The transition from freight consolidation to logistics(8)

Variabledwelltimesandimpreciseinformationfromcustomerslimitopportunitiestoundertakecapacityplanning.Allocatingresourcesonadailybasisisverydi cult.Most rmsbasetheirdynamicdecision-makinganddailyresourceplanningbasedonexperience.Thewiderangeofsizes,weightsandconditionsofindividualcargoesthathavetobeconsolidatedorstrippedmeansthatthetimeandmanpowerrequirementestimatesaredi culttojudge,anditisexperiencethatisusedtodecideonresourceallocation.CFScompaniesrarelymakeuseofanyresourceplanningsoftwareortailor-madecomputerservicecompaniesforwarehouseandinventorymanagement.Thisispartiallyduetothegaps

inthedatarequiredtooperatesuchsoftware,butalsototheresistanceofsta tolearnhowtousethesoftwareandapplytheoutputtodailyoperations.Withsuchaheavydependenceonexperience,thetransferofknowledgetonewemployeestendstobealengthyprocess.Thelossofakeyemployeecanhaveseriousconsequencesone ciencylevelsofthe rm.3.2.Industrychallenges

Aftermanyyearsofgrowthandprosperity,basedlargelyonthegrowthoftra cthroughtheport,HongKongÕsCFSindustryispresentlybeingconfrontedbyanumberofchallengesthatarebothinternallyandex-ternally.Asmentionedearlier,HongKongportisfacingagrowingchallengefromtheShenzhenportsofYantianandShekou.Costsofconsolidationtherearesigni -cantlylower,becauseofthemuchlowerlandandlabourcosts.Thepricedi erentialinconsolidationrepresentsaseriouscompetitivechallenge.ThesurveyrevealedthatoverhalftheHongKongCFS rmshadexperiencedadeclineinbusinessvolumesince1988andwereexpect-ingcontinuedreductionsinto21stCentury,despitethecontinuedgrowthofcontainertra cthroughtheport(seeFig.5).Thesurveyindicatedadeclineofbusinessvolumeof5.8%from1996to1998whilethecontainertra chadagrowthof8.3%duringthesameperiod.TheenhancedcompetitionfromelsewhereiscomingatatimewhenthemajorcostitemsintheindustryinHongKong,especiallyrent,arerising.TheCFScom-paniesconcentratedintheHIDCandATLbuildingshavelimitedbargainingpower.Theyleaselessthan25%ofthetotalspaceinthesestructures,themajoritybeingtenantsfromothersectors,suchasadistributioncentreforalocalsupermarketchain.Theownersarenotwillingtoconsideranyformofcontractotherthanapricepersquarefoot,basedonamulti-yearlease.Thisisanobstacletotheindustryobtainingany exibilityinthemanagementofoperationsthatalternateforms

of

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