Shanghai’s free trade zone (FTZ) is launching a challenge to free port Hong Kong. “But it won’t be a serious threat to Hong Kong in the next five years,” Samuel Lau, Director of Kerry Logistics said. DHL expects that the establishment of the free trade zone will facilitate links between existing ports and airports in Shanghai and increase the efficiency of cargo flow. Bond-to-bond transfer of goods without the need to pay import tax between the existing custom-bond areas in Waigaoqiao port, Yangshan port and Pudong airport could reduce declaration times by about a day, said Victor Mok, Chief Executive of DHL’s supply chain in North Asia. The “fast clearance” channel of goods from Pudong airport also will save half a day. The zone allows value-added services that have been mainly carried out in Hong Kong to be performed in Shanghai. But Hong Kong could still edge out Shanghai in flexibility and productivity, Lau said. “The front-line workers in Hong Kong are still more productive than those in Shanghai,” he added. But in terms of logistics hardware, Hong Kong is at a disadvantage. The logistics centers in Shanghai are low-rise buildings spanning huge areas so that all the products from one company can be consolidated and processed more effectively on the same floor. Most of the logistics centers in Hong Kong are often in industrial buildings of more than 20 stories.