Chairman’s Message (Annual Report 2020)
2020 a challenging year of hope, courage and determination
To say that 2020 was a challenging year is something of an understatement.
Looking at my messages from the past year gives me some hope, but my optimism is largely tinged with caution.
At the start of 2020, I wrote of the “One Plus Four” model that is the bedrock of China’s manufacturing landscape, and consequently the lifeblood of Hong Kong’s trade.
This was after the 2019 Asian Logistics & Maritime Conference, which — as per — drew a large audience and a glittering array of industry giants from across the globe who were to embark into 2020 with renewed enthusiasm.
Alongside China, ASEAN countries had overtaken Europe as one of Hong Kong’s primary trading blocs. Hong Kong retained its status as an international centre for trade, shipping, and logistics and the de-facto go-between for China and the rest of the world.
But by the time of the 2020 Lunar New Year in late January, the sunny optimism with which we entered 2020 dimmed as the outbreak of COVID-19 brought the world to a standstill.
I was in Europe during the holiday period but had to quickly return to Hong Kong to quell the impending chaos.
Similarly, on the mainland, the Central Government instituted stringent safety measures to contain the outbreak. While some manufacturers were able to resume some of their normal operations, uncertain production figures meant they were unable to outsource.
During the same period, I was also having to assure overseas buyers that cargo from Asia was safe to receive.
Little did we know, COVID-19 would make its way westward. Europe would soon be battling with the same virus and implementing national lockdowns throughout the continent.
By April, the coronavirus outbreak had reached all corners of the world. In that same month, the International Monetary Fund lowered its global economic forecast from +3.3 per cent to -3.0 per cent.
Even US oil prices went negative that same month, a first in trading history that sent many scrambling.
Cargo pileup at ports resulted from crumbling supply chains. And to top it off, importers were faced with daily uncertainty due to delayed orders, cancelled orders, and fluctuating freight rates exacerbated by blank sailings and capacity crunches.
This period wasn’t purely defined by doom and gloom though; technology softened the blow of economic slowdown and social isolation.
Many of us turned to technology to shop, work, and keep in touch with our loved ones. As for businesses, they made the wise decision to innovate and leverage technology to keep their businesses afloat and remain relevant.
Digitalisation was one of the defining characteristics of the “new normal”, as we turned to tele-conferencing, tele-education, cloud technologies, and the like to keep our heads above water.
Moving on to the autumn period of 2020, the concept of “travel bubbles” began to float around Hong Kong — namely a Hong Kong-Singapore travel bubble — in the hopes of reinvigorating the city’s dwindling economy.
However, the advent of the fourth wave in Hong Kong forced both governments to put a pin in the travel bubble plan. While no provisional dates have been put forward just yet, both governments are still in talks with one another.
During this same period, China’s economy had bounced back and was showing few signs of slowing down.
In fact, it appears that the pandemic has done wonders for the Chinese economy.
Before COVID-19, the Centre for Economics and Business Research (CEBR) forecasted that China would overtake the US to become the world’s largest economy by 2033.
At the end of 2020, they moved this date to 2028, five years ahead of schedule.
Back in April, China’s production services resumed and had overtaken Mexico and Canada to become the number one trading partner with the US. And with heavy investments in automation, artificial intelligence, and robotics — all of which have lower production costs — China remains poised to become the leading economic powerhouse.
Therefore, it is in our best interests to establish dedicated logistics facilities near our border with China, which is an idea that I floated during the November 2020 edition of my bi-monthly address.
And just as China has made major investments in technological innovations (i.e., robotics, automation, and artificial intelligence), we too must support greater facilitation of these valuable and cost-efficient technologies if we wish to remain competitive in the world economy.
We must also endeavour to negotiate greater Free Trade Agreements with Belt & Road countries, the European Union, and other overseas markets.
The world is a vastly different place to what it was a year ago, and if we are to continue to weather the storm then we must embrace the tides of change as they persist.