Strategic Land Development for Jobs: From Brownfields to Modern Logistics
1 Trading and logistics are the strongest pillars of Hong Kong’s economy
Percentage share of value added by Percentage share of employment by key industries to GDP (2018) key industries to total employment (2018)
Tourism Financial 4.50% Services Tourism 6.80% 6.60% Financial Professional Services Services and 19.80% 21.2% 18.6% Other Trading and Trading and Producer Logistics Logistics Services 21.20% 18.60% 14.2% Professional Services and Other Producer Services 12%
Others Others 53.70% 42.70%
Source: Census and Statistics Department 2 ‘Trading’ and ‘logistics’ are symbiotic and inseparable
Trading brings business to logistics, and logistics fulfils trading
Trading Logistics Contracts
Fulfils
3 E-commerce is revamping traditional trading and retailing models
Global e-commerce platforms Next / same-day delivery
次日达
Local online to offline business Last-mile delivery
Sources: Various newspapers 4 Logistics operation is getting larger share in product value chain
Figure 5. Expanding role of logistics in retail product value chain
Manufacturing Logistics Retail
Source: Asian Institute of Supply Chains & Logistics and World Development Report 2020 5 Revolution in global supply chain boosts logistics activities
Globalised supply chain increased manufacturing efficiency and logistics needs at the same time
Traditional Manufacturing Model Globalised Manufacturing Model
Raw Material Raw Material Suppliers Part Manufacturer 1 Supplier 1 in Country A
Distributor
Product Product Raw Material Distributor Part Manufacturer 2 Assembler in Supplier 2 Manufacturer In Country B Country D
Raw Material Part Manufacturer 3 Supplier 3 In Country C
Source: Lifewire 6 New retail model requires more land to fulfil demand of logistics providers
From retail-centred to customer-centred logistics, the new logistics model revolutionised the Figure 7. New logistics model revolutionised the retail industry from retail industry retail Traditional Retail Model E-commerce Fulfilment Model
Distributor of Product A Shop 1 Distributor of Product A Household 1
Distribution Centre
Distributor of Product B Shop 2 Distributor of Product B Household 2
Distributor of Product C Shop 3 Distributor of Product C Household 3
Source: Amazon 7 Logistics operation is evolving with increased network coordination and system integration
5P L 4PL
3PL
2PL Network coordination coordination Network 1PL
System integration Source: Department of Supply Chains and Information Management, The Hang Seng University of Hong Kong, DHL Trend Research, and BCR 8 Supply chain digitalisation and data analysis are key to future logistics development
Smart Storage Shopping App E-shipping label Barcode / RFID scanner GPS Delivery App notification
Merchant Departure Sorting Hub Transportation Sorting Hub Destination Community Customer Inventory Station Station
First Mile Mid-stream processing Last Mile Last 100m
Real-time / Predictive Data Cloud Data Analytics Storage / Processing
Dynamic Inventory Forecasting, Anticipatory Shipping, Smart Routing
Sources: Alibaba, Roland Berger, DHL Trend Research, and Frost & Sullivan 9 Hong Kong enjoys excellent connection with the world by air
Figure 10. Key facts about Hong Kong International Airport No.1 2nd most 1st Partner Airport Inter-modal The world’s well-connected of IATA’s Center of transportation busiest cargo Excellence for airport in Asia infrastructure airport Perishables Logistics
IATA Certification and Community
Connecting to over 4.8 million tonnes Bonded truck service and International Collaborations established cargo depots of cargo and airmail 220 destinations by in the Pearl River Delta moved in 2019 120 airlines
Sources: The Airport Authority Hong Kong, OAG Megahubs Index 2019, IATA, and Pharma Aero 10 Same story for sea transportation
Ranks 8th in container throughput worldwide
4th largest ship registry in the world
300 container vessel services per week The world’s 6th most well-connected Connects to 420 destinations globally container port
Sources: Hong Kong Maritime and Port Board, Marine Department, Hong Kong Trade and Development Council, the United Nations Conference on Trade and Development, and Lloyd’s List 11 Cainiao Network chose Hong Kong as one of its six global e-Hubs
What is the Cainiao logistics centre in Hong Kong aiming for?
A Cainiao logistics centre will be established at the Hong Kong International Airport in 2023 Cross-border 72-hour Data and e-commerce global delivery technology
Why Hong Kong?
