The Chartered Institute of Logistics and Transport in Hong Kong (CILTHK) Submission for Policy Address (17 August 2018)

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1 The Chartered Institute of Logistics and Transport in Hong Kong (CILTHK) Submission for Policy Address (17 August 2018) By this submission, CILTHK would like to offer our views in response to CE s call for inputs for the Policy Address. This submission covers a wide spectrum of issues on transport and logistics though it is our views that priorities should be accorded to Smart mobility : data integration and analytic capability in particular the acquisition of open data for dissemination of more comprehensive transport information to the travelling public Smart logistics : setting up of a logistics information platform facilitating the optimum availability and efficient use of information for and by businesses and Government Transport infrastructure and services : timely provision of transport infrastructures and services to meet the travel demand arising from different developments in particular those of large scale like what is being contemplated by the Task Force on Land Supply Traffic restraint measures : regulation and control of private car growth and usage Smart mobility The measures under Smart Mobility of Smart Hong Kong Blueprint are fully supported. In a way, the technological advancement and paradigm shift create a favourable environment for furthering the concept of Smart Mobility. However, there is a need for extra marketing and promotion effort for soliciting the supports and co-operation of the private enterprises and the general public such as in respect of open data. The Smart Mobility strategies should be able to, through the application of technology, achieve Locational efficiency Reliable mobility Health and safety Environmental stewardship Social equity Robust economy Together, these factors contribute to reduce Reduction in need for travel o Integrated approach in land use and transport planning for better matching of trip purposes and ends o Reduced per capita vehicle trips o Average vehicle trip length Greater modal share for trips by walk, bike, and public transport Green vehicles for operation of public transport services Data and Intelligence infrastructures The key initiative to realise Smart Mobility is the data integration and analytic capability allowing the visualisation of what is happening now and the predictive determination of what might happen and what needs to be done next. This could be accomplished by aggregating vast amount of data from multiple sources and generating new real time information that users can act upon. In this connection, the Government should take the lead so as to help the transfer of

2 know-how to build up the ITS competence, strengthen and expand the ITS network and support the establishment of framework conditions for a harmonised deployment. Evolution of travel needs In addition to the increasing demand for urban mobility, needs are evolving. Changing travel habits, the rise of collaborative mobility, the demand for services to increase convenience, speed and predictability, as well as evolving customer expectations will require more intelligent infrastructure able to cope with these extended mobility requirements. The development of ondemand services, self-driving cars and other new technologies are set to increasingly transform the way we go about our daily lives. Strategic transport planning Significant changes in the land development and transport scenarios are expected in Hong Kong. The proposals under and the recent land search for housing development would have drastic impact on the land use and in turn future transport demand. In addition, several major transport infrastructures like the Hong Kong-Zhuhai-Macao Bridge, the Tuen Mun-Chek Lap Kok Link, the Central-Wan Chai Bypass and the Guangzhou-Shenzhen-Hong Kong Express Rail Link etc. will be put into operation. Locally, the mass transit system will continue to be expanded. At the boundary, the Liantang/Heung Yuen Wai Boundary Control Point will be opened thus resulting in the realignment of cross boundary traffic. Plus the possible introduction of traffic restraint measures like the electronic road pricing etc., the transport demand and traffic pattern in Hong Kong will be subject to significant changes. As such, the Government should carry out a CTS type study to provide a basis for formulating the future transport policies and strategies. Control on vehicle growth and utilisation There had been nearly a twofold growth in the number of private cars in the past decade. It is necessary to exercise a more stringent control on such growth through various policy instruments. To control the utilisation of private cars in the congested areas, the ERP scheme should be introduced as early as possible. Alignment of tolls at tunnels The uneven toll levels charged at the harbour crossings and the deteriorating congestion at the Cross Harbour Tunnel has been subject of frequent public complaints. Following the completion of the study on the rationalisation of traffic distribution among the three road harbour crossings (RHCs), the Government should expedite actions with the introduction of the toll adjustment options. While PPP for transport infrastructure provision has been successful in terms of construction, operation and quality of service, the target of private sector is to maximise profits. Given the importance of strategic road networks, the Government should exercise a better control on the toll levels, yet without compromising the public interest on the BOT model. Transport information and crowd sourcing Similar to the concept of TrafficScan in Singapore, Hong Kong may consider making use of the penetration of mobile phones to help acquire real time information for advising travellers for trip planning. Taking this opportunity, the Government might wish to explore the feasibility of adopting crowd sourcing from mobile phone users for information gathering, say for example the Intelligent Transport System instead of the installation of more detectors.

