Kerry Logistic Visit

Q1. As Asia’s premier logistics solutions provider, what are the key factors to maintain your competitiveness among the large global dynamic environment?

As Asia’s premier logistics solutions provider, Kerry Logistics works in both the region, and the global market environment. They take the advantage of the uniqueness of the Asian market, especially that in China. Their expertise with a powerful network helps to boost their business in the global, regional and local level of market. Kerry Logistics continue to invest in their own assets like building own infrastructure and storage place, in order to minimize the effect of the volatile change of global economy and to provide reliable and flexible support for their business partners. Also, Kerry Logistics has teams with talented employees and professionals to handle the growing business and the changing global environment for confirmation of profitability of their business. Lastly, the advanced IT system KerrierVISION provides a good management over the supply chain to monitor and control the processes in order to have competitive advantages like cost over the other competitors around the world.

Q2. Recently, Kerry Logistic expanded its network in Vietnam by establishing joint venture with a leading express company called Tin Thanh Express, What are the major advantages of this strategic decision?

Familiar with the Market 

Kerry Logistic is not familiar with the business environment of Vietnam, such as the pricing of equipment and local ordinances, so that they choose to establish joint venture with a leading company. The laws in Vietnam are not well developed such as labor’s law and there are many regulations in doing business Vietnam, Kerry Logistic may sometimes face difficulties with some management issues such as the labor management. Also, there is culture different between Vietnam and Hong Kong, it is hard for a company to send their staff to manage the Vietnamese. Therefore, establishing joint venture can help Kerry Logistic to familiar with the environment and overcome the difficulties so that they can have further expansion in the future.

Build credibility in Vietnam

Besides, Kerry Logistic may not have the reputation in Vietnam. Find the right joint venture partner high local recognition and reputation, and Kerry Logistic can instantly raise the credibility of its own business in Vietnam. Moreover, it can start building acceptance, penetration and access within its target market. Joint venture helps attract more customers and improves Kerry Logistic coverage.

Cost Reduction

Most of the Investors often find poorly developed infrastructure, high start-up costs, arcane land acquisition and transfer regulations and procedures, and a shortage of skilled personnel in Vietnam. As a result, Kerry Logistic can establish joint venture with a recognized local company, they can save the cost in developing infrastructures and hiring skilled personnel. It is much easier to focus on service enhancement when the company needs not to worry so much about exceeding and impractical costs. 

Combined talents and resources

Joint venture allows Kerry Logistics and Tin Thanh Express to pool their financial strength, workforce, equipment resources, and bonding capacity, while sharing the risks involved in competing bigger or more complex projects. Having a joint venture partner that provides additional working capital can reduce the likelihood of cash shortfalls, facilitating successful project completion. Moreover, they can have a better underwriting risk, making them easier to obtain bonding at competitive rates.

Access to different markets

Kerry Logistics can broaden the company’s geographic reach. It has expanded the business into Mainland China and other countries in US. Vietnam is a potential country for developing its business. Since the labor cost and manufacturing cost are increasing, many industries have left China and gone to Vietnam. Therefore, the demand for logistics would increase. 

Q3. Compared with the UPS and FedEx, what are the distinctions between Kerry Logistics and these famous logistics companies in term of the competitive edge?

For UPS and FedEx, their strategies aim to maximize the return on asset. Therefore, they do not make large investment on infrastructure and facilities. Without own infrastructure and building facilities, they can earn higher return due to low expenditure on asset. However, Kerry Logistics is an asset-based organization. With own facilities and infrastructure, it can reduce the effect of the external environment on the cost, for instance, it can ignore the rent and price of the asset. Therefore, it can stabilize the price inflation of the property in recent years. Moreover, with own facilities and buildings, it will be more flexible to provide customized logistics service for the customers to satisfy their needs. Changing containers or other facilities to cater for the special need of the customers can be easily achieved. In addition, Kerry Logistics constructs a big network all over Asia especially Mainland China. The economic growth is extremely rapid in China which makes a great opportunity for Kerry Logistics to sustain its growth of business. It also develops infrastructure in some undeveloped countries such as Myanmar. As Kerry Logistics has been running its business over several decades in the Asia, it should have relatively sound reputation and competitive edge compared with other logistics organizations.