Strategic Excellent Efficient location connectivity customs
Site area: GFA: 5.3 hectares 4 million square feet Investment: Capacity: HKD 12 billion 2.5 million tonnes per year
Sources: Alibaba and the Airport Authority Hong Kong 12 Hong Kong hosts headquarters of global logistics and supply chain giants
Global headquarters in Hong Kong Regional headquarters in Hong Kong
Sources: Li & Fung, Kerry Logistics, DHL, and FedEx 13 But Hong Kong’s logistics performance has failed to fulfil its potential
Percentage share of merchandise trade Logistics Performance Index ranking of GDP among selected world economies Score % of GDP 4.2 350%
300% 4.1
250% 4.0 200% 12th 150% 3.9
100% 3.8 50%
0% 3.7
Note: Logistics Performance Index by World Bank considers 6 factors: Customs, Infrastructure, International shipments, Logistics competence, Tracking & Tracing, and Timeliness. Source: World Bank 14 Hong Kong’s weaknesses lie in cost, land availability, and government support Comparison of factors as regional distribution centres of Hong Kong, Singapore, and Shenzhen Land/Rental Cost
Connectivity Labour Cost
Infrastructure Land Availability
Customs Government Support
Quality Labour RDC Facilities
Hong Kong Shenzhen Singapore
Source: Asian Institute of Supply Chains & Logistics 15 We are falling behind in government investment in logistics infrastructure
Figure 17. Comparison in progress of infrastructural projects between Hong Kong Singapore Hong Kong and Singapore
Container Terminal 10 Tuas Mega Port
Siu Ho Wan ✔ Changi Logistics Park Airfreight Centre
Route 11 North-South Expressway (formerly known as ‘Route 10’)
Sources: Legislative Council, Marine Department, Hong Kong International Airport, Singapore Changi Airport, Jurong Port, and PSA Singapore 16 Transhipment operation requires larger yard area, but Hong Kong’s port is small compared to its peers
International Yard-to-throughput Yard-to-berth 2019 throughput No. of 2019 world transhipment Port size (ha) ratio ratio (’000 TEU) berth Table 1. Comparison of yard area in the world's top container ports ranking rate (ha per 1 million TEU) (ha per berth) Shanghai 1 <10% 43,303 835[1] 19.3 43 19.4
Singapore 2 85% 37,196 858 23.1 72 11.9
Ningbo-Zhoushan 3 <5% 27,535 968 35.2 61 15.8
Shenzhen 4 18% 25,769 1,167 45.3 47 24.8
Guangzhou 5 27% 23,223 873 37.6 74 11.7
Busan 6 50% 21,992 707 32.1 41 17.3
Qingdao 7 <20% 21,010 450 21.4 25 18
Hong Kong 8 71% 18,303 344[2] 18.8 73 4.7
Tianjin 9 N/A 17,300 13,100[3] 757.2 25 524
Rotterdam 10 59% 14,811 8,114[3] 547.8 39 208 Sources: Relevant port authorities, 100allin, Hua Chuang Securities, Ningbo Economy, JOC Notes: [1] The figure indicates the area of storage space only. There is no available data on total port area. International Technical Engineering, Yunlsp, Maritime Gateway, and Ship Technology [2] The figure includes Kwai Tsing Container Terminals (279 ha.) and River Trade Terminal (65 ha.) [3] The figure includes the area of non-container terminals. Port size comparison between Singapore and Hong Kong
PSA Singapore Terminals (858 ha.)
Kwai Tsing Container Terminals (279 ha.)
Source: Google Earth 18 At the same time, 42.4% of port back-up land in Kwai Tsing Container Terminals area is not fully utilised…
Figure 18. Utilisation of port back 47 48 23 51 Terminal 33 29 Average years of Current usage Area (ha) Percentage 28 under utilisation 36 Vacant land 7.7 6.3% 16.8
59 54 52 Open air parking site 44.3 36.1% 21.9
Temporary container yard 55.2 45.0% 4.1 21 19 43 38 14 Buildings / Barge berths 12.6 10.3% 4.0 55 24 22 8 56 46 20 Other temporary uses 2.8 2.3% 9.0 44 45 17 31 16 18 Total port back-up area 122.6 100% 13.5 35 6 3
26 2 4 5 Legend 49 27 1 7 37 25 34 30 Vacant land Other temporary uses
53 Open air parking site Terminal area
57 32 58 11 Temporary container yard Underutilised land outside port area
13 50 Buildings/ Barge berths 15 39 42 41 40 10 9 12
Source: Google Earth, Lands Department, Town Planning Board, and Our Hong Kong Foundation Case Study 1: A 21.1-hectare site that is an open-air parking and container yard, partly vacant for 26 years Site at Container Port Road South and Mei Ching Road
Area size 21.1 hectares Other Specified Uses Zoning (Container related uses and underground sewage treatment works) The site is largely under-utilised as an open-air parking and temporary container Background and yard under Short Term Tenancy (STT), current usage with a 1.61-hectare plot (top left) vacant for 26 years. Aerial photo (1994) Aerial photo (2020) The entire site area is included in a feasibility study for the development of a multi-storey heavy-vehicle parking and modern logistics facility. The study revealed that only a site of 5 to 6 Current planning hectares is planned for the multi-storey development. CEDD explained the rest of the site is saved for sewage plant for Harbour Area Treatment Scheme Stage 2B, which does not have a concrete implementation timeline yet. Zoning (OU) Ground photo (2020) Sources: Google Earth, Transport and Housing Bureau, Civil Engineering and Development Department, Town Planning Board, and Our Hong Kong Foundation 20 Case Study 2: A site allocated to government department that has been left vacant or used for parking for decades Site north of Mei Ching Road
Area size 5.4 hectares Other Specified Uses Zoning (Container related uses) This government land allocation site has been vacant or leased under STT from Background and time to time in the past decades. Currently, current usage the site was lent to non-franchise bus operators to park their idle buses under the COVID-19 pandemic. Aerial photo (2020) Ground photo (2020) According to a study done by the Transport and Housing Bureau (THB) in 2015 on port back-up land, the site together with an adjacent land plot was planned to lease to Current planning Container Terminal 7 to extend its yard area, with a projected timeline from 2016–2017 onwards, which has been significantly delayed.
