UPS says HK cargo volume at 2007 levels
Christmas demand from the United States and Europe has seen United Parcel Service's Hong Kong export volume soar to 2007 levels, if not beyond.
The world's largest package delivery company said yesterday it expected to record year-on-year fourth-quarter growth in its international business due to the resumption in purchasing power of the Western economies.
The number of flights operated by UPS between Hong Kong and the US has increased to 21 per week, compared with 12 to 15 in the first half, while weekly flights to Europe have gone from six to nine.
'Our export volume from Hong Kong has returned to the level of 2007, if not exceeded it,' Leung Kwok-kei, UPS general manager for Hong Kong and Macau, said yesterday.
Besides express deliveries, UPS also handles less time-sensitive general cargo.
About 400 million packages would be handled by UPS globally from Thanksgiving to Christmas, surpassing last year's volume, Leung said.
He expected shoppers in the West to continue to buy less expensive electronic products during the holiday season, which will benefit air cargo more than the sea-freight market.
FedEx Corp, a smaller rival of UPS, said yesterday that its second-quarter profit would exceed forecasts as international and ground shipments increased.
Unlike airlines, which have cut capacity by about 20 per cent by grounding freighters in the desert earlier this year, express cargo operators can react to market demand more promptly as they did not cut capacity as much.
Leung conceded that some of the firm's air cargo business was spilling over from airlines.
'I predict that the overall cargo tonnage in Hong Kong International Airport will have single-digit growth in the fourth quarter compared with last year,' said Leung. 'Meanwhile, our business in Hong Kong will outperform the general market.'
He would not make a concrete projection but said the peak season for air cargo would extend into mid-February and the Lunar New Year.
In the third quarter, UPS saw its international cargo drop 2 per cent year on year worldwide.
According to the so-called lipstick effect, high-value goods were more popular among shoppers in the downturn, said Sunny Ho Lap-kei, the executive director of the Hong Kong Shipper's Council.
'People tend to buy luxury products during the sales rather than go for commodity goods as it makes them happier,' he said.
Spending on household entertainment also flourished as people chose to spend more time at home, Ho said. 'That is why apparel sales dropped 5.7 per cent in November year on year in the US, while sales of television games and flat-screen televisions have been growing.'
Hong Kong International Airport posted its first growth in cargo tonnage in 16 months in October. The pent-up demand for goods ranging from laptop computers to smartphones has seen retailers in the West scrambling to fill empty shelves.
Revived demand from the West has resulted in surging air-cargo rates and a backlog of freight being retained at warehouses waiting for available flights.
Some analysts estimate there is up to 10,000 tonnes of air cargo being stored at warehouses, equal to one to two days of export capacity, while others put the figure at between 2,000 and 5,000 tonnes.
UPS will open its new Asian hub in Shenzhen before the Lunar New Year to replace its operation at Clark in the Philippines, Leung said.
After the move, weekly flights between Hong Kong and Asian destinations will be reduced to three, with 30 to 40 daily truck deliveries between Hong Kong and Shenzhen.
