Logistics & Supply Chain

Hong Kong-based BPS Global Group is a logistics infrastructure service provider that offers integrated engineering building services and automated logistics solutions to its customers across Asia. Founded in 1992 and headquartered in Hong Kong, the company deals with projects including industrial and logistic parks, warehouse automation and equipment, logistic technology, construction and engineering, investment and real estates, and e-commerce platforms.

As China’s Belt and Road Initiative gathers momentum, BPS Global has recently completed a project with a business partner from a Belt and Road country. Whereas many collaborations between China and Belt and Road countries so far have involved Chinese firms establishing a presence on the Belt and Road, in a way that echoes China’s development strategy of “going global”, BPS Global’s partnership with Indonesia’s Salim Group is a typical case of “bringing in”, another state strategy which involves the inflow of foreign capital into China.

Indonesia’s biggest conglomerate, Salim has interests ranging from palm oil plantations to media companies. In late 2015, its Chinese mainland-based subsidiary Salim Wanye Shanghai Enterprise Group came up with a plan to build a harbour in Fujian Province specialising in importing food products from Southeast Asia. Positioned as an “international industrial food park”, the harbour is to be located on a site owned by Salim within the Yuanhong Investment Zone in Fuqing City of Fujian. The project involves an estimated investment of 6 billion renminbi.

Salim’s original idea was to use the harbour to import aqua products, frozen meat and fruits from Southeast Asia to the Chinese mainland. The perishable nature of the imports meant careful logistics planning was of paramount importance. Before setting the project in motion, Salim had to commission a logistics consultancy firm to study the feasibility of the plan and provide logistical solutions. With the help of the Hong Kong Trade Development Council’s Fujian office, which helped identify a number of candidate companies based in Hong Kong, Salim eventually decided to select BPS Global, which has affiliated companies in various mainland cities including Beijing, Shanghai and Guangzhou, and also Singapore.

The role of BPS Global, which had previously handled similar projects including Humen Port and Nansha Port in Guangdong Province, involved carrying out a feasibility study and devising logistical plans. In practice, there were a variety of tasks, including designing the layout of the industrial park and working out a multi-phase development scheme for the project. The Hong Kong company also conducted a study on the feasibility of Salim’s idea of importing frozen food. One conclusion of the study, which featured a wealth of analysis and data, was that Xiamen, a port city in southern Fujian, has abundant supplies of frozen meat and fruits. BPS Global advised Salim against entering the fray and to focus on importing seafood instead, a suggestion that Salim eventually heeded. BPS Global then took reference from fish markets in Hong Kong and Tokyo and drew up detailed logistical plans, including how to keep the imported seafood fresh, what fish species should be frozen, what equipment should be used and meticulous transportation plans.

In the space of less than six months, BPS Global completed its task. The next step is for Salim to construct the harbour and related infrastructure, which should take one to two years to complete.

By applying advanced logistics concepts and technologies and by drawing on its wealth of industry experience to provide integrated logistics support, BPS Global has demonstrated how a Hong Kong logistics expert can help smooth the way for companies in Belt and Road countries to seize business opportunities in China. Through its involvement in the harbour project, the Hong Kong company has also played a part in helping the mainland attract investment from Belt and Road countries, effectively promoting the Belt and Road Initiative, which is designed to benefit all parties involved.

Hong Kong-based CALC is among the world’s top 10 aircraft leasing companies in the freight sector, says CEO Mike Poon. He says Hong Kong is an easy location for expertise in the sector, which also includes orders for aircraft parts, re-sale and recycling. CALC is connected to the Belt and Road Initiative through what is now called the “Aviation Silk Road”.

Speaker:
Mike Poon, CEO, China Aircraft Leasing Group Holdings Limited

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/

China Aircraft Leasing Group Holdings Ltd (CALC), an aircraft operating lessor founded in Hong Kong, specialises in providing aircraft full-life solutions, such as aircraft leasing, purchase and leaseback, structured financing to airlines around the world. It also provides value-added services including fleet planning, fleet upgrade and aircraft recycling. In a dynamic market that has been gaining traction year after year, CALC is one of the market players that stand to benefit from the boom. Today, the company has grown to become China’s largest independent aircraft operating lessor, Asia’s first large-scale aircraft recycling facility operator, and one of the top 10 global aircraft lessors in terms of the combined asset value of its fleet and orders placed. Its global presence is continuing to expand.

