Toronto, Ont December 4, 2015 Remember Marco Polo and tales of the Silk Road? With the Silk Road Economic Belt and the new 21st Century Maritime Silk Road, China aims to open a new era for global trade, simply called the Belt and Road initiative. The opening plenary at the Asian Logistics and Maritime Conference (ALMC) in Hong Kong a couple of weeks ago brought some 2000 logistics professionals together to learn more about how the powerhouse that is China intends to accomplish this feat and what it might mean for countries touched by the belt and for traders around the world.
The Belt and Road: Journey to the New Era panellists presented insights on challenges that must (and I suspect will) be overcome for this new vision to be realized. Certainly there are physical infrastructure requirements of railroads, bridges, tunnels and stations that Mr. Zhao Huxiang, Chairman, Sinotrans & CSC Holdings and President of FIATA addressed. Even more challenging perhaps than physical infrastructure projects are the issues relating to trade facilitation, border crossings, customs facilities and the interminable delays and costs in transiting so many countries, many of which lack modern Customs administrations.
Organized by the Hong Kong Trade Development Council and the Government of the Hong Kong Special Administrative Region, the AMLC covered many other subjects. Some of the numbers presented in the discussions on eCommerce were astounding. The scale and potential of eCommerce in China and throughout Asia is almost unbelievable. Last year on Singles’ Day, it took about 8 hours to process 100 million orders. This year, according to conference speakers, it took 43 minutes to generate 100 million orders and Alibaba processed US $14 billion in one day. For everyone in the business to consumer (B2C) logistics industry these numbers are significant and are, I think, the harbinger of significant change in how consumers shop. Black Friday and Cyber Monday are nothing when compared with the power of the volumes of China. Every order must be picked, packed, shipped and paid for efficiently.
Not all of Asia is ready for such explosive B2C growth or eCommerce as China has experienced. In many countries individuals don’t have credit cards, there isn’t reliable internet, the last mile is a congested nightmare of exhaust belching trucks, but change is coming to the entire region and it is coming quickly. There is incredible opportunity in the region.
In another panel dedicated to Shipper-Liner Dialogue, the Global Shippers’ Forum (GSF) Secretary General Chris Welsh described how better communication across the whole supply chain is vital to ensure customers’ needs are not compromised by the container shipping industry’s drive to cut costs through mega-alliances. He went on to advise that GSF is not opposed to mega-alliances in principle but they must deliver enhanced quality in services as well as reduced prices. As we all know, there are plenty of challenges facing the container industry: depressed freight rates, mega-vessels and over-capacity and the new reality of shipping alliances.
All in all, the ALMC created an excellent opportunity to think about the brave new world of trade with Asia and how Canadian traders should begin to consider these vast new markets. Hong Kong, with its strong financial institutions, strict rule of law and port and airport infrastructure is perfectly positioned as the gateway to China and beyond.
Want to learn more – view the video produced by the Hong Kong Trade Development Council for the ALMC. It can viewed at the following link and my interview and the CIFFA booth are at minute 2:51: