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Opening remarks by STH at LSCM Logistics Summit 2017

Following are the opening remarks by the Secretary for Transport and Housing, Mr Frank Chan Fan, at the LSCM Logistics Summit 2017 this morning (September 15):

Chairman Sunny (Chairman of the Board of Directors of the Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (LSCM R&D Centre), Dr Sunny Chai), distinguished guests, ladies and gentlemen,

Good morning. It is my pleasure to be here with you at the LSCM Logistics Summit 2017.

The theme today is most timely as the Belt and Road Initiative and robotics are among the hottest topics in the logistics sector these days. The two of them combined will transform the industry with disruptive technologies while open up boundless opportunities.

The aspiration to replicate human actions by machines has gone a long way. Some 500 years ago Leonardo da Vinci drew in his sketchbook a robotic knight that experts believed could sit, stand, raise its visor and move its arms.

Today, robots are widely used in hospitals, in factories, as well as for risky operations in the aftermath of natural disasters to support search and rescue. Robotic technology is not new to the logistics sector either. Robots are used in automated warehouses to facilitate stock tracking. Without such automation, workers would have to walk to and fro throughout the day, in some cases up to as much as 21 kilometres, which is half a marathon.

Yet in sorting and packing, we still rely very much on manual labour. Online retail giant Amazon first ran a robotics challenge in 2015 to encourage engineers around the world to create commercially viable robots that would pick and pack from a pool of 25 items. The best robot finished 30 sorts per hour with a failure rate of 16 per cent. Since then, the performance of robots has improved over time. In July this year, an Australian team won the challenge, beating 16 others in picking and packing from a pool of 40 items. Although a worker can sort about 400 items per hour with minimal errors in Amazon's warehouse, I am hopeful that one day logistics robotics will prevail in a way similar to AlphaGo. As a matter of fact, given the speed of technological advancement nowadays, logistics robotics will bring sea change in due course.

One of the biggest challenges facing the logistics industry today is manpower shortage. Abundant career choices have led many young people away from warehousing jobs. The call for remedy is imminent as we continue to move from bricks and mortar to online transaction. When compared to moving merchandise to a retail store in bulk, we will need more labour input per item sold, mainly to pick and pack online purchases individually by hand. Automation and robotics are therefore necessary and essential for the sustainable development of the logistics sector. Apart from productivity enhancement in terms of speed, accuracy and efficiency, the mundane manual work at a warehouse would be greatly reduced. As the logistics industry continues to move up the value chain, providing value-added services in distribution, inventory management, and in some cases big data analysis, the younger generation will be more willing and happy to put their energy and creativity to more intellectual and innovative use in supply chain management.

Ladies and gentlemen, the Government is committed to supporting the development and growth of modern logistics and nurturing a conducive environment for the sector. Trading and logistics together account for 22 per cent of Hong Kong's GDP and one-fifth of our employment. To maintain and strengthen the competitiveness of this very key sector is our shared vision, and we must work together to translate the vision into action.

Rome was not built in one day, and nor was Hong Kong's renowned regional logistics hub. Seamless teamwork for common good, unswerving dedication to service excellence, a ceaseless quest for continuous improvements and innovations are part and parcel of our success formula. Our airport is the world's busiest cargo airport. Our port is also the fifth busiest in the world. We are endowed with a strategic location at the heart of Asia and the gateway to Mainland China. Together with our world-class transport and logistics infrastructure, we offer excellent connectivity from air to road and to sea. All of Asia's major markets are reachable within four hours' flight time and half of the world's population is within just five. The Hong Kong International Airport hosts more than 100 airlines, operating over 1 100 flights each day to 190 international destinations. Every week, about 330 container vessels leave for some 470 destinations worldwide. Our logistics services further stand out with our institutional strengths. These include our free port, a low and simple tax regime, efficient customs clearance, rule of law and the commitment to maintaining a level playing field. And most important of all, our logistics talents who are adept at providing a total supply chain solution to the customised need of local and global companies.

To maintain our leading position while ensuring sustainable development and prosperous growth, technological innovation and application are indispensable. From mechanisation to service-wide adoption of radio frequency identification, inventory optimisation and big data analytics, it is crystal clear that technologies have made the supply chain management more traceable, visible, efficient, productive and cost-effective.

The Belt and Road Initiative provides a golden opportunity for Hong Kong industry to rise up to a new height. New trade routes will emerge amongst the 60-plus economies along the Belt and Road corridors, thereby boosting demand for international logistics. The Hong Kong port has marine cargo movements with 45 of these economies. We have also signed air services agreements or international air transit agreements with over 40 of them. Despite all these competitive edges, there is no room for complacency and we must soldier on.

Today's summit brings together the brightest minds in the industry. With the collective wisdom of you all, I am confident that Hong Kong will rise to the challenges, harness the latest technologies and help translate the vision of the Belt and Road Initiative into reality.

In closing, I must thank the LSCM R&D Centre for hosting the Logistics Summit 2017 and its continuous efforts in advancing logistics and supply chain management enabling technology.

May I wish all of you a fruitful summit. Thank you.

15.09.2017


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