CALC’s business is mainly divided into two areas: CALC itself is responsible for the leasing of new aircraft; its member company, Aircraft Recycling International (ARI), focuses on the disassembling and recycling of used aircraft and spare parts supply. This unique business model means the company’s services cover an aircraft’s full life cycle – from its days as a new plane to the time it comes to the end of its lifespan. As the first full value-chain aircraft solutions provider in Asia, CALC currently owns and manages 130 aircraft in its fleet and is on track to expand its fleet to more than 300 by year 2023.

Over the past three decades, the aviation leasing industry has been growing at a remarkable speed as more and more airlines prefer to lease, rather than own, their aircraft for operation flexibility and efficiency. The outlook for the industry has become even more positive in recent years, with low interest rates and surging demand for air travel providing strong tailwinds. Amid the boom, CALC launched in 2014 a “globalisation strategy” aimed to carve out a global presence for the company. In less than two years, CALC’s clientele expanded to include airlines in Asia Pacific, Southeast Asia, Europe, Middle East and the United States, many of which are flag carriers or top-tier airlines in their markets.

The aircraft lessor first set its sights on Harbin, the pivot hub of the Longjiang Silk Road Economic Belt under the Belt and Road framework, which connects Eurasia with the Pacific and Baltic countries through a comprehensive land and sea transportation network. In 2014, CALC signed an agreement with the Harbin Municipal Government on the establishment of China’s first and largest aircraft disassembly project, the China Aircraft Disassembly Centre. The centre features an ageing aircraft material recycling system, which provides services to countries including those along the Belt and Road routes.

Also in 2014, CALC entered into leasing agreements with Air India – its first non-Chinese customer – for five new Airbus A320 aircraft. The first of the five planes was delivered during Indian Foreign Minister Sushma Swaraj's trip to China in February 2015.

As the “Aviation Silk Road” continued to gather momentum, CALC expanded its reach into more and more Belt and Road countries. In 2016, it delivered two new Airbus A320 aircraft to Pegasus Airlines, Turkey’s leading low-cost carrier, and four Airbus A320 aircraft to Jetstar Pacific, Vietnam’s first low-cost carrier. In 2017, CALC continued to deliver aircraft to airlines in various parts of the world, including in Russia, one of the largest markets on the Belt and Road.

Currently, aviation is one of the key areas of focus of the Belt and Road Initiative. As of the end of December 2016, China had signed bilateral air transportation agreements with 120 countries and regions. Mike Poon, Chief Executive Officer of CALC, said CALC sees great growth opportunities arising from the Belt and Road Initiative.

“In China, demand for domestic and international air transport services, including different aviation financial services, is growing rapidly. Meanwhile, many Belt and Road countries are emerging economies with an underdeveloped aviation sector. We believe our growth potential is high since we are the first-mover in the industry and one of the few operators that provide full value-chain aircraft solutions and value-added services to our clients around the world,” Poon said.

That is not to say there is no challenge. As with many other cross-border industries, the aircraft lessor sector is exposed to different operational risks, including political instability, credit risk and interconnectivity risk. To counter the risks, which are not unusual in Belt and Road countries, CALC relies on its own professional team with substantial experience in global financing and a comprehensive risk management system. This enables the company, which is listed on the Hong Kong Stock Exchange, to keep risks under control when expanding internationally.

According to Poon, in its continued effort to expand its international presence, CALC, being a Hong Kong company, also enjoys a diversity of advantages that the city offers. They include an open economy, the city’s sophisticated banking and financial sector, the common law system, and Hong Kong’s role as a facilitator of Belt and Road opportunities. In addition, the Hong Kong government’s move last year to grant aircraft leasing tax concessions to qualifying lessors has taken the city a step towards establishing itself as an international aircraft leasing hub. All these local advantages stand CALC in good stead, enabling it to grow fast and in the right direction while playing an effective role in building the “Aviation Silk Road”.

The MTR Academy offers intense courses on professional and managerial railway expertise, aiming to improve railways on the Belt and Road Initiative, according to Academy President Morris Cheung. This is essential for management development, says participant Kyaw Kyaw Myo of Myanmar Railways. Azerul Fahmi Mohamed of Malaysia’s Mass Rapid Transit enhances his railway management while Deddy Gamawan of MRT Jakarta looks to MTR’s high-speed expertise. 

