system, robust legal system and
deep pool of well qualified professionals. The development of affiliated
maritime services in Hong Kong has been gaining momentum in recent years.
These include ship management, shipping agency, ship finance, marine
insurance, ship registration and legal services. We will take account of
recommendations in a consultancy study to be completed later this year as we
seek to reinforce the maritime service cluster and develop high value-added
maritime services. This is an example of how we may "expand" our industries.

Source: http://www.policyaddress.gov.hk/2013/eng/p40.html

29

Policy Address 2014 Logistics Industries

The logistics industry has flourished in recent years. Ten hectares of land have
been set aside in Tuen Mun West for logistics use. Land will also be earmarked
in new development areas for the construction of modern logistics facilities. On
air freight, the Hong Kong International Airport (HKIA) has been the worlds
busiest international cargo airport in the past decade. In the first 11 months of
2013, the HKIA handled 3.7 million tonnes of cargo, an increase of 2.6% over
the same period in 2012. In addition, following the full operation of the third air
cargo terminal last October, the overall cargo handling capacity of the HKIA has
increased by 2.6 million tonnes, further strengthening Hong Kongs position as
an international and regional logistics centre. The Government will continue to
improve port facilities and enhance the efficiency of port operations, thereby
seizing the opportunities brought by the growth of trade in the Mainland and
Asia.

Source: http://www.policyaddress.gov.hk/2014/eng/p27.html

30

Policy Address 2014 Maritime Services

Hong Kong enjoys a competitive edge in developing quality and international maritime
services, such as ship registration, management and broking, shipping agency, ship
finance, maritime insurance, legal and arbitration services.
The consultancy study on Enhancing Hong Kong's Position as an International
Maritime Centre has been completed. The study concluded that Hong Kong is well
positioned to develop high value-added maritime services. It also proposed setting up a
new statutory maritime body. In the coming year, the Government will work out the
specific functions, structure and funding of the proposed new body and consult the
industry. We will then take forward the necessary legislative procedures as soon as
possible.
Amid the rapid development of the aviation industry, manpower training is essential to
further strengthening our leading position as the major regional aviation hub. The
Government will consider setting up a civil aviation training institute, as supported by
the EDC's Working Group on Transportation, to develop human capital for both the
local and regional aviation industries, promote exchanges and enhance the safety and
efficiency of air services.
Source: http://www.policyaddress.gov.hk/2014/eng/p28.html

31

2012 Manpower Survey of the Hong Kong

Transport Logistics Industry
Managerial

Executive/
Supervisory

Assistant/
Clerical

Crafts/
Operative

All Sectors

a. Warehousing & Cold Storage

296

752

1,589

4,007

6,644

b. Cargo Handling Terminals

98

541

1,085

1,211

2,935

1,324

3,836

6,291

31,566

43,017

300

1,567

1,613

4,656

8,136

5,272

5,715

15,744

3,247

29,978

f. Stevedoring Services

65

94

128

651

938

g. Couriers (International)

569

1,064

1,862

6,721

10,216

h. Other Transport Logistics

Service Providers

61

92

157

1,063

1,373

i. Sea Freight Transport

664

978

1,242

37

2,921

j. Ship Management & Chartering

251

303

460

155

1,169

8,900

14,942

30,171

53,314

107,327

c. Trucking & Container Haulage

d. Air Freight Transport
e. Forwarding Agents

Total

Source: http://www.vtc.edu.hk/uploads/files/publications/transport_logistics_training_board/en/2012%20TLTB%20MPS%20Statistical%20Report.pdf

32

2010 Manpower Survey of the Hong Kong

Transport Logistics Industry
Managerial

Executive/
Supervisory

Assistant/
Clerical

Crafts/
Operative

All Sectors

a. Warehousing & Cold Storage

401

679

1,643

3,836

6,559

b. Cargo Handling Terminals

95

531

626

1,295

2,852

1,571

3,917

7,690

30,450

43,628

261

1,483

1,365

4,200

7,309

3,857

5,009

16,726

2,805

28,397

f. Stevedoring Services

87

104

215

824

1,230

g. Couriers (International)

375

780

1,518

6,220

8,893

h. Other Transport Logistics

Service Providers

81

146

168

1,035

1,430

i. Sea Freight Transport

414

645

1,198

31

2,288

j. Ship Management & Chartering

293

383

742

301

1,719

7,435

13,677

31,891

50,997

104,000

c. Trucking & Container Haulage

d. Air Freight Transport
e. Forwarding Agents

Total

Source: http://www.vtc.edu.hk/uploads/files/publications/transport_logistics_training_board/sc/2010%20TLI%20MPS_110818.pdf

33

2008 Manpower Survey of the Hong Kong

Transport Logistics Industry
Managerial

Supervisory

Clerical

Operative

All Job
Levels

a. Warehousing & Cold

Storage

351

881

1,561

3,742

6,535

b. Cargo Handling Terminals

incl. KCR

140

900

1,018

3,345

5,403

c. Trucking & Container

Haulage

891

4,515

7,320

30,791

43,517

d. Air Freight Transport

187

534

602

2,907

4,230

3,844

6,507

16,627

3,124

30,102

f. Stevedoring Services

78

239

217

1,312

1,846

g. Couriers (International)

235

448

1,008

1,971

3,662

h. Other Transport Logistics

Service Providers

50

103

122

1,009

1,284

i. Sea Freight Transport

838

1,077

1,916

259

4,090

6,614

15,204

30,391

48,460

100,669

e. Forwarding Agents

Total

Source: http://www.vtc.edu.hk/content/96/129/1/tltb_2008_mpr_091002.pdf

34

Business Outlook
More sea freight is expected to be diverted to
mainland ports.
More river-trade traffic.
More air freight is expected to route via Hong
Kong.
The switch from freight service provider to logistics
service provider.
The integration of e-business and logistics services.
35

Challenges to Hong Kong Logistics Industry

Infrastructure development in Pearl River Delta.

