Hactl fends off rivals as it adapts to changes brought on by e-commerce
HK air cargo handler fends off challenges from rivals as it adapts to the transformation of the logistics chain brought about by rise in e-selling
Hong Kong Air Cargo Terminal Limited (Hactl) is the largest ground handler at the world's busiest cargo airport, but chief executive Mark Whitehead has good reasons to worry about it losing that position, with the new Cathay Pacific Cargo Terminal vying for traffic and Shanghai threatening to top Hong Kong in tonnage.
Hong Kong International Airport set a new throughput tonnage record of 4.38 million tonnes last year - with Hactl contributing 1.81 million tonnes and Cathay 1.45 million tonnes, but Shanghai, the Asia-Pacific region's second-biggest hub, is quickly closing the gap, reporting throughput of 3.6 million tonnes last year.
"There is nothing I can do about it," Whitehead said. "It is inevitable that more cargo in the mainland will get shipped out directly as there are more direct flights."
The challenge is how to get the yield to improve
If the burden of financing Hong Kong's HK$141.5 billion third runway was passed on to users of the airport, as is being proposed, Hong Kong would risk losing even more traffic, countering the point of the investment, he said. "When the cost compared to competitor hubs is too high then we would lose business," he said. "Airlines and freight forwarders will find alternative growth areas … they are not tied to Hong Kong. Hong Kong's cost competitive edge has to be constantly refurbished."
International Air Transport Association chief Tony Tyler said on a recent visit to the city that a 10 per cent increase in user charges could reduce passenger numbers by 80,000 and cargo by 7,000 tonnes.
Whitehead said Hong Kong still had advantages as a hub because of its network, frequency, fast and easy customs procedures, and leadership in adoption of paperless processing. When shippers chose between cargo routing options, it was "a balance between time-efficiency and cost", he said.
The US$63 billion global air cargo industry, and Chinese air hubs in particular, are facing fresh opportunities and challenges brought by the rise of cross-border e-commerce, Whitehead said.
"The ability of e-tailers to sell globally, instead of just on their own high street, means we could see a lot of new international traffic in the air as bulk stocks of high-value items move from manufacturers to new regional distribution centres in distant markets," he said, while postal service is making a comeback around the world because its network was suited for scattered shipments.