Speakers:
Kyaw Kyaw Myo, General Manager (Operating), Myanmar Railways
Azerul Fahmi Mohamed, Manager, Mass Rapid Transit Corporation Sdn Bhd
M Deddy Gamawan, Division Head, PT MRT Jakarta
Morris Cheung, President, MTR Academy
Valentin Reyes, HSEQ Director, Light Rail Manila Corporation

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/

With 22 ports situated along China’s Belt and Road and a further 26 ports globally, Hong Kong-based Hutchison Ports has taken a large stake in the Initiative, with huge growth potential. Group Managing Director Eric Ip points to major port developments in Thailand and Pakistan, significantly contributing to those countries’ infrastructure development on the Belt and Road.

Speaker:
Eric Ip, Group Managing Director, Hutchison Ports

Related Links:
Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/
 

Established in Hong Kong more than 20 years ago, On Time Express Ltd (OTEL) is a leading provider of freight forwarding and logistics services with a global presence. In 2014, OTEL set up a specialised eTotal team to handle small-sized parcels and develop e-commerce logistics solutions. Leveraging OTEL’s extensive logistics network, eTotal provides e-tailers with a comprehensive logistics solution that includes booking for air and sea freight shipping services, overseas warehousing, delivery by local post and localised pre- and after-sales services.  The services  are aimed at streamlining the order management process and reducing transportation time. 

eTotal has established close partnerships with leading e-commerce operators including Alibaba’s Cainiao Network. With the help of eTotal, in just one year, the shipping time of small-sized parcels travelling from China to Russia has been reduced from 30-45 days to 15-20 days, with some even arriving in 5-7 days. 

eTotal owns warehouses in Shanghai, Beijing, Shenzhen and Hong Kong, and processes close to 100,000 parcels  (or 10 tonnes of goods) daily. The company offers air charter services during peak seasons. Apart from strengthening existing partnerships and optimising routes and services, eTotal also supports the Belt and Road Initiative by connecting more e-commerce platforms and sellers, and expanding into the Central Asian and European markets, in order to offer a more comprehensive logistics services package for cross-border e-tailers. The exponential growth of cross-border e-commerce business in recent years is dependent on modern cross-border logistics. The Belt and Road Initiative facilitates international trading and provides unlimited opportunities for the development of cross-border logistics and e-commerce.

With its strategic location at the heart of Asia, state-of-the-art infrastructure, advanced IT application and extensive land, sea and air transport networks, Hong Kong has long been a global logistics and supply chain hub and a gateway for Chinese mainland enterprises to explore Belt and Road opportunities.

An international logistics services provider based in Hong Kong, On Time Express Ltd (OTEL)’s  business includes air freight, sea freight, warehousing, delivery, supply management and supply chain consultancy. As the China-Europe Railway Express (CR Express) freight transportation service matures, OTEL’s rail services are also improving, providing a more convenient and environmentally-friendly logistics solution in addition to air and sea freight services to its clients. 

Launched in 2011, CR Express offers fast-track cargo rail transportation services between China and Europe. As a key to facilitating Belt and Road connectivity, CR Express has been renowned for its shorter lead time, high freight volume, convenience, safety and efficiency. CR Express now provides services to up to 10 Chinese mainland cities, including Chongqing, Zhengzhou, Chengdu, Wuhan, Suzhou, Yiwu, Hefei and Harbin. Its network has also expanded to major economic zones in 11 different countries, including Duisburg and Hamburg in Germany, Cherkessk and Chelyabinsk in Russia, Pardubice in Czech Republic, Warsaw, Łódź and Małaszewicze in Poland, Madrid in Spain, Rotterdam in the Netherlands, and Brest in Belarus.

In recent years, the number of returning trains has increased significantly and some of the routes started providing regular services including: Hamburg, Germany to Wuhan; Brest, Belarus to Suzhou; and Madrid, Spain to Yiwu. This presents a new logistics model for the import of European cargo and reduces operational costs for the cargo rail operator. The variety of freight shipped via CR Express has expanded from electronics such as mobile phones and computers to clothing, vehicles, auto parts, food, wine, coffee beans and wood. 