3 Balanced public Transport System With growing importance of public transport services in achieving objectives of sustainability in Hong Kong, further expansion of the railway network is fully supported. However, it is essential to maintain a balanced public transport system for meeting the travel demand of the general public at the same time. Therefore, it is important to ensure the viability of operations of all public transport modes to ensure satisfactory level of service and reasonable levy of charges. In addition, the feasibility of introducing bus rapid transit and modernised tramways for improving the efficiency of the public transport system should be explored. Financial subsidy for public transport operators All along, Hong Kong public transport services are operated on prudent commercial principles with little subsidy by the Government. Recently, there has been changes in that the ferry operations to the outlying islands which being essential services for the residents, are subject to more subsidies. The purpose is to maintain the financial viability of the ferry operation while keep the fares at an acceptable level. With the extension of MTR network, the road based public transport services would suffer from passenger loss and face financial hardship. One example could be the adverse impact of the opening of the Shatin-Central Link on the cross harbour bus services which have been cross subsidising the local services. To ameliorate the pressure for upward fare adjustment, the Government should closely monitor the situation and offer support as and when necessary. Timely provision of transport services It is essential to construct road networks and introduce public transport services timely to tie in with the completion of development which generate travel demand. Any failure of doing so would not only cause hardship for the travellers but also tarnish the image of the Government. The situation in East Kowloon Development is a typical example and the Government should expedite its decision on the environmental friendly linkage system to be implemented there. Public transport interchanges Quite a number of public transport interchanges are poorly planned and managed. In the face of higher expectation of passengers, the Government should make endeavour to improve the conditions of public transport interchanges, perhaps in collaboration with the public transport operators. This is important as the quality of the public transport interchange would affect the attractiveness of integrated public transport services and passengers willingness to make interchanges. In addition, in order to reduce the resistance of passengers in making interchanges, the feasibility of fare integration among public transport modes should be explored. Walkability While efforts are being made to improve walkability, the progress has been slow. In this connection, the Government should pursue the matter with renewed vigour. In particular, the Government should follow up with the ideas of constructing underground shopping malls to facilitate pedestrian movements at busy areas such as at Causeway Bay. While the proposals are complex, the facilities could resolve traffic problems through vehicle/ pedestrian segregation and create economic effect in the longer term. Given the commercial value, the development could take the form of PPP.

4 Cycling In Hong Kong, cycling is getting more popular and the designation of more cycle tracks should be contemplated. Other than cycle tracks, adequate related facilities such as bicycle parking spaces should be provided. However, the recent closure of the cycle sharing scheme has reflected the lack of a comprehensive planning and evaluation of the operation. While the operators should conduct a service on commercial principle, the Government should render the necessary supports. Colocation of immigration and customs clearance at cross boundary points Similar to the arrangements at the Hong Kong-Shenzhen Western Corridor, the principle of colocating immigration and customs clearance should be applied to all cross boundary points. By doing so, the adverse impact of the potential bottle-necks to trade and traffic at the cross boundary points can be reduced. This will help the improvement to the competitiveness of Hong Kong in the face of the development of the Greater Bay Area. Smart Logistics Smart logistics is the innovation in logistics and supply chain management for breaking through regularities such as custom requirements, modal split or transport kilometres etc. To stay competitive in logistics, there is a need to continuously strive to make the logistics chains more efficient and sustainable. Lower logistics costs, improved service levels and reliable and sustainable distribution are all important elements. Supply chains are also becoming more complex, with increasing customer demands, the possibility to use rail and inland waterways and the rising possibilities of supply chain disruptions. Supply chains are becoming supply networks, in which goods flows can take different routes to arrive at the final customer. Strengthening the supply chain control and streamlining the regulatory frameworks, with reference to physical, information and financial flows, can lead to the optimisation of logistics efficiency. Taking overseas examples, the innovation roadmaps for achieving smart logistics could comprise, among others, the following Logistics Information Platform Open ICT platform facilitating the optimum availability and efficient use of information for and by businesses and Government Synchromodality Efficient use of various modalities as one single integrated transport solution Trade facilitation Streamlining the administrative arrangements and simplifying the collaboration between customs and industry Cross Chain Control Centres Control centre for collective coordinating and managing of multiple supply chains through up-to-date technology, advanced software concepts and supply chain professionals Supply Chain Finance Optimisation of financing the total supply chain and the integrating financial processes between shippers, suppliers, logistic service providers and financial partners in order to create value for all participants IT applications in logistics industry For application of technology, the cycle follows technology awareness, technology acquisition, technology adaptation, technology advancement and technology replacement. With the rapid development of IT, the processing and storage capacities are increasing exponentially. To