Zoning (OU) Sources: Google Earth, Transport and Housing Bureau, Town Planning Board, and Our Hong Kong Foundation 21 Case Study 3: A large site used as an open-air parking and temporary container yard under STT, with no timeline on multi-storey facilities planned Site at Tsing Hung Road Table 4. Quick facts about site at Tsing Hung Road Area size 4.6 hectares Other Specified Uses Zoning (Container related uses) The land parcel includes two STT sites Background and used as temporary container yard and current usage open air parking. According to a study conducted by the THB in 2015 on port back-up land, the Government planned to conduct a Aerial photo (2020) Ground photo (2020) feasibility study for multi-storey complex at the site. Whether and when the study will Current planning kick off is subject to the findings of the feasibility study done for the site mentioned in Case Study 1. There is no sign that the feasibility study for the site will be kicked off soon.
Zoning (OU) Sources: Google Earth, Transport and Housing Bureau, Town Planning Board, and Our Hong Kong Foundation 22 The glory of Hong Kong’s ports fades as throughput stagnates
Ranking of container ports based on container throughput 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Ranking in 2001 Ranking in 2019
Hong Kong (1st) Shanghai (1st)
Singapore (2nd) Singapore (2nd)
Busan (3rd) Ningbo-Zhoushan (3rd)
Kaohsiung (4th) Shenzhen (4th)
Shanghai (5th) Guangzhou (5th)
Rotterdam (6th) Busan (6th)
Los Angeles (7th) Qingdao (7th)
Shenzhen (8th) Hong Kong (8th)
Hamburg (9th) Tianjin (9th)
Long Beach (10th) Rotterdam (10th)
Source: Marine Department 23 Air logistics operators at Hong Kong International Airport also face challenges in land supply
Logistics land 2019 ranking by 2019 annual Logistics land GFA for GFA per million Airport size (ha) size per million cargo tonnage cargo tonnage size (ha) logistics (sq m) tonnes (sq m) tonnes (ha)
Hong Kong 1 4,809,485 1,250 55 11.4 996,000 207,000
Memphis 2 4,332,740 1,578 410 94.6 3,189,268 736,000
Shanghai 3 3,634,230 4,000 205 56.4 1,117,373 307,000
Louisville 4 2,790,109 610 53 18.9 5,200,000 1,864,000
Seoul[1] 5 2,764,369 3,900 338 122.1 1,183,708 428,000
Anchorage 6 2,745,348 1,865 68 24.6 18,694,946 6,810,000
Dubai 7 2,514,918 2,900 77 30.6 492,597 196,000
Doha 8 2,215,804 2,200 6 2.5 406,670 184,000
Taipei[2] 9 2,182,342 1,173 42 19.1 469,655 215,000
Tokyo[3] 10 2,104,063 1,137 45 21.4 650,000 309,000
… … … … … … … …
Singapore 14 2,056,700 1,300 70 31.9 941,000 429,000
Notes: [1] Incheon International Airport [2] Taiwan Taoyuan International Airport; [3] Narita International Airport Sources: Relevant airports’ official websites, DB Schenker, Airport Council International , and Statista 24 Lack of infrastructure forced Hong Kong to take different approach to ICAO’s latest policy direction
International Civil Aviation Organization (ICAO) announced its new policy direction in 2016 to increase the air cargo screening percentage from unknown consignors to 100%.
