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The Hong Kong-Zhuhai-Macau Bridge: A New Dawn for Zhuhai Logistics

Interview with Zhuhai Gangda Supply Chain Management Co., Ltd.

The Hong Kong-Zhuhai-Macau Bridge (HZMB), which is due to open in the second half of 2018, will serve as a road bridge linking Hong Kong, Zhuhai and Macau. Built to facilitate passenger and freight transport over land between Hong Kong, the mainland (especially the area west of the Pearl River) and Macau, this bridge forms a new passageway straddling Guangdong, Hong Kong and Macau and connecting the east and west banks of the Pearl River Delta (PRD). With the support of the Commerce Department of Guangdong Province, HKTDC Research conducted a study in western PRD in May 2018 to assess the impact the bridge could have on the logistics industry in Hong Kong and western PRD. The study included meetings with representatives of the local commerce departments and logistics companies looking into co-operation and development opportunities arising from the HZMB for industry players in Hong Kong and western PRD.

Complementariness Raises Efficiency

Photo: Gangda’s bonded warehouse in Nanping
Gangda’s bonded warehouse in Nanping.
Photo: Gangda’s bonded warehouse in Nanping
Gangda’s bonded warehouse in Nanping.

Zhuhai Gangda Supply Chain Management Co., Ltd., a subsidiary of Zhuhai Port Holdings Group Co, is the only logistics company in Zhuhai city recognised as an advanced certified enterprise by the General Administration of Customs (GAC) under the Authorised Economic Operator (AEO) [1] programme, and granted an AA credit rating by the General Administration of Quality Supervision, Inspection and Quarantine. Gangda has an extensive network of branches and warehouses in Hong Kong, Shenzhen, Guangzhou, Dongguan, Shanghai and Beijing. Apart from providing third-party Vendor Managed Inventory (VMI) [2] warehousing and Just In Time (JIT) [3] distribution services to clients, Gangda also offers supply chain management services ranging from import and export agency and customs declaration to financial logistics.

Gangda’s 3,000-sq m warehouse in Tsuen Wan, Hong Kong, is the company’s distribution and transit centre for its import and export business between the mainland and foreign countries. Mainland manufacturing enterprises often import electronic parts, semi-manufactured electronic products, and small and medium-sized machinery from different overseas suppliers. These foreign goods are delivered first to Gangda’s warehouse in Hong Kong by air or by sea before they are distributed or transferred to different locations on the mainland according to the demands of different factories. Since Hong Kong is a free port where import and export goods are exempt from customs tariffs, mainland manufacturing enterprises can import large quantities of the raw materials they need and store them in the Hong Kong warehouse first in order to lower transportation costs.

Gangda uses barges to transship goods from Hong Kong to Hongwan Port in Zhuhai, which normally takes about 1-2 days depending on sailing schedules and the operating conditions of the wharves concerned. The land route from Hong Kong to Zhuhai is over 200 km and the travelling time is at least four hours. But after the HZMB opens, the distance between Hong Kong and Zhuhai will be shortened to only about 40 km and Gangda estimates that it will only take about 75 minutes to travel from its Hong Kong warehouse to its Zhuhai warehouse. This is bound to help raise logistics and transport efficiency.

Air Freight Synergy

With Hong Kong International Airport to the east and Zhuhai (including the Hongwan customs clearance centre) to the west of the HZMB, it is estimated that the completion of the bridge will cut the time it takes to go from the Hong Kong airport to Zhuhai to about an hour. Given the shortage of warehousing facilities at the Hong Kong airport, it is likely that Zhuhai will tap into the logistics business of the Hong Kong airport to undertake part of its cargo freight and provide logistics and distribution services (such as bonded processing, bonded warehousing, and repackaging). The logistics industry in Hong Kong and Zhuhai can mutually benefit from the collaboration.

Hong Kong International Airport is not only one of the busiest airports in the world but also handles the highest volume of air freight in the Guangdong-Hong Kong-Macau Bay Area. In 2017, the volume of freight and postal items handled by the airport reached over 5 million tonnes. Today, more than 100 airline companies operate in Hong Kong, flying to 220 cities across the world, including 50 mainland destinations (most of which are first- and second-tier cities). When delivering imported goods via the Hong Kong Airport to mainland cities, Zhuhai airport can play the role of a distribution and transit point, especially for goods destined for second- and third-tier cities on the mainland. Currently, over 28 airline companies operate from Zhuhai airport, serving more than 50 mainland cities. It is likely that in years to come Zhuhai airport will offer an increasing number of domestic flights in order to meet market demand.

An analysis of airfreight cargo by Gangda shows that the bonded import of cross-border e-commerce goods, high-priced electronics/raw materials, and chilled and frozen foods (fruits/marine products/cold meat) has the greatest potential for development. After the HZMB opens and direct freight transport service between Zhuhai airport and Hong Kong airport becomes possible, industry players can transport export goods to Zhuhai first for central handling (such as packing and repackaging) and then make use of Hong Kong airport’s international networks to deliver the goods to overseas markets via the SAR. Similarly, foreign goods destined for the mainland can first be delivered to Hong Kong airport before they are transported to Zhuhai airport by bonded vehicles/customs clearance vehicles for customs clearance and distribution to different places across the country. Such arrangements are set to make Zhuhai a logistics distribution centre because they not only help solve the problems of warehouse shortage and high labour costs in Hong Kong, but also give full play to Zhuhai’s role as an air cargo distribution and transit point.

The HZMB will connect with three major expressways: Beijing-Zhuhai Highway, Guangzhou-Zhuhai Expressway West Line, and Jiangmen-Zhuhai Highway. This, coupled with the expanding highway network on the mainland, is expected to turn Zhuhai into a goods aggregation and distribution centre in western PRD and the western Guangdong area. At the same time, the commissioning of the HZMB is set to create extra cargo sources for Hong Kong’s sea freight and air freight operators.

Reaching New Service Heights

In anticipation of the growth of the logistics industry, many logistics companies in Zhuhai are making great efforts to enhance their management efficiency by pursuing informatisation, going smart and adopting standardisation. Gangda’s proprietary information management system can link up with clients, suppliers and customs offices online for real-time data transmission. This system not only helps clients forecast and manage inventory, but also raises the efficiency of customs declaration and the clearance of goods.

Hong Kong logistics companies are known for their professional supply chain services. In addition to warehousing and distribution, they can also provide services like overseas sourcing, customs declaration and clearance, and export bill financing. As such, there is a great deal of room for co-operation with their mainland counterparts. After the opening of the HZMB, the transport network in the Bay Area will be further improved, giving a further boost to the development of modern logistics in the Bay Area.

[1] “Authorised Economic Operator” is a concept under the World Customs Organisation’s Framework of Standards to Secure and Facilitate Global Trade aimed at strengthening the safety of international supply chains and facilitating the movement of legitimate trade through partnership between Customs and business.

[2] VMI is an inventory operation mode under the supply chain environment, using actual or projected consumer demand and inventory level as a solution to projecting market demand and replenishing inventory.

[3] JIT distribution refers to the delivery of the right product in the exact quantity to the destination and at the time designated by the client.

Content provided by Picture: Alice Tsang
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