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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.



Chek Lap Kok burdened by similar cost handicap to Kwai Chung