Certify freight forwarders to operate Certify consignors and promote screening machines at their own premises on-site screening at the airport
Consolidated screening at airport is impossible due to insufficient road Launch Known Consignor Regime to alleviate infrastructure to cater for the increased flow the demand for screening. of goods and trucks.
$ Provide consolidated screening facilities at Freight forwarders have to bear their own the airport. cost for screening
Logistics operators facing increased operation Burden of screening distributed to cost and risk consignors and airport.
Sources: Civil Aviation Department, Singapore Police Force, the Export Council of Australia, and JOC.com 25 Hong Kong lags other economies in providing all-encompassing Trade Single Window
Figure 33. Development timeline of electronic platform for trade document submission Hong Kong Other economies
Government Electronic Trading Services (GETS) launched, 1997 to handle electronic submission of four documents to the Government 70 other economies have set up TSW Government commissioned the development of South Korea: Single Window (2008) Digital Trade and Transportation Network (DTTN) 2003 to facilitate information exchange within the industry Taiwan: CPT Single Window (2013)
DTTN started operation 2006 Singapore: Networked Trade Platform (2018)
All other GBA cities launched TSW Consultation on Trade Single Window (TSW) began 2016 by 2018
Phase 1 of TSW rolled out 2018
Full implementation of TSW 2024
Sources: Legislative Council, Networked Trade Platform, and The Hang Seng University of Hong Kong 26 We lack high-quality logistics space to meet industry demand
Figure 34. Types of industrial and logistics space in Hong Kong Storage space in flatted General warehouse Modern logistics centre Cold storage factories
No temperature control Modified from existing Ramp access Temperature- flatted factories controlled storage Low plot ratio Large floor plate Low ceiling and floor loading High ceiling and floor loading No ramp access
Inadequate supply in Hong Kong
Source: Savills and CBRE Research 27 Modern logistics centre is much more than new and large warehouse space
Figure 35. Specification of modern logistics centre Advanced computer network facilities • Order management • Warehousing management
Modern warehouse facilities Value-added services • Direct vehicle access • Assembly • Ample parking space • Quality check • High ceiling • Packaging • Large floor plate • Sufficient power supply • Heavy floor loading • Temperature-controlled area
Source: Savills 28 Examples of value-added services
Figure 36. Examples of value operators
Industry-specific solutions
Fashion Industry • Garment-on-hanger • Creaseless garment transportation Packaging
Food & Beverage Industry • First-expiry-first-out • Gift packing • Seasonal hamper assembling
Secured storage Sortation
29 Tight supply of warehousing space in Hong Kong drives up rent
Completion and vacancy rate of private storage in 2018 Top Ten Cities with Most Hong Kong Sq m Vacancy rate Expensive Prime Logistics Rent (Ranked on USD per sq ft per annum) 600 000 14.0% Hong Kong 1st 12.0% 500 000 London
10.0% Greater Tokyo 400 000 Shanghai 8.0% 300 000 Stockholm 6.0% Singapore 200 000 Oakland 4.0% Beijing 100 000 2.0% supply vacuum Munich
0 0.0% Sydney 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 Completion of private storage (LHS) Vacancy rate (RHS) 0 10 20 30 40
Note: Assuming private storage GFA is intended for logistics use. Sources: Rating and Valuation Department and CBRE Research 30 Revitalisation of industrial buildings removes space that could be used as urban logistics space
Figure. Removal of industrial space due to revitalisation of industrial buildings 18 million sq ft (8% of total industrial space) were removed from stock of industrial properties under revitalisation scheme for industrial buildings between 2010 and 2018
Office / Retail / Hotel
Industrial Building
Urban logistics Policy-driven re-centralisation re-industrialisation Urban Logistics / Industrial Space Sources: Legislative Council and CBRE Research 31 Industrial land shortage will intensify
Growth in value added of the trading and logistics sector HKD (billion) compared to built-up industrial area Hectare 600 +51% 4,000
550 3,500 500
450 3,000
400 +8% 2,500 350 Approx 390 ha of brownfield 300 will be phased out by 2030 2,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ….… 2030 Value added in GDP (LHS) Actual industrial land* (RHS) Projected valued add in GDP (LHS) Projected industrial land* (RHS) Note: (*) Includes industrial land, industrial estates and warehouse and open storage Sources: Census and Statistics Department and Our Hong Kong Foundation 32 Lack of industry land forced logistics operators to spread onto brownfield in New Territories (NT) Table 6 (LHS). Distribution of brownfield sites by planned development Figure 38 (RHS). Distribution of brownfield sites by locations in Hong PDAs in NTN Kong NWNT NENT Within new development areas (NDA) 653 ha 1,170 ha 376 ha Hung Shui Kiu / Ha Tsuen 246 ha (74%) (24%)
