Annual Report 2019

21 ANNUAL REPORT 2019 Regarding operation management, the Group strived to develop an operation management system for sustainable value creation. Through benchmarking against the world- class enterprises, the Group analysed the key issues and weaknesses in operation management and formulated improvement measures with designated targets to gradually refine various operation management indicators, thereby promoting the establishment of a world-class operation management system. The Group put great efforts in facilitating the synergistic development of businesses among different regions and segments, fully capitalising on the value endowed by synergies of the network, to maximise the overall results. The Group also proactively improved management and control measures, reinforced the strategic leadership of the headquarters, and streamlined the relationships of management mandate among subsidiaries of different levels. On one hand, the Group has established a communication platform covering enterprises at all levels and all business scopes to gain better understandings and strengthen collaboration. On the other hand, the Group gave reasonable authorisation to enterprises at different levels based on the precondition of maintaining risks under control to enhance their flexibility in terms of decision-making and hence to increase the efficiency of management and control. The Group systematically pushed forward the “Project of Improving Quality and Efficiency” in full swing with a focus on enhancing operational efficiency and deepening refined corporate management to help release potentials and realise high-quality and efficient development of the Group. With regard to marketing and commerce, the Group’s headquarters coordinated and planned commercial promotions and marketing activities for both domestic and overseas customers and actively arranged the exchange visits with senior management of the major customers to facilitate the vertical development of the strategic partnership with customers. As a result, business volume from major customers at controlling terminals sustained growth. The headquarters has stepped up its efforts to assist the subsidiaries in contract negotiations and joint marketing activities to promote their business expansion both internally and externally. The Group also fully utilised the resource advantages of terminals across Northern and Southern China of China Merchants Group to explore North-South boutique shipping routes. Bonded logistics operation In 2019, the Group’s bonded logistics business continued to pursue the development direction of a diverse integrated services business. The Group put more efforts in market expansion by proactively conducting businesses such as cross-border e-commerce, devanning and consolidation of international transhipment containers, and enhanced the utilisation rate of resources at the existing warehouses and yards to tackle market changes. In 2019, the average utilisation rate of the warehouses of China Merchants Bonded Logistics Co., Ltd. in Shenzhen reached 95%, as a result of active exploration of new clients and operating models. China Merchants International Terminal (Qingdao) Co., Ltd. made full use of its resources to develop self-operated business and the average warehouse utilisation rate was 99%. Tianjin Haitian Bonded Logistics Co., Ltd., which is an associate of the Group, recorded an average utilisation rate of 66% of its warehouses. In Djibouti International Free Trade Zone, the bonded warehouse, which the Group partially invests in, officially commenced operation at the beginning of 2019, and the warehouse utilisation rate reached 86% as at the end of 2019. Besides, the wholly-owned bonded warehouse of the Group also commenced operation in May 2019, and recorded the warehouse utilisation rate of 30% as at the end of 2019. In 2019, the total cargo volume handled at the three major air cargo terminals in Hong Kong amounted to 4.27 million tonnes, down by 1.4% as compared with the previous year. Asia Airfreight Terminal Company Limited, which is an associate of the Group, handled a total cargo volume of 0.81 million tonnes, representing a decrease of 5.8% year-on-year and a market share of 19.0%, decreased by 0.8 percentage point as compared with the previous year.