Q4. How should the HK-based logistics company like Kerry to face the changing market environment?

  

First of all, the rental price of land is increasing vigorously in Hong Kong and China. Kerry Logistics react this by applying asset based policy, which is definitely a competitive advantage. The competitors in the market usually apply few assets policy, which to achieve high return per assets. Kerry Logistics has bought some lands in Hong Kong, which is to build warehouses, for example, Tai Po, Kwai Chung. This can help Kerry Logistics avoid the rise of rental cost increases its operating cost. In addition, they find the operating cost of warehouse in coastal cities is increasing. They turn to build warehouses in the inner cities, like Chongqing. Wages and other costs are lower.

Secondly, the business in Hong Kong may decline when there is economic downturn. Also, Kerry Logistics observe the opportunity in China and other Asian countries. Therefore, they are keen on develop their market in Asia. They have a slogan, “Asia Specialist, China Focus, Global Network”, which can show their core value of business, building network in Hong Kong. By exploring their market in new countries, this can help them avoid the economic downturn in one of countries. During the talk, the speaker told us they have explored new market in Myanmar by using the method of Joint Venture. Kerry Logistics has long history of doing Asia business, so it is relatively easy to enter into this special country, which have different political environment. They would use different methods to enter into new market, such as Joint Venture, Merger and Acquisition. Kerry Logistics is very flexible to adapt to different business environment. 

Last but not least, there are many logistics companies in Hong Kong, with both small and large structure. The competition becomes more vigorous. The customer expectation also becomes higher. Kerry Logistics does well to become more professional in niche markets including Food & Beverage, Fashion & Lifestyle. This could help them build up competitive advantages to better fulfill the needs of customers and win over other competitors. For example, they have built a PC3 warehouse in Tai Po. The meaning of PC3 is “Product customization and consolidation centre”. It especially serves the high fashion brands, like LV and Marks & Spencer. Those high fashion brands put high concern on their environmentally friendly image. Therefore, their requirements are higher, so that warehouse required being built greener by adding water recycle system, roof-top garden, etc.  

Q5. From your website, we noticed that ISO Tank Solutions have been becoming increasingly popular. With increasing fuel prices and environmental awareness, how does Kerry respond to these types of market trends?

Kerry Logistics has developed and operated an environmental management system to prevent pollution, preserve natural resources, and adhere to environmental regulations and laws.

The environmental management system includes:

•  Use of Solar Energy

The company has installed photovoltaic cells on the building to convert light into electricity using the photoelectric effect to support the operations of the company.

•  Use of Windmill

The company has installed windmill to convert the energy of wind into energy to support the company.

•  Water Recycling System

The company has set up a water recycling system to remove solids and certain impurities from sewage for non-potable use in the company.

•  Roof Garden

There is a roof garden on the building to reduce the overall heat absorption of the building which then reduces energy consumption.

•  Policy adhered by Employees and Contractors

1. Continually and effectively improving our environmental performance
2. Complying with and surpassing standards required by all applicable environmental regulations
3. Fulfilling all environmental requirements prescribed by the company
4. Promoting sound environmental policies and practices within the company
5. Setting and reviewing environmental objectives
6. Conserving resources and maximizing energy efficiency
7. Minimizing waste wherever practicable
8. Reusing or recycling waste where appropriate and regulating the treatment and disposal of residual waste
9. Reducing and preventing pollution where possible
10. Minimizing vehicular emission of pollutants
11. Minimizing adverse environmental impacts of asset decommissioning and disposal
12. Enhancing environmental awareness of colleagues and subcontractors
13. Advocating good environmental practices on both departmental and individual levels
14. Effectively communicating our environmental performance to stakeholders

7-11 Japan Case Discussion

Q1. Identify the major obstacles to e-commerce in Japan.

Connection Charges

Since Nippon Telephone & Telegraph (NTT) and its subsidiaries NTT East and NTT West controlled 95% of Japan’s telephone lines, the pricing of access charges to the Internet was decided upon by this company. Although the company decided to cut monthly fixed charges by 50%, the price charged for connection to the Internet was still high. Also, connection to the Internet was charged by the minute, deterring Japanese from surfing the Internet or staying at a website for very long.

Japanese Culture

Japan was a cash-based society. The most commonly used payments are cash and bank note. Cash-on-delivery and bank transfer are the most commonly used methods for online shopping. Cheques were not used. Credit card payment was not popular because Japanese were afraid that their credit card information and other personal data are stolen by hackers.

Japanese were used to buying offline because they could see and touch the products and perhaps obtain discounts. Offline shopping was very convenient in Japan. Mail-order and catalogue shopping were very common. There were also streets packed with stores selling daily necessities. Also, convenience stores were almost everywhere. Most of them were open all night.

Many Japanese homes were tiny and had no space to accommodate a personal computer. End-fulfillment of online orders was also a problem for many people since most customers were not home during the day to receive parcels ordered by them online and they were also worried about receiving their parcels from online stores, either due to mailing errors or non-fulfillment on the part of the stores.

Q2. Describe the proposed 7dream.com business model.

Seven-Eleven Japan Co. Ltd, the country’s largest convenience store chain with 8,200 outlets, established an ecommerce business model called 7dream.com, with seven other Japanese companies, including NEC Corp., Nomura Research Institute, Sony Corp., Sony Marketing (Japan) Inc., Mitsui & Co., Ltd., Japan Travel Bureau,Inc., and Kinotrope, Inc.

Place/Distribution

The consortium launched the website in July 2000 to handle a wide range of operations, including distribution, sales and services, with product delivery and payment made at any Seven-Eleven convenience stores nation-wide. Also, Seven-Eleven installed in-store multimedia terminals for consumers to order products.

The basic concept behind the 7dream model is that after the consumer places an order on the web, they can pick up and pay for their purchases at any Seven-Eleven stores on a 24-hour basis (credit card payments, reliable pay-on-delivery and home delivery courier services are also available). The customers can choose “Payment at a 7-Eleven store" as their payment method. Payment slips with bar codes would then be printed out from the customers' printers OR payment reference number to the cashier at the 7-Eleven store. (Adapt to the Japanese traditional buying behavior).

Product

7dream.com offers services in eight content areas: travel; music; photographs; Merchandise, gifts and mobile phones; tickets; books; car-related items; and information. This diverse range of merchandise was specially aimed at the buying pattern of most Japanese consumers and to complement the range of goods offered in the 7-Eleven stores.

Price

Orders on 7dream.com’s site would probably only be charged a minimal cost, which would be largely lower than the shipping and handling charges levied by other e-commerce companies because the delivery system was already in place.

Promotion

The targeted group is youngster. They had taken to the Internet most enthusiastically. These characteristics made this group an ideal target to market an on-line shopping site.

(High acceptance of youngsters, get popular in a partial and potential groups and spread out to the whole society)

One of the channels under consideration was Internet-enabled multimedia kiosks. Once 7dream.com's Website was enabled, Suzuki planned to start placing these multimedia kiosks in a few participating 7-Eleven stores in October 2000, aiming for a kiosk in all stores by June 2001. The idea was to whet people's appetite for computers and the Internet. These kiosks would enable consumers who did not wish to connect to the Internet at home, or did not have personal computers with Internet access, to access the full services of 7dream.com. Once consumers savored what 7dream.com had to offer, it was expected that the utility-packed kiosks would offer enough value to attract the consumers into using the kiosks more often to access 7dream.com's services in order to satisfy their shopping needs. The kiosks would be equipped with a screen to access the services of 7dream.com, a digital printer for instant printing and delivery of pictures purchased or photographs taken with the in-built digital camera, and a MiniDisc drive and MemoryStick slot to allow customers to save purchased songs.

Q3. How does 7dream.com define and differentiates its offerings from its traditional model?

Traditional Model	7dream.com
Products
Food & Drink, Newspaper, Daily necessities, etc.	Travel, Music, Photographs, Merchandise, Gift and Mobile phones, Ticket, Books, Car-related items, Information
Target Market
Japanese around the store	Mainly young people who enjoy community life in Japan such as socializing with friends, paying for utilities, having the habit of access Internet and convenience stores
Payment System
Pay by cash or credit card face to face	Pay for their purchases by credit card over the Internet or pay at 7-11 store. Customers can print the payment slips with bar codes, and then visit any 7-11 store with these slips to make their payments or just state the assigned payment reference number to the cashier
Delivery System
Face to face transactions at 7-11 stores	Customers can choose to have their orders delivered to their home or other delivery address, or choose to pick up their purchases at 7-11 store
Marketing
Developing merchandise to meet the customers' needs	Placing the multimedia kiosks in 7-11 stores with a screen to access the services of 7dream.com, a digital printer, mini disk strive and MemoryStick enable customers who cannot connect to the Internet at home or do not have personal computers with Internet access, to access the service of 7dream.com

Q4. Identify the critical success factors of the business plan of 7dream.com.

7dream.com has the first-mover advantages in Japanese e-commerce by using their information system:

Point-of-Sale (POS)

·       Showing real time information, e.g. merchandise sell-out schedules, shelf-stocking methods,

·        Responsive to customer's shifting tastes quickly

·       Weather prediction (The system remind operators to put umbrellas next to the sales counter during bad  weather)

Total Information System

·         Linking all the 7-Eleven stores through satellite communications and ISDN telephone line

·         Transmitting large volume of information at high speed

·         Reductions in missed sales opportunities and inventory write-offs

Low Delivery Charges

·         Obtaining the products directly from the warehouse of its suppliers

                -  No inventory and warehouse cost

·         Leveraging on an existing delivery system

              -  Customers would not be charged for extra cost

              -  Potential saving in operating cost

Lower Internet Costs

·         Payment based on the amount of data transmitted or received instead of duration

·         Allowing more consumers to purchase from home

·         Internet-enabled multimedia kiosks

              -  Connect to 7dream.com even customers did not have personal computers with internet access

                 -  Attract customers to access 7dream.com more often

Create Demand with New Online System

By showing real-time information such as merchandise sell-out schedule, shelf stocking, the weather and local event, the online system (through promotion, kiosks, etc) allowed stores to be extremely responsive to consumers’ shifting taste.

The business practice overcomes the buying culture of the Japanese

It convinces them that buying online is an acceptable and safe practice. Also, the system and the transaction make sure that customers can rely on this method of purchasing. This can be done by making sure every order is filled on time.

Government Support
Government Support through deregulation of the e-commerce environment, splitting the Nippon telephone & Telegraph and combining ISP and phone cost.

HIT Visit

Q1&Q7. The future of Hong Kong port industry has been badly predicted since the rapidly growing of mainland’s port industry. How does the company face the threats and turn those threats into great opportunities? What are the future strategies for HIT to fight against the aggressive competitors in China’s coastal cities, like Shanghai ports?

In the past, Hong Kong has held the position of being the only modern, fully developed deep-water harbor between Singapore and Shanghai, making it the focal point of all maritime trading activities in Southern China. Today, there is serious and increasing competition from other ports in Southern China, namely Shekou, Chiwan and especially Yantian. These ports are largely managed and/or partially owned by Hong Kong-based terminal operating companies and the expertise is in place, therefore, to enable their fast development. Whilst Hong Kong’s container traffic increased at an average of 6.6 per cent per annum from 1995 to 1999, container traffic in the port of Shanghai increased by an average 80.2 per cent per annum over the same period (Hong Kong Port and Maritime Board, 2010). The growth in throughput of the ports of Shanghai and Hong Kong is shown in the following table. Although HIT faces the competition from mainland’s port industry, there is still an increasing trend for the port industry. 

