IF THERE is one element of Hong Kong's service sector which is set for record-breaking growth well into the next century, it is air cargo. The opening of Chek Lap Kok in April 1998 will break the bottlenecks which have held back growth, as state-of-the-art facilities and 24-hour, all-year handling give shippers a unique edge. Long-term forecasts show Hong Kong's air cargo throughput will outperform the global average for industry growth by 2 per cent a year. According to Boeing's 1996 World Air Cargo Forecast, the future of the industry is strong. The sector is anticipated to average 6.6 per cent annual growth in the long term, assuming the world economy expands at a rate of 3 per cent a year. This compares with a bullish 8 per cent annual growth forecast by Hong Kong Air Cargo Terminals (HACTL). HACTL has invested more than US$1 billion (HK$7.74 billion) in the world's most advanced air cargo facilities at Chek Lap Kok. Managing director Anthony Charter said: 'I have every confidence that this sort of growth will be maintained over the next few years, if not exceeded.' When Chek Lap Kok opens, HACTL's SuperTerminal 1 will become a landmark for the Special Administrative Region's rapidly growing air freight business. Another company, Kerry Godown Holdings, has invested US$1.2 billion in a cargo centre in Kwai Chung, mainly focused on air freight. Ronnie Shing, director and group general manager of Kerry Godown, a wholly owned subsidiary of Kerry Properties, said small freight forwarders could bring cargo to Kerry's consolidation centre, reducing trucking and toll charges to Chek Lap Kok. Demand for space at the 20-storey cargo centre, which is only 35 minutes' drive from the new airport, is expected to increase when the Route 3 highway linking Hong Kong and China opens. The centre, which is expected to be completed by the end of next year, will have a gross floor area of 2.4 million square feet. The HACTL facility is much bigger and has a capacity to handle 2.4 million tonnes a year. It will be equipped with advanced high-technology machinery for faster cargo clearance. The facility will be supported by an express centre with an additional 200,000-tonne capacity. It will include a container centre capable of handling a wide range of cargo, including oversize or valuable items. SuperTerminal 1 has a six-storey, 40-metre high main building with a floor area of 2.95 million sq feet, and a 495,000-sq-foot, two-storey express cargo centre. Mr Charter said the main building structure was about 80 per cent finished, while about 40 per cent of the handling systems had been installed to date. The design would allow 40 per cent of its truck docks to have direct airside access, increasing efficiency and productivity, he said. HACTL's offices and commercial tenants will be housed in two office towers at either end of the airside apron. SuperTerminal 1's main improvement over existing HACTL facilities is that cargo is not handled when passing Customs, eliminating the risk of errors such as switched labels. Customs can inspect any cargo automatically, reducing processing time. 'When [the airport] opens for operations, we are planning on trying to bring 60 per cent of the cargo complex into operation on day one and we believe that it will just about cope with the tonnage requirements at that time,' Mr Charter said. 'Roughly speaking, we are talking about 5,000 tonnes a day when the airport opens.' A number of airlines have agreed to use HACTL's facilities at Chek Lap Kok, while others have yet to make up their minds. The Hong Kong Air Freight Forwarders Association has urged Shenzhen airport authorities to provide forwarders with a piece of land at minimal cost to build an air cargo centre there. 'If such a centre was established across the border, it could successfully compete against Chek Lap Kok's facilities, as it would be much cheaper to fly air cargo out of Shenzhen,' said one forwarder. The main obstacle to such a development is that authorities are not willing to allow foreign cargo airlines to fly scheduled flights to Shenzhen. For example, South Korea's Asiana Airlines flies chartered cargo freighters out of Shenzhen, but has to apply monthly for each flight. An Asiana spokesman said the matter was being discussed between Beijing and South Korean government officials. Mr Charter said: 'Hong Kong's air cargo business will not be threatened by the growth of neighbouring airports.' While business at the airports in Zhuhai, Macau, Shenzhen and Guangzhou was bound to increase, cargo growth would only be in proportion to passenger traffic growth. 'An airport can only increase its cargo tonnage if it has aircraft capacity, because 55 per cent of cargo is carried in the bellies of [passenger] aircraft,' Mr Charter said. 'Unless there is strong passenger demand, you don't get the freight capacity.' Mr Charter feels that the other airports have many years to go before they can develop an international network like Hong Kong's, which has evolved over a 50-year period. 'Passengers prefer to fly to Hong Kong as a destination and do not want to transit [via] other destinations, and this applies similarly to cargo,' he said, adding that transit flights increased the risk of cargo being lost. He said one of the most important factors was Hong Kong's competitive pricing. Although some neighbouring airports might charge lower freight rates to attract customers, this was not a viable option in the long term, he said. Such cheap rates could not be sustained if they were non-compensatory. Last year Hong Kong became the world's busiest air cargo centre, surpassing Tokyo's Narita Airport, according to the Airport Council. With the new infrastructure at Chek Lap Kok, the SAR can look forward to even greater success in the industry.