New Territories North 243 ha Kwu Tung North and Fanling North Yuen Long South 94 ha Hung Shui Kiu / Ha Tsuen NDA Yuen Long Kwu Tung North and Fanling North 70 ha South Within other development projects 150 ha Within conservation-related zones 76 ha Remaining brownfield sites 700 ha Metro area Total 1,579 ha
SWNT SENT Note: NWNT refers to Northwest New Territories; 10 ha 24 ha NENT refers to Northeast New Territories; SWNT refers to Southwest New Territories; (0.6%) (1.5%) SENT refers to Southeast New Territories; NTN refers to New Territories North Source: Planning Department 33 Logistics-related industries occupy over 46% of active brownfield site area
Logistics-related Industries Active Brownfield Site Area Figure (LHS). Distribution of active brownfield sites for logistics General Workshops 651 ha (46%) related industries Rural Industries Vehicle 2% Scrapping 2% Figure (RHS). 1% brownfield sites Waste General Recycling Warehouse 6% / Storage 27% Vehicle Parking 7%
Vehicles Repairing and Related 10%
Logistics 13%
Construction 26% Port Back-up (Container- related) 6%
Source: Planning Department 34 Brownfield operators provide considerable job opportunities to local logistics industry
Employment of logistics-related industries in Hong Kong
15% are working in brownfields
Estimated employment of logistic-related industries on brownfield sites: 26,270
Employed > 180,000 people (approx 5% of Hong Kong employed population)
Note: Employment of logistics-related industries on brownfield sites includes employment in general warehouse / storage, logistics, and port back-up (container-related) Sources: Census and Statistics Department and Planning Development 35 Planned development of north-west New Territories for port back-up industry in 1990s has not been realised
An assumed development pattern for Scenario B by 2011 (1999) Distant Vision Concepts (1999)
More land for port-related industry was expected in 2011 Distant vision concepts considered developing more land for according to development plan in the Territorial Development container handling and rationalising brownfield in north-west Strategy Review NT
Source: Territorial Development Strategy Review (1999) 36 Brownfield emerges as result of inadequate land-use planning for industrial growth
Lack of holistic economic and land use planning
Organic development of brownfield is being fostered
Suboptimal operation on brownfield leads to negative externality
The way forward: Commitment to ensure adequate and timely provision of land and facilities for strategic industries
37 Operating space on brownfield will gradually be phased out…
Brownfield affected by NDAs / About 50% brownfield sites will be affected by New Development Projects PDAs in NTN Development Areas and other Development Projects Brownfield classified as High or Medium Possible Development Potential Areas Affected by New Development 803 ha Remaining Brownfield Areas / Development Projects (Low Possible Development Potential Areas / Conservation Related Zones) Hung Shui Kiu / Ha Tsuen 246 ha New Territories North 243 ha Yuen Long South 94 ha Kwu Tung North Lau Fau Shan Ngau Tam Mei and Fanling North Kwu Tung North and Fanling North 70 ha Other development projects[1] 150 ha Ping Shan Sha Po About 28% brownfield sites are classified as high or Hung Shui Kiu / medium[2] possible Development Potential Areas (DPA) Ha Tsuen NDA Shap Pat Possible Development Potential 450 ha Lam Tei Heung Areas (DPA) to be studied
Yuen Long South High DPA—Ping Shan, Lam Tei, Sha Po Tsuen, 160 ha Shap Pat Heung, etc. Medium DPA—Ngau Tam Mei, Lau Fau Shan, 290 ha Lung Kwu Tan South, etc. Notes: [1] As the details of the 150 ha development projects have not been announced, the exact Total brownfield area: 1,579 ha locations of these projects are not shown on the map. [2] The Planning Department will study about 700 ha brownfield sites, which are to be classified as Source: Planning Department high, medium and low Development Potential Areas, of which 250 ha brownfield sites are 38 classified as low Development Potential Areas. Five recommendations to improve Hong Kong’s logistics competitiveness
Figure. Five recommendations to improve Hong Kong’s logistics
competitiveness Hardware Develop dedicated logistics nodes 1 Conduct economic reviews and form Trading industrial policies Reform the site 4 allocation mechanism and 2 Logistics Establish a statutory body for development of strategic industries Relocate Kwai Tsing 5 Container Terminals 3 Software
39 Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies Potential sites for development of dedicated logistics nodes
Figure (LHS) Potential sites for development of dedicated logistics node New Territories North Roles and Estimated job Logistics Nodes Size (ha) Functions capacity Table (RHS) Functions and size of suggested logistics nodes 4 1. Hong Kong Airport Logistics Boundary 30 Consolidation 5,000 – 10,000 Crossing Centre Facilities Island Airport Logistics 2. Lung Kwu Tang Support 450 – 590 50,000 – 70,000 & Tuen Mun West 3 Northwest Hinterland New Territories GBA Logistics 3. Northwest New 150 – 160 Gateway 15,000 – 25,000 Territories 2 Lung Kwu Tang & (Western) Tuen Mun West GBA Logistics 4. North New Gateway 110 – 150 10,000 – 20,000 Territories (Eastern) Hong Kong Boundary Crossing 1 Facilities Island Total 740 – 930 80,000 – 125,000
