Cargo Figure 1: Modal share of US imports by value, 1990-2009
Can Hong Kong hold on? This brings us back to Hong Kong. It is well situated, but not optimally so. There are other airports, such as Shanghai Pudong and Incheon that are likewise strategically located with respect to the workshops and factories which can fill aircraft currently departing Hong Kong. HKG’s top spot in the cargo airport hierarchy may rest in its economies of scale, or in its extensive international route network and frequencies of flights, or in its jumbo passenger aircraft which cross-subsidise cargo service, or in the speed at which it can process cargo on the ground. Or it may simply be its first-mover advantage in the greater China region.
Source: Kenan Institute analysis of US Department of Commerce data.
of supply chains, which decreased overall production, inventory, and shipment costs. While international air express processes substantially improved, corresponding improvements were much slower with traditional air cargo. IATA notes that today the average international air shipment still takes six days to travel from the shipper’s door to that of the consignee – despite the fact that the longest and most central portion of the journey can be made in less than 24 hours. That figure has remained nearly
constant for the past two decades, causing traditional air cargo to lose market share to the air express industry and ocean shipping.
As much as 90% of the door-to-door
time taken by traditional air freight shipments is spent sitting still. With today’s technologies and air route structures, a majority of international air cargo could be delivered within 72 hours or less. Air shipping is not fundamentally different from ocean shipping. The introduction of widebody aircraft over the past 40 years has contributed to the growth in scale and competitiveness of air cargo. A new generation of large,
26 Issue 1, Volume 5
fuel-efficient aircraft promises another significant boost. But, traditional air cargo still requires far too many ‘touches’, especially at airports. Indeed, the most perilous portion of a shipment’s journey may be between the cargo terminal and the aircraft, and much of the dwell time could be eliminated, contributing to a new wave of air-assisted supply chain management. Air cargo’s 2009-2010 rebound may
reflect, in part, the significant reductions in ocean capacity during the global recession, which is more difficult than aircraft to ramp back up with economic recovery. Consensus of opinion, though, seems to
be that shippers and consignees have become more risk-averse in the present turbulent economic environment. They are reluctant to hold inventory and are therefore willing to pay for time-definite delivery of air freight (on-time, just-in-time, every time). That raises the question of whether all participants in the air cargo value chain – airports, airlines, freight forwarders, customs brokers, and others – will do what it takes to make air cargo as fast, reliable and predictable as possible in the long-term, thereby maintaining competitive advantage.
At present, most airlines, freight forwarders, and shippers find it more advantageous to route through HKG than they do through nearby Guangzhou Baiyun or Shenzhen airports. These Delta-located airports, however, are beginning to seriously challenge Hong Kong for regional freight as their airlines and cargo facilities expand. To the extent that Guangzhou and Shenzhen continue to develop new air routes, Hong Kong’s reign may be predicated more on airport performance and efficiency of cargo handling than the volume of cargo generated nearby. Shanghai Pudong, Incheon,
Guangzhou Baiyun and Shenzhen, when combined, present a major challenge to Hong Kong retaining its number one air cargo airport ranking in the future. Other shipment modes, especially ocean and trucking, present an analogous competitive challenge to the entire air cargo industry. Will Hong Kong and the air cargo industry in general be able to restructure with continuous improvements in speed, reliability and predictability or will they cede to others?
About the authors Dr Steve Appold and Dr John Kasarda are at the University of North Carolina’s Kenan Institute of Private Enterprise.
Steve_Appold@unc.edu;
John_Kasarda@unc.edu
GLOBAL AIRPORT CITIES
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