5 capitalise on the changes, the Government should make the knowledge accessible and improve the awareness of the logistics and transport industry about the latest development and contemporary IT applications. This will help the SMEs to plan for the automation of their operations and improve their competitiveness. At the heart of IT-powered logistics landscape is the availability and accessibility of Big Data, itself a challenge in collaboration between the public and private sectors. The Government needs to open up its own data bank for sharing on cross-departmental basis with the private sector without compromising on privacy; the private sector needs to voluntarily and freely provide their own data base to the Government for building a robust and dynamic Big Data platform for public sharing. Should there be a need, the Government should consider extend the "Technology Voucher Program" operating under the auspices of the Innovation and Technology Commission. In addition, it is desirable to increase the level of awareness for the users of ITS in policy, industry and the public sector. Trade facilitation (Single Window) To improve logistics efficiency, the custom clearance, inspection and quarantine of goods should be rationalised, perhaps with the support of IT applications like the e-locks etc. In addition, in order to streamline the handling of B2G trade documents, we urge the Government to expedite the development of full-fledged single window. The changes of the modus operandi by the Government is encouraging. We hope that the one-stop electronic services could be put into effect as soon as possible. Land allocation for the logistics industry Currently, the efficiency of the logistics industry is hamstrung by the shortage in warehousing space and fragmentation of land supply. To mitigate the deficit in the short to medium term, the Government should consider, among other measures, optimise the land use from brown fields recovery and re-vitalise the industrial buildings initially in the non-metro areas which are with higher potentials for industrial development. In the longer term, the reclamation outside of the Victoria Harbour area should be pursued. To enable clustering effect, strategy land use for logistics should be contemplated to enhance the efficiency and cost saving potentials in the operation. Shortage of labour supply With the development of the Greater Bay Area, there will be a crowding out effect on human resources and this might affect the labour supply of Hong Kong. Apart from measures such as supporting training, improving recognition and encouraging capable people at retirement age to return to the employment market, the Government should critically examine the feasibility of importing labour to relieve the labour shortage problems. SME viability In the drawing up of strategies, it is of paramount importance to ensuring that Hong Kong s competitive advantages would not be compromised. This is particularly important for the SMEs which are easier to be subject to the impact of competition and economic downturn. In fact, it is expected the situation would aggravate with the recent trade wars started by the United State of America. In the process, tangible and effective measures should be explored and introduced to

6 help the SMEs to maintain their viability, if not to prosper. In addition, the implementation of strategies should be well phased and timely to suit the changes in the operating environment. Air cargo security Air cargo security would be made mandatory with 100% X-ray screening and security checking and this would exert pressure on the current facilities in the HKIA area. Against the deadline of 100% x-ray of air cargo departing from HK, and the persistent constraint of landside facilities to handle the process efficiently and economically, the Government should actively engage with the industry stakeholders to finalise on the option to be adopted. As suggested in the past, we call upon the Government to utilise part of the land available at Tuen Mun Areas 40 and 46 for setting up an air-cargo X-ray screening and security checking infrastructures to complement the current system. Guangdong-Hong Kong-Macao Greater Bay Area (GBA) In principle, we support the proposal and consider that Hong Kong should strive to enhance cooperation and co-ordination with other cities in the PRD region, leveraging each other s differentiation and respective strengths under the principle of complementarity and achieving a multi-win situation. To optimising the synergy, we consider there is a need to demarcate the functions among areas, make full use of the limited resources available and avoid wasteful competition. On this basis, we suggested, among others, the need to designate ports in the region to, in principle, meet different natures of demand with Hong Kong specialising in transshipment. Cabotage restriction The Government should frequently and consistently megaphone the indispensable enforcement of the cabotage restriction in China and the flexibility accorded to HK for the latter s continuous contribution as a transshipment hub in the GBA context. Automation at container ports The remote-controlled operations project launched at HIT s Container Terminal 9 North has opened a new chapter in the development of Hong Kong s container terminals. By enhancing efficiency, occupational safety and the working environment at the container terminal, it reinforces the competitiveness of the Hong Kong Port. The intelligent algorithms that can predict equipment behaviour that enables prevention of break downs and down time has tremendous potential to take container terminal performance to the next level. While it is a commercial decision to adopt the new technology, the Government can encourage the operators to head towards that direction. Maritime and Port Board Once again, we urge the Government to appoint a representative from CILTHK which comprises experts of different disciplines to sit in the Board to offer professional advices, set up a communication system and maintain dialogues with the logistics and transport trade. 20 th August 2018