Table 1 container throughput in the ports of Hong Kong and Shanghai 2000-2010 (‘000 TEUs)

	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
Yantian				15	106	354	638	1350	1580	2000
Shekou	4	51	67	87	90	90	214	463	574	720
Chiwan	45	50	59	90	90	214	463	574	477
Shanghai port	49	101	126	181	261	542	1002	2120	2631	3994	5076
Hong Kong	6160	7970	9200	11050	12550	13460	14390	14580	16210	18100	18000

Source: Ocean Shipping Consultants (2010), Containerization International (2011)

Co-operation of Hong Kong and Yantian port strengthen the shipping line

In order to fight against the aggressive competitors in China’s coastal cities, co-operation strategies to counter shipping lines’ increasing bargaining power and fierce intra- port and inter-port competition among other concerns. Hong Kong and Yantian generate a positive effect on each other’s container throughput. Based on ‘co- opetition’ which was suggested by Brandenbuger and Nalebuff to show that those engaged in the same or similar market should collaborate to compete as a win-win strategy, rather than a win-lose one. It indicated that Hong Kong and Yantian as a co-opetitve alliance can strengthen both partners against outsiders even as it may weaken one partner against the other. Therefore, this strategy from regional perspective as there are benefits from economies of scale. HIT can take advantages of the information, infrastructure and port management resources already available.

High shipping line connection around the world

HIT has high shipping line connectivity remains, but Shenzhen may catch up quickly. For the America and Europe related trades, there are 61 and 58 calls per week respectively at Shenzhen as compared with 59 and 63 calls in Hong Kong. On this basis, Shenzhen’s shipping line connectivity for the key trades may catch up with HIT’s in the near future, though HIT still has much higher connectivity for Asia and other routes. Currently, most long-haul vessels call both Hong Kong and Shenzhen ports. But the concern is that if the high cost of using HIT continues, shipping lines could add more services at Shenzhen and decrease their presence at HIT. At this point, HIT’s remaining intangible cost advantages may be swamped by the greater shipping line connectivity offered by the Shenzhen ports. This is a key determinant of port choice, not just for South China import/export cargo but also for transshipment competitiveness. Therefore, HIT and Shanghai port would not have direct competition.

Opportunity in re-exports from Mainland China

An analysis of Hong Kong’s trade figures shows that it is the 10th largest exporter in the world (Economist, 2009). The main reason for this is its proximity to Mainland China. In terms of inward port cargo, Mainland China accounts for nearly three times more than Taiwan. In terms of outward port cargo, Mainland China also accounts for three times more than the other developed countries, such as USA. In fact, around 90% of Hong Kong’s exports are actually re-exports, around 60% originated in Mainland China. Hong Kong is the most important entrepot for Mainland China. About 37% of Mainland China’s foreign trade is handled via Hong Kong, comprising products sourced in, and destined for, Mainland China. According to Mainland China’s customs statistics, Hong Kong ranked as its third largest trading partner, accounting for 11% of its total trade in 2009. Therefore, the development of Mainland China brings much demand to the company.

Efficiency and reliability of Terminal operation

The container port of Hong Kong is famous for its efficiency, effective management
and organization. To cite evidence, the quay crane movement of 28-40 moves per
crane per hour is respectable record in any terminal in the world. Although HIT has invested billions of Hong Kong dollars in technology development in the past, the company still continuously improves its existing system and facilities in order to lower the bottleneck in border-crossing caused by the increased throughput rate.

