Premium cargo on the wish lists of Hong Kong companies

Hong Kong third runwayThe new year in Hong Kong began in an auspicious manner for the airfreight community. In the budget that was propsed in February, Hong Kong’s Financial Secretary, Paul Chan, outlined plans to foster air cargo. To cement Hong Kong’s status as major hub and enhance its competitive edge, Secretary Chan pledged to look at measures to support growth in trans-shipment, cross-border e-commerce and high-value cargo.

Naturally the industry has welcomed this, although there is much speculation as to what these measures will actually be. Until this is known, the territory’s largest cargo handler, Hong Kong Air Cargo Terminals Ltd. (Hactl), and its flag carrier, Cathay Pacific, have wish lists of their own, as they jostle for the limited resources available.

One of the improvements that everyone in industry applauds is the massive third-runway project at Hong Kong Internationst summer (see artist’s rendering at right). According to the Airport Authority, some measures include reserving land on both the airside and landside to support the growth in segments like trans-shipment, high-value freight and e-commerce. Once the project is done, “we will once again be in a position to actively pursue freighter growth, and to accommodate it throughout the day, rather than just at night,” said Mark Whitehead, CEO of Hactl.

The authority also has driven a broad push for CEIV-Pharma certification and sponsored seven operators on its property to obtain the IATA badge. All seven are expected to be certified by the third quarter of this year, but Hactl was the first out of the starting blocks, announcing its certification in February. Whitehead remarked that having GDP already under its belt helped speed up the process for the handling firm. “We have seen 84 percent growth in pharma traffic already in 2017,” he reported.

Likewise, Hactl has also enjoyed growth from the rapid increase in e-commerce flows through Hong Kong, chiefly through Hong Kong Air Cargo Industry Services Ltd. (Hacis), its road-feeder arm that runs trucking service to locations in the Pearl River Delta. “We will drive further growth by adding depots and increasing RFS frequencies and destinations,” Whitehead said.

A key to this road-feeder strategy will be the completion of the Hong Kong-Macau-Zhuhai bridge, a US$10.6 billion project linking the three cities via a series of bridges and tunnels across the Pearl River Delta. After this engineering feat is completed, by the end of this year, Whitehead said the bridge will whittle down the drive to Zhuhai from the current two hours to just 40 minutes.

Hong Kong’s role as a key gateway for e-commerce flows into China was underscored by logistics firm Tigers Inc., which recently launched eShop, an e-commerce platform for international brands that want to tackle the China market, but fear they would be crowded out in the much larger Alibaba space. Tigers’ eShop offers customers a full enterprise solution, with marketing in China through an alliance with WeChat, a massive social platform that is widely used for online transactions. Tigers CEO Andrew Jillings said that all traffic is funnelled through Hong Kong.

Meanwhile, at Cathay Pacific, the carrier’s director of cargo, Simon Large, said he is hoping that some other projects come to fruition, including off-airport screening facilities (“always important to improve speed and safety”) and a regional distribution center for e-commerce to serve the Pearl River Delta and mainland China. He also said he hoped for facilitation in both the legal and physical airport infrastructure to handle pharmaceuticals and perishables, such as chilled meat going into China, with a focus on air-to-air trans-shipment, which should include temperature-controlled facilities and a bonded regional distribution center.

Cathay Pacific has concentrated its e-commerce efforts so far on working with the postal services of Hong Kong and China. The airport authority is also working with Hong Kong Post to explore ways to enhance the capacity and set-up of the airport’s mail center.

For his part, Hactl’s Whitehead expects modest growth this year, barring sudden strong fluctuations caused by forceful external developments. One of those developments may become known soon, when Secretary Chan provides more details of his plans and reveals which Hong Kong logistics wishes may come true.

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