Summary:

The pace of e-commerce evolution has been phenomenal since the webization of the Internet. During the decade of 1990, e-commerce website has evolved from a simple browsable site of static information to that of cross-website integration of dynamic business processes. It has realized connectivity, interactivity, interoperability, and integrability. Along the way, the problems of protocol standardization, tracking, security, and data interfacing have to be solved. A genre of websites has emerged, which aims to conduct both commerce activities and business processes. In this paper, we provide a technical design for such a website for the air cargo industry in Hong Kong. This platform website is a 4th party community infrastructure where air cargo logistics services can be designed, traded, and managed. The online process design is enabled by the e-business decision support system, which is capable of editing, integrating, and consolidating the respective shipments that are being negotiated. The objective of this paper is to show the technical issues involved in designing a platform of this genre. The principal aspects of system requirement, system architecture, interface design, and information representation requirement are addressed. We also examine the difference of designing such a platform with more traditional website, as well as highlighting the complexities and issues involved.

Reference:

Chu, S.C., Leung, L.C., Cheung, W., and Hui, Y.V. (2001), “Designing an e-Business Integrative Platform: A Case for the Air Cargo Logistics Industry”.

Objective:

To formulate economic models for the strategic alliance of passenger and cargo services from a network integration approach.

Summary:

Airlines form alliances as they compete for positions, to gain footholds in strategically vital markets. There have been many alliances in the airline industry and such alliances are basically passenger-based. The initiatives of the alliance - code sharing, mutual frequent-flier program, common facilities access, etc. - have concentrated on fostering passenger growth. During the past decade, growth in the global air cargo industry has been phenomenal and air cargo has become a vital source of revenue for airlines. The rapid growth of integrators such as FedEx and UPS and their penetration in international air cargo markets has posed a potential threat to airlines. Most importantly, it now means that airlines must address their strategic alliances in terms of both passengers and air cargo.

The complementary and compatibility issues between passenger and cargo networks - traditionally regarded as separate markets - are examined. The formation of strategic alliances for both passenger and cargo services will be studied through the passenger network alliance synergies, cargo network alliance synergies, and the passenger-cargo network complementary.

Sponsor:

Research Grant Council, UGC

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6.	Electronic Technology and Simplification of Customs and Other Administrative Procedures in Air Cargo Trade (2002)

Objective:

To examine regulatory lag and reforms, the requirements and factors that will affect a successful application of e-technology to customs and other administrative practices.

Summary:

With the successful reduction of typical trade barriers such as tariffs and quotas, countries are now in a position to turn their attention to other practical obstacles to the free flow of goods and services across borders. Administrative barriers, which include barriers arising from customs and other administrative procedures, seem particularly prominent for Asia-Pacific, given the diverse character of the APEC and the different levels of development in regulative and administrative systems and in technology among APEC member economies. In order to effectively expand trade in the region, APEC economies must take full advantage of the recent advancement in information technology and simplify customs and other administrative procedures.

The purpose of this paper is to contribute to a better understanding of: a) the issues surrounding the application of electronic technology and the simplification of customs and other administrative procedures to trade in air cargo services; and b) why the issues are important. The paper examines regulatory lag and reforms, the requirements and factors that will affect a successful application of e-technology to customs and other administrative practices. Finally, the paper makes some recommendations to assist the APEC in making policy decisions in this area.

Reference:

Zhang, A. (2002), “Electronic Technology and Simplification of Customs and Other Administrative Procedures in Air Cargo Trade”.

Objective:

To study the various challenges that the industry is facing, and to provide recommendations to the Government and the industry agents to increase competitiveness.

Summary:

The air cargo industry operates in a very competitive environment with many competitors. It has evolved from a traditional labor-intensive industry to one that requires innovation and technology. With China ’s imminent entry into WTO and with southern China ’s developing trend of producing high-tech products, the demand for Hong Kong ’s air cargo service will intensify. Also, the rapid development of e-commerce has resulted in urgent needs for logistics integration and IT infrastructure in the Hong Kong air cargo industry. We intend to identify ways and means to enhance the competitiveness of HK ’s air cargo industry. The key issues in the industry are the air cargo ’s macro environment, the future trend of global logistics, and the significance of information infrastructure. All such issues are closely related to analyzing the competitive factors of the industry.

Reference:

Innovation Technology Fund Report (2002) [Download]

Objective:

To examine the benefits, costs and risks of the design of a fourth-party e-commerce logistics center.

Summary:

The global trend of e-commerce and use of information technology is transforming the business structure of many industries and the air cargo industry is no exception. The requirement for information integration is unprecedented in the air cargo industry. The Hong Kong Government (via Airport Authority) has initiated efforts to establish a high-tech logistics center, which could allow the leasing of both information infrastructure and physical facilities without requirement of ownership. Like any public infrastructure project, a vast amount of investment is required and there is a vast amount of risk involved as well. The success of such a center depends on the commitment of three parties: the Hong Kong Government, the Investors, and the Users. While each party plays an important role towards the center’s success, their interests might differ and in some cases be conflicting. In this paper, we evaluate the benefits, costs, and risks of such a logistic center using a series of Analytic Hierarchy Process (AHP) and Analytic Network Process (ANP) models. It is shown that the proposed models can be used to examine the sharing of benefits, costs and risks such that a design agreeable to all parties can be determined.