As high transit time is another obstacle for the rapid flow of goods and containers to
and from the mainland. There is often significant congestion at the border, with a lot of lorries waiting up to four to five hours, and as a result, time cost is much higher for
shippers. Delays to cross border freight movements are another key concern for shippers.
Therefore, HIT has a need to strengthen its system and facilities to deal with the increased throughput rate and fight with the competitors.

Q2. HIT is required to manage 5 container terminals, 14 ship berths and 9 barge berths and a number of machines. How can it manage to allocate the resource in an efficient and effective way for the shipment and container movement? 

  

HIT have developed lots of advanced technology and policy to streamline the operations. These help optimize the resources between different parts of the terminal. nGen, Next Generation Terminal Management System, controls the entire scope of terminal operations from ship and yard planning, gate operations, vessel operations and interactions, yard configuration and performance, overall operations monitoring, equipment utilization, productivity to costs optimization. With nGen, HIT is well positioned to meet increasing throughput and productivity requirements into the next decade and beyond.

The Tractor Appointment System is HIT's innovative scheduling system for collecting inbound, loaded containers. The appointment system is a key part of HIT's gate automation process. It also works in tandem with HIT's Terminal Management System that ensures containers are efficiently stacked in the yard. Containers ready for collection are always at the top of the stack, making pick-up quick and easy. HIT's pioneering Tractor Appointment System enhances cost efficiency and customer service, ensuring rapid turnaround for both ships and tractors.

Operations Monitoring System helps HIT staff visualize information on terminal operations and container stacking through a graphic representation. Overviews cover the entire container yard down to details of an individual container. The system can predict yard congestion so operators can take pre-emptive action.

Ship Planning System delivers optimal sequences for discharging and loading vessels, ensuring ship stability and efficient operations. Computers hold a library of every vessel berthing at the terminal. The system generates pier-side instructions to yard operators.

Radio Data System uses radio channels and remote terminals to provide detailed information on yard operations and container movements. RDS acts as the eyes and ears to the main computer system nGen. Terminals include computers mounted in the cabins of each Rubber-Tyred Gantry Crane and hand-held computers carried by operators and supervisors in the yards and on the quayside.

Container yard activities are planned, coordinated and monitored automatically. HIT reduces the time vessels spend at berth, saves tractor turnaround time in the terminal, and provides flexibility in handling customers' special requirements. The computer system maintains detailed information on each container and provides a variety of enquiry, reporting and analysis facilities to assist in management of container inventory. A special feature of the system is a yard map that contains the exact location of all containers in the terminal at any one time.

The computer simulations are helping to ensure that any new practices, systems or technology are properly integrated and optimized. HIT's container terminal simulation focuses on five key areas: equipment handling rates, vessel operating rates, tractor turnaround times, yard grounding characteristics, and resource utilization levels. 3D Animation is also used to enhance understanding and visualization of complex container port operations.

MOVINS stands for movement instruction. With the implementation of this electronic platform, the resources involved in pre-plan operations are notably reduced and lead time for stowage plans are shortened. Furthermore, it allows shipping lines to receive updated outbound planning information from terminals much earlier for stowage verification. The MOVINS stowage instruction transmits information on loading, discharging, shifting and re-stowing activities between the terminal operators and shipping lines electronically. The implementation of this platform allows both shipping lines and terminals to react much faster to the rapidly-changing and complex operational environment.

Knowledge Management applications cover terminal and crane design, capacity planning, work procedures, terminal and corporate systems, shipping line requirements and even contractual and regulatory issues. The web-based environment of Knowledge Management for increased team collaboration is helping to improve competitiveness, accelerate innovation, reduce costs and integrate new businesses. It has enabled the aggregation and dissemination of information throughout HIT. Sharing knowledge throughout the company help people work more productively. By pooling individual knowledge assets in a central repository, HIT has created a key knowledge resource. The HIT Knowledge Portal is a virtual workplace for discussion and resource sharing on any project or business requirement and interaction on-line.

Q3. What are the advantages and disadvantages of shifting from the terminal-operations focus to the customer-services focus?