Working together with CR Express, OTEL provides a one-stop solution for FCL (full container load), LCL (less container load), customs clearance, trailer transport, warehousing, insurance, overseas door-to-door delivery and container return at different locations. OTEL has long-term storage agreements with warehouses at Chinese ports such as Zhengzhou, Chengdu, Wuhan, Suzhou, Yiwu and Xian. With overseas truck services covering Europe and the Middle Asia, onward truck transhipment is also provided in hub areas including Duisburg and Hamburg in Germany, Warsaw and Małaszewicze in Poland, and Brest in Belarus. International clients of OTEL ship items including clothing, auto parts, industrial products and electronics. As cross-border e-commerce business continues to flourish, OTEL has rolled out a tailored railway shipment solution to fulfil their e-commerce clients’ demand for direct, low quantity and high frequency transactions.

Founded in 1982 as a customs consultancy, Barsan Global Logistics (BGL) had grown to become Turkey’s largest customs company in seven years. Since 1990, the company has been involved in global transportation through land, air, sea, rail and multi-modal freight forwarding, bonded and non-bonded warehousing, and stock management.  Hong Kong has played an important role as BGL expanded its global presence, as BGL has today 33 branches in 14 countries and an annual turnover of some 400 million US dollars.

BGL expanded its network in Asia in 2001 when it established “Barsan Global Logistics HK Ltd” in Hong Kong. This Hong Kong branch has been providing research and management advisory services to companies across Asia and Europe, a large part of which is now covered by China’s Belt and Road Initiative. Ebru Busra Tunca, Director of Barsan Global Logistics HK Ltd, said Hong Kong’s Closer Economic Partnership Agreement (CEPA) with the Chinese mainland and its proximity with the dynamic economy of the Pearl River Delta are among the reasons that made Hong Kong one of the strongest logistics bases in Asia. She said Hong Kong’s “East-meets-West” culture has also been an attraction for overseas companies looking to expand their business in the region.  

BGL’s Hong Kong branch has proven to be a stepping stone to various emerging markets in Asia, and has remained an important regional office for BGL. BGL subsequently opened its Shanghai branch and became the first Turkish logistics company to establish a presence on the Chinese mainland. This was followed by new branches in Yiwu, Busan, South Korea, as well as Shenzhen and Ningbo. BGL’s steady growth and its worldwide network spanning East Asia, Southeast Asia, Central Asia, Europe and North America have demonstrated the importance of worldwide supply chain management. The company will continue to expand its network, targeting to be among the top ten logistics companies in the world by 2020.

Hong Kong was created as a trading post of the British East India Company for 19th century China trade. A new China trade is flowing, much bigger than the one before, which is what the Belt and Road signifies. It is natural that Hong Kong should again be a major node for it. Hong Kong has strong links to China and the rest of Northeast Asia. For Hong Kong to be a super connector for the new China trade, it must also develop strong links to the rest of Asia, in particular, to Southeast, South and West Asia. Hong Kong's full range of capabilities can then be brought into full play. 

Riding on the Initiative and taking advantage of ASEAN’s economic integration, Kerry Logistics continues to expand its ASEAN-wide cross-border road transportation network – KART which connects regional MNCs in ASEAN with the Chinese mainland and Hong Kong. One of the company’s successful showcases is a well-known toothpaste brand in which Kerry Logistics transports the raw materials in barrels packing (e.g. sodium salt, calcium salt) from the origin in Kunming to the client’s factory in Bangkok through the Kunming-Bangkok highway. Compared to the traditional land-sea solution – from Kunming to Guangdong by land and then to Bangkok by sea, the client can significantly shorten the transportation lead time from two weeks to less than four days.

A combination of Hong Kong’s multi-modal transportation model and IT solutions advantage allows On Time Express to cut freight transit times by up to 50 per cent. The Hong Kong-based logistics firm’s Spencer Lam says China’s Belt and Road Initiative also creates many new opportunities for traditional freight forwarding across the more than 60 countries under the Initiative. 

Speaker:

Spencer Lam, Managing Director, On Time Express Limited

Related Links:

Hong Kong Trade Development Council
http://www.hktdc.com

HKTDC Belt and Road Portal
http://beltandroad.hktdc.com/en/