No let-up in growth
Economic pundits may talk of recession in the world’s largest country, but no one seems to have told the Chinese. The air freight and logistics industry continues to grow, and scarcely a week goes by without a new development springing up somewhere.
E
urope and North America's appetite for the latest phones, computers and other electronic goodies have kept Hong Kong's air freight volumes quite buoyant, despite the dire state of many
of the world's major economies. Mark Whitehead, managing director of
Hong Kong Air Cargo Terminals Limited (Hactl) says that his exports have held up much better than expected, only slightly down on the 2012. “The world has an insatiable demand for electronic goods, and they all travel by air,” he said. The goods in question are not made in
Hong Kong itself, a country which has now effectively deindustrialised, but across the bor- der in China's Pearl River Delta. Hong Kong Airport, and Hactl in particular, remains as a major hub for the region's manufacturers, as well as a transhipment hub for local air carriers. In fact, transhipment traffic tends to go up
when times are hard, says Mark Whitehead, as carriers take off direct freighters from China to many destinations. Hactl has kept on top of demand, not by
expanding its footprint – the six-storey terminal was built to its maximum physical extent when it opened together with Hong Kong's new air-
port in 1988 – but by introduc- ing ever-more sophisticated electronic systems, such as the Web-based COSAC-Plus soft- ware introduced three years ago. This has allowed Hactl to increase its throughput to a peak of 2.9 million tonnes hit in 2010, compared with a maxi- mum capacity when it opened of 2.6 million tonnes. The maxi- mum realistic capacity now is around 3.2 million tonnes, says Mark Whitehead, who explains: “There is no Phase II to Hactl – there is no land left.” The dependence on sophisti-
been just two short ones. “The biggest constraint we
Whitehead: “labour shortage”
cated IT means that Hactl spends a significant proportion of its budget on them and on ensur- ing that they keep on working. In such an intensive operation – there are no physically separate import and export areas, for example, everything is kept separate by the systems – computer breakdowns are pretty much unthinkable, so Hactl makes sure that they don't happen. In the past two years, there have
Kerry Logistics’ website currently lists an impressive 260 locations in China – but that figure is already wildly out of date, suggests regional director Sean Smith: “The true figure is 360 or 365; we’re opening new facilities there at the rate of one every two weeks, or even faster,” he says. The logistics giant – part of the Kuok
Group – has anticipated its customers’ devel- opment, opening new facilities in the central and western regions, some of them up to 66,000m2 million m2
. Kerry owns a mind-boggling 2.2 of space in China.
China’s manufacturing is moving west as com- panies seek to maintain the country’s labour cost advantage that attracted them there in the first place. But in doing so, it is creating funda- mental shifts in the market that are more than just geographical, says Geodis Wilson’s Nikolas Domrowski. The air freight market in Chengdu or
Chongqing is rather different from Shanghai or Beijing, points out the product director for air freight at the French-owned forwarder. “There was over-capacity in Shanghai,” he explains. This is not the case in the west, where services are much more limited, and as a result “rates are a bit more attractive”.
face is not physical, but labour,” continues Mark Whitehead. “Hong Kong has effectively zero unemployment and working in a warehouse is a tough environment com- pared with an office with the air-con on. And regrettably we can't import labour from the Chinese mainland, as visas tend to be very restricted (by the Hong Kong Government) and only available for high-end labour.” Hactl is unlikely to run out
of capacity any time soon, though. In fact, in the immediate future it could get somewhat less busy as Cathay Pacific is due to open its own terminal next year, which is expected to bring Hactl's own tonnage down to something like that with which it opened in 1988. Under the terms of the franchise agreement, Cathay was to be allowed to open its own facility once a cer- tain level of cargo traffic had been reached.
A new logistics centre every fortnight However, space on the ground does not
necessarily translate into increased air freight for the multimodal Kerry Logistics, says Smith. In the boom years of the early 2000s, “we did have customers that only shipped airfreight. High end fashion, high tech – it was all flying off the shelves, and prices were such that you could afford to ship airfreight”. Now, though, as economies in the West
have slowed or stalled, companies have got a much better handle on their stock control, and are in a much better position to use seafreight for the vast majority of their needs.
Westward shift brings big changes to air freight market On the other hand, whereas eastern China
has a reasonably buoyant inbound market, this is almost entirely absent further inland, so freight flows are a lot more imbalanced. Most of China’s multimillionaires still congregate on the eastern seaboard, so the market for luxury goods is distinctly limited in these regions. The passenger market to inland areas is also
limited. Few tourists venture into these parts, and while there is a trickle of visiting business people, it is questionable whether there is enough traffic to sustain the comparatively few international services that do operate; the cur- rent list includes Lufthansa, Singapore International Airlines and Cathay Pacific.
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20 August 2012
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