Terminal operations focuses on controlling the movement and storage of various types of cargo in and around the terminal or port, making better use of the resources to plan the workload, and get the real time information which allows for more timely and cost-effective decision making, and efficiently monitoring the flow of products in, out and around the terminal by using some technologies such as Electronic Data Interchange (EDI) processing and Radio Frequency Identification (RFID).

Its aim to provide a set of computerized procedures to manage cargo, machines and people within the terminal so as to efficiently and effectively manage the terminal operation. Customer service focuses on doing a series of activities to enhance the level of customer satisfaction. It is important because customer service experience can change the entire perception a customer has of the organization.

Q4. Recently, an outsourcing transportation company (San Bo 三寶) has shut down which aroused controversy on the outsourcing. How will HIT monitor the financial state of outsourcing companies?

An outsourcing transportation company (San Bo) which is appointed by Hong Kong International Terminal (HIT) has suddenly shutdown recently, the person in charge also disappeared. Nearly 70 employees did not get their wages and severance payment.

In order to solve the problem, HIT issued a statement that provide a lump sum of $10000 for each affected employees who employed to provide service to Hong Kong International Terminal for over six months. Also, HIT tries to help the employees to find other working positions in the other companies in that industry. In this case, HIT worked with this problem closely and actively cooperated with the Labour Department and other related departments. HIT shows its responsibility and quick responds to this sudden case.

In order to prevent this problem in the future, HIT should improve the risk management for outsourcing and monitoring system. Outsourcing is about taking risks. Managing supply chain risks is an important factor of Supply Chain Management (SCM) and the requirement to include more risk management tools and approaches. Therefore, the development of failure detection systems to reduce risks is able to ensure the expected supply chain performance levels.

Q5 & Q6. In light of the poor air quality in Beijing affecting flights into and out of the city, is HIT concerned of the environmental impact the continued operations of terminal will have on Hong Kong’s air quality and other environmental impacts? How does your company maintain the balance of the society responsibility and its revenue? What is the most effective environmentally friendly measure of HIT to stand out from others in the logistics industry? What is the most effective environmentally friendly measure of HIT to stand out from others in the logistics industry?

HIT has already committed itself to protect the environment and resources years ago. They have three essential company policies including Pollution Prevention, Continuous Monitoring and Sustainable Development. “HIT Environmental Steering Committee” is the core team who work together to execute long term environmental protection.

To maintain up-to-date information about green issues, HIT interacts regularly with stakeholders such as External Audit, Environmental Protection Department, Contractors and Suppliers for sharing and reporting. For example, in middle June 2012, HIT has recommended the use of lithium-ion battery for hybrid car carrier/vessels. Such battery is charged with solar power generation system while at sea, and then consumes the battery charged at berth. This totally reduces the consumption of diesel power. Now, its hybrid vehicle system is under research and EURO III engine equipped vehicle will be the new standard of their new vehicle.

Apart from air pollution, HIT also focuses on setting up Washing Bay and Petrol Filling Station surrounded with independent drainage system to underground oil interceptor. These measures can be an effective water protection.

HIT is a terminal operator which consumes high percentage of harmful energy before. Due to the cost problem, similar companies in this industry in Hong Kong or Pearl River Delta may face a serious decision whether bear responsibility to improve environment or not. HIT begins the protection from its plants. It has conducted a series of investigation and pilot project to determine the feasibility of converting RTGC’s fuel from diesel to main electricity as a substitute for powering RTGCs.

If HIT succeeds replacing these machines, a benefit of 70% on fuel and 80% on maintenance cost, black smoke, and noise pollution can be saved. HIT considers that the benefit to environment is invaluable even the cost payback of the above project for HIT would be in three to four years. Not only is its proactive social responsibility, but Electrification may create a certain competitive advantage and potential market for HIT too.

Last but not least, its environmentally friendly technology can definitely help motivate another port operator, HPH, to follow what HIP has done. The awareness of environmental protection can then be spread rapidly among industries.