Development in Shanghai.
WTO accession.
Relaxation of the direct freight link between
Mainland China and Taiwan.
Integrators and global logistics operators.
Integration of e-business and logistics services.
Slowing down of the Economy in US and EU.
36

MS3108 Transportation Logistics

Appendix

37

Job Descriptions in Transportation Logistics

Managing Director/Chief Executive/General
Manager
Assumes full responsibility of overall management
and development. Formulates company strategies, sets
guidelines, targets, and makes corporate decisions.
Monitors the performance of various departments.

38

Job Descriptions in Transportation Logistics

Marketing/Sales/Commercial Manager:
Plans, organizes, directs and controls marketing, sales
and promotional activities. Determines pricing policy
and pricing packages. Co-ordinates with operations
and freight/traffic/customer service managers in
anticipating, identifying and satisfying customer
needs. Plans new services. Reviews performance
analysis for forecasting future marketing situation.

39

Job Descriptions in Transportation Logistics

Freight/Customer Service/Documentation
Manager
Plans, organizes, directs and controls overall
operational aspects of customer services. Supervises
the booking of space and the acceptance of cargo.
Supervises the preparation and issuing of shipping
documents.

40

Job Descriptions in Transportation Logistics

Insurance/Claims Manager
Deals with underwriters for hull, cargo liability, crew
and liability insurance. Takes care claim settlement and
claims against the insurer. Makes recommendations on
cargo handling to reduce claims.

41

Job Descriptions in Transportation Logistics

Line Manager
Assume on overall responsibility for a liner service
including planning its marketing and sales policies.
Co-ordinates with documentation, operations and
logistics managers to provide back-up service to
customers. Liaises with terminals and contractors to
render other transport services to meet customers
needs. Monitors. Space allocation and rate level.
Responsible for tariff matters.

42

Job Descriptions in Transportation Logistics

Sales & Purchase/Chartering/Brokering Manager
Arrange to charter in and charter out of ships.
Responsible for sales, purchases and ship building
contracts.

Quality Assurance Manager

Responsible for the design, implementation,
coordination, review and revision of quality assurance
programmes in the organization.

43

Job Descriptions in Transportation Logistics

Distribution/Traffic/Logistics Manager
Responsible for and controls of the receiving, storing
and distribution of cargo. Ensures compliance with
government and company regulations. Advises
management of planning and new techniques.
Supervises the supply, maintenance, repair and
installation of equipment.

44

Job Descriptions in Transportation Logistics

Terminal/Depot/Warehouse Operation Manager
Plans, organizes, directs and controls the activities of a
cargo terminal.
Monitors aircraft/vessel/train/tracks arrival and
departure schedules, berth, closing time and cargo
delivery date. Formulates operation, maintenance and
control policies relating to cargo handling in a cargo
delivery base.

45

Job Descriptions in Transportation Logistics

Terminal/Depot/Warehouse Operation Manager
Takes charge of the overall operation of a warehouse.
Ensures receiving, storage and distribution services are
provided for and records kept.

46

Job Descriptions in Transportation Logistics

Stevedore/On Board Manager
Monitors freight operational activities including the
delivery of cargo from vessel to land and from land to
vessel. Controls use of vehicles/transport equipment.

47

Job Descriptions in Transportation Logistics

Supervisors

Marketing/Sales/Commercial
Freight/Customer Service/ Documentation
Pricing
Insurance/Claims
Sales & Purchase/ Brokering
Distribution/Traffic/Logistics Operations
Container logistics/Equipment Control
Stevedoring/ On Board
Terminal/Depot/Warehouse Operations
48

Ranking of Skills Required for Logistics Managers

Business strategy planning, implementation and
evaluation
Automation strategy planning, implementation
and evaluation
Customer relationship and service strategy
planning, implementation and evaluation
Supervisory techniques
Quality assurance and control
49

Ranking of Skills Required for Logistics Managers

Information systems
Workflow analysis
International trading practices
Supply chain concepts
Benchmarking of transport and distribution
operations
Budgetary control

50

Ranking of Skills Required for Logistics Managers

Distribution operations
Routing optimization
e-Business
Material handling and automation
Warehousing and storage operations/inventory
control
Risk management

51

Ranking of Skills Required for Logistics Managers

Multi-model transportation
Transport operations
Pricing strategy
Multi-lingual business communication
Human resource planning, implementation and evaluation
Financial planning, implementation and evaluation
Sales and marketing strategy planning, implementation
and evaluation.

52