With cheaper port services and expanding freight destinations, China is overtaking Hong Kong in handling cargo export and distribution. At the same time, international forwarders like FedEx, DHL and UPS are expanding their regional businesses by leveraging their global networks, advanced technologies and customized services to handle end-to-end supply chain processes.

This is according to Professor CJ Tan, interim CEO of Logistics and Supply China Management Enabling Technology R&D (LSCM) Centre at Hong Kong University. "In this region, the tremendous development in industrial expansion and economic growth impose insurmountable demands for logistics services," said Tan. "It is a challenge as well as an opportunity to the local logistics business."

"Hong Kong is losing its edge in handling cargo," said Wilson Lee, head of information technology at Kerry Logistics. "Like many local logistics providers, we are seeing that as our major challenge."

As one of the first third-party logistics (3PL) service providers in Hong Kong, Lee noted the company traditionally focused on the handling of goods. While the cargo handling business is shrinking in Hong Kong, Kerry Logistics has been expanding rapidly in China to capture the growing volume of mainland business. Meanwhile, the company is riding on its experience in the industry to re-position itself from handling cargo delivery to managing supply chain operations.

This new position means Kerry Logistics aims to be the 3PL that provides outsourced logistics management services, which includes managing various logistics suppliers, monitoring their performance, providing consulting services or even transforming their supply chain processes.