Reference:

Hui, Y.V., Leung, L.C., Fu, G., and Cheung, W. (2001), “Designing A Fourth-Party e-Commerce Logistics Center: A Benefit, Cost and Risk Analysis Using AHP and ANP models”.

Sponsor:

Research Grant Council, UGC

Objective:

To study the export logistics in Pearl River Delta.

Summary:

This is a case study on two contract manufacturers of toys in the Pearl River Delta. One is Regaltronic in Dongguang and the other is Genalex in Zhongshan. Being a contract manufacturer, both of them co-develop products with their buyers. Personal interviews were made with the persons in charge of the export logistics to learn about the process.

It is found that though the overseas end buyer is not in any contractual relationship with the contract manufacturer, in practice it decides the physical cargo transportation routes in this mode of contract manufacturing operation. This is because the contract buyer – Hasbro – in fulfilling its own sales contract with the end buyer, will instruct the contract manufacturer to deliver as per the end buyers shipping order.

An interesting finding is that more than 95% of the delivery terms between Hasbro and its end buyers overseas are in free on board (FOB). It is believed that by entering in FOB terms, end buyers can leverage on its yearly cargo volume to get a better deal with its freight forwarder.

Another interesting finding is that the freight forwarder of the end buyer plays a pivotal role in the transportation route decision through bidding for the provision of logistics service to the end buyer. To compete for the forwarding bid, freight forwarder tends to select the logistic route that costs least. Once the bid is accepted and the freight forwarder is appointed the agent to handle the day to day operations, the logistic route is then fixed accordingly.

Reference:

Tong, K.K. (2000), “A Case Study on the Export Delivery Originated from the Pearl River Delta”, MBA Project, CUHK.

Objective:

To investigate the investment opportunity as well as the risk factors concerning the development of Air Cargo Logistics Centers in Beijing and Shanghai.

Summary:

China ’s Air Cargo transportation industry has been expanding rapidly in recent years. Air Cargo transaction recorded double digits growth for the past five consecutive years. Evidences indicated that the central and local governments as well as the airport authorities are especially keen to build air cargo business through Shanghai and Beijing. In this study detailed development of airports and air cargo industry for both cities have been studied and analyzed. Business opportunities and constraints are outlined. For the industry to be successfully operating business in these two cities, they must collectively ensure that air cargo be shipped in a time-definite and cost-effective fashion and with a high standard in shipment tracking and information processing. Recommendation of strategic selection of a proper local alliance is also provided.

Reference:

Leung, L.C., Cheung, W., Hui, Y.V., Zhang, A. (2000), “An In-Depth Study of The Beijing and Shanghai Air Cargo Logistics Industry: Potentials and Obstacles ”, Client Research Reports.

(73 pp Beijing Report, 57 pp Shanghai Report)

Sponsor/Partner:

A major player in Hong Kong logistics industry

Objective:

To identify areas that are losing competitiveness and ways in which air cargo industry agents and the Government can work in a collaborative manner to strengthen its competitiveness and to explore new business opportunities arising from China's WTO accession.

Summary:

China has entered the WTO after 14 years of negotiation. The air cargo industry must examine the long-term economic impact of both WTO and direct transport links between Mainland and Taiwan on the industry. It must also examine the logistics and IT infrastructure needs within the same context. There will be new requirements for air cargo logistics as well as logistics-related information technology, as more international standards are expected of the Hong Kong air cargo industry. Innovative public policies would be imperative in helping the industry in becoming more competitive globally. Further, e-commerce and Supply Chain Management have become critical aspects of air cargo logistics, the industry would be well served if such aspects can be addressed within the WTO and direct link context as well.

Sponsor/Partner:

Innovation and Technology Commission [Download]

Objective:

To develop a framework for logistic Air Cargo relevant to the development of the region.

Summary:

e-commerce has brought new challenges as well as opportunities to the air cargo industry. In this stud ,a framework of a third-party e-commerce community network has been presented. It is an extension of traditional B2B and E2E network at the industry level. The proposed infrastructure differed from traditional portals in that it features the online integration of business transactions. It provides a virtual market for agents of the air cargo industry, enabling them to develop and engage in logistic integration. It also facilitates tracking and tracing, and minimizes unnecessary travel and inventory costs –thus achieving Supply Chain Management at the industry level. Implementation scenario of such network in Hong Kong is also envisioned and discussed.

Reference:

Leung, L.C., Cheung, W. and Hui, Y.V. (2000), “A Framework for a Logistics E-commerce Community Network: The Hong Kong Air Cargo Industry,” IEEE Transactions on Systems, Men, Cybernetics, Vol.30, No.4, pp.446–455.

Prototype:

The Cyber Logistic Laboratory at Chinese University of Hong Kong is building a prototype of logistics e-business platform.