Hong Kong’s (HK) air cargo market has been flying high this year and the biggest cargo handler Hong Kong Air Cargo Terminals Ltd (Hactl) has benefitted from the strong growth, writes Justin Burns.

From January to June year-on-year tonnage was up 16.6 per cent to 860,242 tonnes and Hactl has outperformed the market every month since September 2016.

Chief executive, Mark Whitehead (pictured below) says it has been driven by several factors including a small shift away from ocean due to slow steaming, capacity cutbacks and port issues.

Other reasons have been continuing growth in e-commerce imports and exports to/from China via HK, and significant growth in freighter charters (606 in the first five months of 2017, compared to 100 in 2016).

Whitehead also feels in addition to these, HK has a lot to offer as it is in the right location for all of Asia, bilingualism is widespread and it has an “unparalleled” spread of destinations and frequencies.

But what sectors are driving growth?

Whitehead explains: “Pharma continues to perform well, partly due to increasing global production and demand, and partly due to our own efforts in compliance (first in HK to gain WHO GDP and first to gain IATA CEIV Pharma as part of the airport’s initiative).

“Perishables are also proving robust – both for the HK market, and for China via HK. China continues to look for increased quality and variety in its food products, and that is driving demand from overseas.”

As for CEIV Pharma, which was gained in February as part of the airport sponsored initiative to position HK as a leading pharma hub, he expects the results to be “progressive and long-term”.

He notes the industry as a whole still has a lot more to do to create a true network of pharma trade lanes on which the required standards are applied end-to-end.

Whitehead says e-commerce is a fast developing area of business, driven by expanding Asian middle-class populations and the thirst for Western goods and Whitehead notes traffic via HK is bi-directional.

He says Chinese consumers are increasingly developing an appetite for all kinds of foreign products, from designer handbags to baby formula: “At the same time, China is the producer of many items that are heavily sold globally via e-commerce.

“The common factor in both directions is that the ‘traditional’ airfreight industry is gaining from the maturing of e-commerce and its supply chains.

“The days of one-off, straight-to-customer packages via integrator are giving way to consolidation of freight flows over longer sectors, with final-mile deliveries from RDCs closer to final market; this achieves welcome logistics economies.”

Hactl’s logistics subsidiary, Hacis, is helping it meet demand and providing fast, reliable and cost-effective bonded RFS into and out of China via HK, and offering collection and delivery points at its eight inland cargo depots.

Whitehead says one of Hacis’ recent innovations is putting together a viable alternative route for ex-China mail containing e-commerce items and it is handling 1,000 mailbags a day, providing welcome traffic for Hactl’s airline customers.

He adds: “Hacis complements the basic Hactl service offering. Most notably, it effectively adds eight more destinations in China to any of our carriers’ networks – six of them IATA-coded, so carriers can sell on through AWBs – without the cost and commitment of adding flown services.

“Hacis plays a big part in Hactl’s success, and it’s why we tightened the relationship between the two businesses by appointing its MD, Vivien Lau, to Hactl’s executive board.”

Hactl has also been on an efficiency drive and is using technology to improve processes. An example of this has been adoption of mobile computing throughout the HK site.

Whitehead says now, instead of ramp staff having to drive to fixed data terminals to input information and receive instructions, they can do this on the move from any location using mobile devices, using an app, which accesses its COSAC-Plus cargo management system, saving time and manpower, and cuts fuel consumption and pollution.

He explains: “Customers can also use the app set to access flight arrival information, optimise their arrival for collections and deliveries, obtain pre-allocated truck doors and pre-check handling charges. COSAC Mobile is now in use on 3,000 staff and customer mobile devices. It has revolutionised our operations.”

There is fierce competition between handlers in HK with the current over-capacity, but despite that, Whitehead says Hactl is outperforming the market, and growing its share of traffic thanks to new contracts (Vietjet and Virgin Australia most recently) and successes of customer carriers.

Investment wise moving forward, Whitehead says it is about less obvious things like new staff training technology, IT enhancements and compliance. He notes the end game is better efficiency and enhanced customer service, but Hactl is an important element of the total package any customer carrier offers to his market; and service differentials are created on the ground.

“We want that package to be the best possible, both in scope and in quality. We never lose sight of the fact Hactl can only succeed through the success of its carrier customers,” he concludes.