Source: Transport and Housing Bureau 40 Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies 1. Topside development at the Hong Kong Boundary Crossing Facilities (HKBCF) Island
The Planning of Topside Logistics Development at Hong Kong Boundary Crossing Facilities (HKBCF) Island should speed up Figure (LHS) Proposed topside development at HKBCF Island Proposed routes Planning, Engineering and 2015 Architectural Study for Possible routes Figure (RHS) Development timeline of topside development at HKBCF Topside Development at Island Existing routes HKBCF Island of the The HKBCF Island Hong Kong-Zhuhai-Macao Bridge (HZMB), Hong Hong Kong International Airport Kong section Greater Bay Area (GBA) Suspended
2018 Government invited Airport Authority Hong Kong to submit development proposal
No further HKBCF Island HKIA progress 2020 ???
Developable topside area Double Gateway Airport Logistics World 30 ha Consolidation Centre Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies 2. Lung Kwu Tan & Tuen Mun West Option 1: Airport Logistic Support Hinterland Total 450–470 ha Phase 1 Figure. Proposed Airport Logistics Support Hinterland at Lung Kwu Air Cargo / Tan & Tuen Mun West 1a. Tuen Mun Area 49 Modern Logistics 1b. Current River Trade Terminal 1c. Tuen Mun 40 & 46 2a • Open-air logistics
• Modern logistics / general Phase 2 warehouse 2b Lung Kwu Tan Modern Open-air Construction Environmental • Construction industry village • Air cargo / modern Logistics Logistics Industry Infrastructures 1c logistics • Environmental 2a. Current Lung Kwu Tan brownfield sites infrastructures • Air cargo / modern 2b. Lung Kwu Tan reclamation 1a logistics
Phase 3 Air Cargo / Modern Logistics
3a. Current fill bank, recycle plant, steel plant, and cement plant
Tuen Mun – Chek Lap Kok Link Planned Tuen Mun Western Bypass • Air cargo / modern Proposed Road expansion for existing Lung Mun Road 3a logistics • Air cargo / modern 1b logistics Proposed New Road to divert heavy vehicles away from Lung Kwu Tan village Buffer area between Lung Kwu Tan village and Logistics Node 42 Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies 2. Lung Kwu Tan & Tuen Mun West
Option 2: Integrated Residential & Logistics Development Phase 1 Figure. Proposed Integrated Residential & Logistics Development at Construction Air Cargo/ Modern Environmental Lung Kwu Tan & Tuen Mun West Total 570–590 ha Logistics Industry Infrastructures 3a. Transform Current River Trade Terminal for interim development 1a. Tuen Mun Area 49 1b. Current Lung Kwu Tan Brownfield Sites 1c. Lung Kwu Tan Reclamation 1b • Open-air logistics Phase 2
• Thematic Air Cargo/ Offices Hotel Lung Kwu Tan 3c leisure Modern Logistics village development • Modern logistics / general 2a. Relocation of Current Fill Bank, Recycle Plant, Steel / Cement Plant 1c warehouse 2b. Relocation of Current Power Station • Construction industry • Air cargo / • Re-provision of 1a modern environmental logistics Phase 3 infrastructures Residential Leisure Marine 3a. Replace River Trade Terminal for long-term development 3b. River Trade Terminal Reclamation • Air cargo / modern logistics • Air Cargo / Modern 3c. Tuen Mun Area 40 & 46 2b • Offices and business hotels 3a Logistics (interim 3d. River Trade Terminal Further Reclamation development) • Residential (long- Tuen Mun – Chek Lap Kok Link term development) Tuen Mun South Extension • Air Cargo / Modern Logistics • TM South MTR Proposed Tuen Mun South MTR Further Extension 2a • Offices and business hotels extended station Planned Tuen Mun Western Bypass • Residential Proposed Road expansion for existing Lung Mun Road development • Marine facilities Proposed New Road to divert heavy vehicles away from Lung Kwu Tan village 3b 3d Buffer area between Lung Kwu Tan village and Logistics Node 43 Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies 3. Northwest New Territories Modern Logistics Circle
Total 150–160ha Development Planned by the Government Figure. Proposed Modern Logistics Circle at Northwest New Territories Yuen Long 1a. Hung Shui Kiu NDA industrial estate 1b. Yuen Long South development 1c extension 1a Hung Shui Kiu 1c. Yuen Long industrial estate extension Proposed Development
2. Lam Tei Quarry Site 1b Yuen Long South
Modern Enterprise & Open-air Wholesale Trade & Outlet Logistics Technology Logistics
Planned sites Lam Tei Planned Route 2 Quarry Site Proposed site Existing Road Existing Rail Brownfield 44 Reform site allocation Conduct economic 1Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies 4. New Territories North
Planned Development Total 110 –150 ha Liantang / Figure. Proposed development at New Territories North Heung Yuen Wai BCF San Tin / Lok Ma Chau Ma Kam To New Territories North 1 Heung Yuen Wai Development Node Logistic Corridor New Town 1. Heung Yuen Wai Science Park Man Kam To Industrial Estate BCF Proposed Development Lo Wu BCP
