Greater Bay Area’s logistics gain from smart port development
A competitive supply chain and efficient waterway transportation will help improve growth potential in the local industrial real estate market.
The Greater Bay Area becomes the world’s busiest container port cluster
Comprising the major container ports of Guangzhou, Shenzhen, and Hong Kong, the Guangdong–Hong Kong–Macao Greater Bay Area (GBA)’s port cluster has become one of the world’s largest regional port clusters in terms of freight traffic. In 2021, the GBA port cluster’s annual cargo throughput was recorded at over 80 million TEUs (twenty-foot equivalent unit), significantly ahead of the other three world-class bay areas centred around New York, San Francisco and Tokyo.
Figure 1: Guangdong-Hong Kong-Macao Greater Bay Area’s ports map
Source: JLL Research
The latest trend in developing smart ports with intelligent upgrades
In recent years, smart port development has been gradually maturing, along with the developments of 5G, blockchains, AI, and other advances in information and communications technologies. Improving the sustainability and efficiency of port operations through an intelligent upgrade is becoming a key competitive advantage in the GBA’s logistics market.
The GBA has achieved great operational improvement through smart port developments
The digitisation of ports has generated abundant data that supports automation across the entire operational flow, including shipping, loading/offloading and storage, thus enhancing the ports’ long-term resilience to potential risks.
Figure 2: Technology landscape of GBA’s smart port upgrades
Source: JLL Research
Positive impact on the GBA’s supply chain network
Ports are a vital link in the movement of goods and closely connect with many other midstream and downstream industries along the supply chain. Their competitive performance is crucial to economic growth at a larger scale, which involves trading, manufacturing and energy businesses. Introducing smart technologies into a port’s operations will increase efficiency and thus lower logistics costs and benefit the industry’s overall ecosystem.
Figure 3: Correlation between port efficiency and the logistics industry
Source: JLL Research
Specifically, developing smart ports in the GBA will help optimise the logistics network, simplify export procedures and accelerate the movement of goods through trade automation. An efficient logistics system will support trading enterprises in improving their product quantity and quality. Hence it will stimulate the development of the GBA’s e-commerce platforms. In effect, alongside the smart port developments, a ‘port – warehouse logistics – trade’ virtuous cycle among all related industries will gradually take shape within the GBA and beyond.
Figure 4: Virtuous cycle between port-related industries
Source: JLL Research
The GBA features an export-oriented economy combined with a comprehensive manufacturing foundation and a resilient supply chain. Building smart ports will give a fresh stimulus to regional industries.
Outlook: The new growth driver of trades with RCEP will bring comprehensive merits to the logistics and warehousing industry in the GBA
With the Regional Comprehensive Economic Partnership (RCEP) implemented this year, the merchandise trade volume between the GBA and RCEP member countries has grown rapidly.
Looking ahead, deepening cooperation with China’s trading partners will benefit downstream enterprises in the GBA’s logistics industry and the supply chain, including those specialising in more traditional trades and cross-border e-commerce enterprises. Meanwhile, development in high-end technologies, such as blockchain, IoT, AI, big data, etc., will drive digital transformations and intelligent upgrades within the logistics industry. In short, the evolving smart port developments and the steady growth of external trades will boost demand in the logistics and warehousing market.