Chek Lap Kok burdened by similar cost handicap to Kwai Chung
The fact that time-critical air freight has become the fastest-growing segment in the global transport and logistics trade seems a godsend for Hong Kong.
With Shenzhen's seaports now handling more of the south China trade than the main terminal operators at Kwai Chung, it is good to know there is still a segment of the industry that we are better at than our rivals across the border.
But will that always hold true?
The writing has been on the wall for our seaport for the better part of a decade. The once-superior service advantages of Hong Kong are now offset by cost savings from routing cargo through Shenzhen ports. Inflexible cross-border trucking rules, which add to costs, and high terminal handling charges are also blamed for Kwai Chung's decline.
Although these issues are almost never discussed by our government officials in relation to the competitiveness of our airport, it would be naive to assume that similar problems do not exist for Chek Lap Kok.
Industry executives lament the government's inertia in facing up to Hong Kong's problems, fearing the airport's 'Kwai Chung problem'.
'When the [air-freight] price difference is $1 per kilogram, consignees may still prefer to ship through Hong Kong. But the price difference is now $3 or $4 and more,' one freight forwarder griped to Below Deck recently over beers. 'We're nearly at a point where reliability is overtaken by the allure of lower shipping costs in Shenzhen. After all, do shippers care where their cargo is being flown out of if the forwarders and airlines can guarantee that it will arrive at the destination on time?
'We all want Hong Kong to do well, but frankly we'll bypass Chek Lap Kok for the Shenzhen and Guangzhou airports ... if there's more money to be made there.'
That point may come sooner than most people think.
One major international cargo airline recently completed an internal study on Hong Kong's air-cargo competitiveness. Its findings, shared privately with Below Deck, were damning.
Hong Kong's terminal charges ($1.71 per kilogram) are 425 per cent higher than Shenzhen's and Guangzhou's (30 fen), while transporting cargo from Hong Kong to southern China cost 63 per cent more than routing it through Chek Lap Kok's two Guangdong rivals.
Airlines are also charging less on average to ship out of Shenzhen: $20 per kilogram in Hong Kong, compared with 15 to 17 yuan from Shenzhen.
Consignees in southern China are increasingly instructing shippers to transport cargo directly from the mainland rather than through Chek Lap Kok.
Airlines are also demanding regulatory flexibility to ensure their aircraft are full on both legs of journeys to Europe and the United States. That means being allowed to call at several mainland cities on the same flight, dropping off and picking up a bit of cargo at each.
While this has been welcomed by the mainland as a means to ensure throughput growth at secondary airports, Hong Kong officials have not been as flexible even though 60 to 70 per cent of the city's air imports are destined for the mainland.
If all the cargo coming through Chek Lap Kok stayed in Hong Kong, there would be no problem. But that is not the case.
However, as long as the pie keeps getting bigger and the value of trade shipped through Chek Lap Kok continues to rise, our officials are likely to ignore the bigger picture.
Ultimately, this will be to our detriment. Just ask the fellows over at Shenzhen's seaports.