2. Ta Kwu Ling E-commerce Enterprise & Lok Ma Chau Modern Logistics Technology BCP Proposed Extension of Northern Link Proposed North-South Corridor and Rail 2 Ta Kwu Ling Proposed Rail Station Planned Route Planned Rail Planned Station
Existing Road Existing Rail Existing Rail Station Kwu Tung North Fanling North New Development Area New Development Area Brownfield Reform site allocation Conduct economic 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies How should these logistics nodes be operated?
Figure. Elements of suggested operation model of logistics node Allocation Arrangement Level playing field for SMEs and established players
Admission Criteria Prioritise current brownfield operators and tenants with strong willingness to invest in technological upgrade Logistics node managed by a Pricing Mechanism statutory body Set rental below market level and review tenants against a set of milestones upon tenancy renewal
Strategic Clustering Reserve buffer space for other industries along the same value chain
Mixed development Create a vibrant environment for a mixed-use industrial and business hub
46 Reform site allocation Conduct economic 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies Examples of operation model from overseas experiences
Figure. Examples of operational model adopted overseas Concept and Price Tenders (CPT) Applicants are first assessed based on the strength of proposed business plan, and then on offered prices
Direct allocation
Qualified companies get direct allocation of land with the support of government agencies
Readily-built facilities Readily built facilities are provided for operators of smaller scale to rent
Joint management with private entity Chambers and associations can participate in the management to share expertise with the public body
Sources: JTC Corporation, and United Nation Industrial Development Organization 47 Reform site allocation Conduct economic 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies Existing Kwai Tsing Container Terminals can be relocated
• Relocate the Kwai Tsing Container Terminals (KTCT) to artificial islands or outlying islands away from the metro area
Kwai Tsing • The new port could consolidate all container Container Terminals ports within the GBA area
Possible routes Planned routes Existing road
Proposed reclamation
* For indication purpose only Reform site allocation Conduct economic 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies Land of existing Kwai Chung Container Terminals can be redeveloped
Seamless / Work-live-play-learn / Intergeneration Community Seamless new and old communities Figure. Proposed redevelopment plan for Total potential redevelopment area: 790 ha • Connectivity—Vibrant and of walkable distance Terminals • Container Terminal site area: 280 ha • Container-related uses area:150 ha • Functionality—Provision of balanced daily necessity services and • Industrial & incompatible uses area: 180 ha choices • Tsing Yi Southwest Reclamation area: 180 ha • Visibility—Harmonised landscape and building design Kwai Fong
Open Area Tsing Yi Work-live-play-learn community Lai King • Various choices of job opportunities
• Affordable and sizable housing units Marina
Open Area Mei Foo • Outdoor / indoor recreation and entertainments
Marina
Nam Intergeneration community Cheong • Integrated elderly home and core family residential complex
Marina • Integrated nursey / youth / elderly / daily necessity services complex
49 Reform site allocation Conduct economic 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 Establish statutory body mechanism and reviews and form nodes Container Terminals for logistics sector operation model industrial policies Government should conduct regular economic review to form long-term industrial policy
Economic Review Figure. Suggested governance structure for economic review, industrial Every 10 years policy and strategic land use planning Financial Secretary Guide
Industrial Policy Provide direction on Strategic Land Use Planning Based on economic review Fit for purpose Support Facilitate trading activities to attract goods flow to Hong Plan and determine the Bureaus with Kong optimal land use for logistics similar missions Facilitate the development of activities are best positioned logistics SMEs to take the lead Lead bureau Support bureau
Commerce and Economic Development Transport and Innovation and Development Bureau Bureau Housing Bureau Technology Bureau
50 Reform site allocation Conduct economic Establish statutory 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 mechanism and reviews and form body for logistics nodes Container Terminals operation model industrial policies sector Industry players have advocated for statutory body
Figure. Industry players have been advocating for statutory body
It is recommended that a new statutory body outside the Government be set up and operate on its own.
