What Role Can the Philippines Play?

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HONG KONG — The Cathay Pacific Cargo Terminal near the Hong Kong International Airport is a marvel. Sure, it’s not really that unique, especially if you have been to, or work in, a warehouse that utilizes extensive automation systems like AS/RS and pallet conveyors. Still, being there, seeing all that cargo go through one of the biggest cargo handling facilities in Hong Kong, in a facility that’s specially designed for that purpose – that leaves you in awe.

 

The fully automated facility is the heart of Cathay Pacific’s cargo operations – a critical player in Hong Kong’s logistics industry, an important industry in one of the world’s biggest ports, both sea and air. Costing around HKD 5.9 billion and built across eleven hectares of land, it is a fully automated facility designed to accommodate up to 2.6 million tons of cargo per year. Home mostly to transshipments, it has dedicated facilities for off-size cargo, items that require cold storage, and even live animals (horse racing is big here, after all).

 

I toured it, alongside several of my colleagues in SCMAP and other participants from around the world, as part of this year’s Asian Logistics and Maritime Conference, the region’s biggest such event, organized by the Hong Kong government and the Hong Kong Trade Development Council. Apart from panels on the latest developments in shipping and supply chain, we were given the chance to see just what makes Hong Kong, or at least its supply chain, tick.

 

And it does tick. The city is home to one of the busiest seaports in the world, a port of call for the world’s biggest vessels: 100,000 of them as of 2015. In that same year, 283.8 million tons of cargo went through the city. It calls itself a “superconnector” between the emerging economic giant, China, and the rest of the world.

 

Recent events are making this role more important than ever, with some Asian countries (including the Philippines) moving towards closer economic ties with the superpower. With China’s focus on improving connectivity through its Belt and Road Initiative, notably enhancing ports along its coastal cities, the commitment to solidifying its place in the global economy is there. While all this may seem like a threat to Hong Kong, its history as a center of shipping, its regulatory strength and its constant improvement assures it a seat at the table in the years to come, especially with China moving towards a consumption-driven economy, buoyed by technology and the rise of e-commerce – and beginning to look outward.

 

This is my third year attending the event, and I have the same takeaway as with previous years: what does this all mean for the Philippines?

 

Of course we cannot realistically aim to be a center for trade and shipping like Hong Kong is. They do not just have technology behind them, but history, going back centuries. Maybe a cargo facility as advanced as Cathay Pacific’s is not for us. But we have another role to play in this regional (and global) economy – and we have to make sure we are prepared and ready for it.

 

Just what is the Philippine niche, though? We are already home to major manufacturers, producing either full products (like Toyota and Mitsubishi) or parts of products to be assembled elsewhere in the chain (like the 16 firms that create electronic parts for Apple’s products). Succeeding governments have made efforts to jumpstart our manufacturing base, also taking advantage of the abundant resources the country has to offer. Perhaps we can strengthen these advantages by enhancing our connectivity – seaports and airports, major hubs as well as elsewhere in the country? How about education programs that empower our youth to do their best working for these manufacturers? How about looking at power costs, our transportation networks?

 

I’ll admit, these are the same thoughts I’ve had before. But time is ticking fast and we might not get our own seat at the table. The first time I attended the ALMC, the Belt and Road Initiative was just a plan. This year construction of ports is in full swing, and a bridge connecting Hong Kong, Macau and the Chinese city of Zhuhai – which will cut trips from three hours to forty-five minutes – is slowly taking shape. I could see it from the bus window after leaving the Cathay Pacific Cargo Terminal, and again as I take the train to the airport for my return flight.

 

SCMAP elections: I am happy to announce the members of SCMAP’s 2017 board of directors: Christina Alvarez (Procter & Gamble), Clarisse Castillo (Johnson & Johnson), Mark Philip Comandante (Zuellig Pharma), Carlo Curay (XVC Logistics), German Martizano (Unilever), Manny Onrejas (Fast Logistics), Christine Pardiñas (Rustan Supercenters), Dina Pilapil (LF Logistics) and Angie Santor (Nestlé). They, along with president elect Nestor Felicio (Unilab), will lead SCMAP towards a more fruitful 2017. We will formally introduce them at our Christmas fellowship, happening on December 1.

 

Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in- chief of the organization’s official publication, Supply Chain Philippines.