The transition from freight consolidation to logistics(7)

The transition from freight consolidation to logistics

R.K.Cheungetal./JournalofTransportGeography11(2003)245–253251

itedvariabilityofopiniononthedi erentlogisticsfunctions,largelybasedonthesizeof rm.Inordertopresentthisdivergence,theresponsesofthreerepre-sentative rmsofdi erentsizehavebeenselected.Thelargestoneconsolidatedover1millionCBMannuallywhilethesmallerandthesmallestoneshandledaround1/3and1/10ofthelargest rmÕsvolumerespectively.Theirevaluationscores(5¼highestpotential,0¼lowestpotential)ofthedi erentactivitiesarelocatedontheverticalaxis(seeFig.6).Theresultsrevealthatthelarger rmidenti estheactivitiesrequiringthehighestlevelsofinformation(distribution,warehousemanage-mentandinventorycontrol)aso eringthehighestlo-gisticspotentials(seeFig.4).Thesmaller rms,ontheotherhand,considertheactivitiesrequiringmorephysicalhandling,suchasassemblyandre-packaging,asmostsuitable.Ontheotherhand,theinterviewwiththoseoutsidetheCFSindustrysuggestedthatshippersappearmostwillingtooutsourcethetransportationandphysicalhandlingandwarehousingfunctionsmorereadilythaninventorymanagement.

Theinterviewsundertakenamongthecompaniescompletingthequestionnairerevealedanumberofgeneralconcerns.Whileallthe rmsareawareofthetrendtowardslogistics,thereisagreatdealofuncer-taintyaboutwhatisinvolvedandthepotentialconse-quences.TheyallrealisethatlogisticsrequireshighlevelsofIT,butthesmaller rmsarehesitanttogofurtherbecauseofthecostsandlackoffamiliarity.Thereisawidespreadconcernaboutcustomerrelations.Manyrealisethattodealdirectlyas3PLproviderswithshippersplacesthemincompetitionwiththeirexistingcustomers,theforwarders.Evenif,assomebelieve,theforwarderswillrequiremorelogisticsservicesoftheCFS rmsanyway,thereisaconcernaboutpossible

failuretomeetexpectationsinlogisticsservicesthatmaythenhaverepercussionsonexistingservicesprovidedtothesecustomers,resultinginalossofreputation.Overall,thereisuncertaintybecausetherearefewex-amplesofother rmsthathavemadethelogisticstransitionsuccessfully,withnobenchmarkstoemulate.Itwasevidentthatmostofthe rmsthatindicatedanintentiontomovedeeperintologisticswereoperatinginanadhocfashion,withnolong-termstrategicplanning.Fromtheinterviewsandfromextensiveon-sitevisits,severalotherspeci cchallengeswereidenti ed.ManyintheCFSindustryseelogisticsasameansofutilisingresourcesmoree ectively.Theo -peakperiodsareseenasopportunitiestoengageinnewlogisticsactivities.Thisisverydubious.Withoutdetailedknowledgeofthedemandstructureoflogisticsservices,thereiseverylikelihoodthattheywillpeakatthesametimeasCFSactivities,andthereforecompoundtheresourceprob-lem.Afurtherissueiswhatmaybetermed‘‘overpromising’’.Intheirdesiretoenterpotentiallylucrativenewbusiness elds,somecompaniesarepromisingmorethantheycandeliverandunderestimatingrisks.Welearnedofone rmthathadsignedacontracttoprovidelogisticsservicestoahighvaluegarmentshipper.Itquicklybecameevidentthatthewarehousespacewasnotclimatecontrolledtomeetthestrictneedsoftheshipper,andthecompanylackedequipmenttoensurequalitycontrol,suchasneedledetectors.

4.Paradoxinthetransition

Inhispolicyaddressinlate2001,theChiefExecutiveoftheHongKongSpecialAdministrativeRegion,Mr.Che-HwaTung,gavethedevelopmentof

logistics