Hong Kong Shipowners Association has been communicating with the Government on establishing a new statutory body.
We hope the Hong Kong Maritime and Port Board can become a statutory body with administrative power.
Sources: Various newspapers 51 Reform site allocation Conduct economic Establish statutory 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 mechanism and reviews and form body for logistics nodes Container Terminals operation model industrial policies sector Advisory body lacks power to drive growth of logistics industry
Comparison of functions of advisory bodies and statutory bodies
Hong Kong Hong Kong Hong Kong Hong Kong Logistics Trade Hong Kong Singapore JTC Maritime and Science and Development Development Airport Authority Corporation Port Board Technology Park Council Council Nature Advisory Body Advisory Body Statutory body Statutory body Statutory body Statutory body Land under management - Area (ha) N/A N/A N/A 242 1,255 7,000 - Properties N/A N/A N/A Science Park, Hong Kong Industrial land in and industrial International Singapore estates in Hong Airport Kong Financially independent Full-time staff
Sources: Hong Kong Science and Technology Park Corporation, Hong Kong Airport Authority, JTC Corporation, Hong Kong Logistics Development Council, and Hong Kong Maritime and Port Board 52 Reform site allocation Conduct economic Establish statutory 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 mechanism and reviews and form body for logistics nodes Container Terminals operation model industrial policies sector Lands in logistics nodes can be injected into statutory body to ensure financial sustainability
Figure. Ways of ensuring financial sustainability for proposed Logistics Authority Land Resource
Strategic • Logistics nodes and Economic facilities Statutory • Under-utilised land in KTCT Body
Financial Resource Financially • Subsidised by ship Sustainable registration fee and tonnage fee
53 Reform site allocation Conduct economic Establish statutory 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 mechanism and reviews and form body for logistics nodes Container Terminals operation model industrial policies sector New body to be responsible for development of the logistics industry
Figure. Functions and responsibilities of proposed Logistics Authority
Active land and facility management Statutory body can manage resources more effectively, which also helps achieve self-funding 01
Strategic Facilitate policy execution and support LogisticsEconomic Statutory body has stronger will to drive policy AuthorityStatutory execution to facilitate industry development Body 02
Strong industry representatives for external affairs
Statutory status makes the authority well positioned to negotiate deals on regional collaborations. 03
54 Reform site allocation Conduct economic Establish statutory 1 Develop dedicated logistics 2 3 Relocate Kwai Tsing 4 5 mechanism and reviews and form body for logistics nodes Container Terminals operation model industrial policies sector We do not lack suggestions, but good execution
Maritime industry Labour force Trade Single Window 8 Explore compatibility of Hong Kong’s Figure. Recommendations from industry practitioners and academia 1 5 Devote resources for marketing Expand coverage of MATF[1] to Trade Single Window55 with those of and promotion to attract support training and education other economies or other B2B systems initiated by private sectors commercial principals CGCC, HKGCC, The Hong Kong Shippers’ 6 Review manpower demand and Council 2 Establish sovereign-rate leverage on HKQF[2] to design financial institution to provide Trade finance suitable training and education funding for ship owners 9 Facilitate SMEs’ access to export FSDC, HKIAPS 3 Include maritime-related insurance or guarantees amid Covid-19 support services in the Logistics R&D Logistics operators dedicated tax regime 7 Offer sufficient funding to 4 incentivise SMEs to deploy new Conclude more Double Tax technology in operation Need for effective and responsible Agreements with major shipping leadership to ensure timely jurisdictions AISCL, HAFFA, HKIAPS implementation FSDC, HKMPB
Notes: [1] Maritime and Aviation Training Fund [2] Hong Kong Qualifications Framework Sources: Financial Services Development Council, Hong Kong Maritime and Port Board, Hong Kong Institute of Asia-Pacific Studies, Hong Kong Association of Freight Forwarding Agents, The Chinese General Chamber of Commerce, The Hong Kong Shippers’ Council, Asian Institute of Supply Chains & Logistics, and various news clips Thank you