AUGUST TO NOVEMBER is traditionally the busiest time of the year for the airfreight industry, but despite the full schedules, executives in the sector are already looking at the general prospects for next year. Kelvin Leung, chairman of the Hong Kong Association of Freight Forwarding and Logistics (Haffa), said he was only 'cautiously optimistic' and cited the price of oil as a major cause for concern. It has already led to higher fuel surcharges for shippers and consignees. 'The business cycle has not yet fully worked its way through to the customer,' he said. 'As manufacturers see higher costs for raw materials, they will want to pass these on to buyers. If that has an inflationary effect on product prices for the coming year, it may reduce overall orders and the demand for airfreight space.' Mr Leung said some central banks were already forecasting slower gross domestic product growth in the United States and Europe next year. If correct, those estimates could translate into smaller export growth in Asia and a need to review available tonnage and carrying capacity. 'The autumn trade fair in Guangzhou will provide a good indication of business for the next six months,' he said. 'If orders are strong there, we can be more confident. Last year, buyers held back because of uncertainties about possible quotas on products from China, so we hope the same won't happen again.' As a leading industry representative, Mr Leung is aware of the need to enhance automation and competitiveness. He is in favour of the DTTN (digital trade transportation network) initiative. When trials are completed, it will provide a neutral electronic platform linking shippers, carriers, airports, banks, logistics providers and government departments. 'It will speed up efficiency and make data quality more accurate,' Mr Leung said. 'All parties will have access to the same information and it will greatly reduce the need for data re-entry.' He is less enthusiastic, however, about the proposed introduction of a goods and services tax. If implemented, he said, it might be necessary to work in an environment with bonded trucking and bonded warehouses. This would effectively mean new regulations and an end to Hong Kong's free port status. 'It's not just that costs will go up, but that the whole mode of operations may change,' Mr Leung said. Warren Bishop, director of corporate development for Hong Kong Air Cargo Terminals (Hactl), said four factors - coverage, speed, service and economics - drove the airfreight industry and determined the relative competitiveness of individual airports. 'These are the fundamental reasons why Hong Kong has become a regional hub and the worldwide benchmark for cargo handling,' Mr Bishop said. He said Hong Kong covered three times the number of destinations and had an eight times greater international frequency than its nearest competitor in the Pearl River Delta (PRD). Besides that, the time required to get export cargo from factory to plane had been calculated as 50 per cent faster than the next best, thanks to fast customs clearance and the latest IT systems. 'It is critical to maintain these advantages as PRD airports upgrade their value-added services and simplify their customs procedures,' Mr Bishop said. In view of this, Hactl, which handles about 80 per cent of Hong Kong's airfreight cargo, has pioneered various 'e-initiatives' using its website and community portals. Logistics companies can now declare export consignment data before actual cargo delivery and pre-book time slots to pick up imports. 'The aim is to streamline handling procedures and to provide seamless connectivity for cargo transiting between Hong Kong and the PRD region,' Mr Bishop said. 'This can be in the physical handling of cargo or the electronic movement of data. It helps to shorten the order fulfilment cycle, enhancing the time to market of goods for shippers and consignees.' Looking ahead, he said new carriers entering the market could have an impact on volumes moving through Hong Kong. In particular, the increasing frequency of flights to and from airports in South China, following the further relaxation of traffic rights. Andy Weber, managing director of Kuehne & Nagel (Asia Pacific) Management, agreed that the continued expansion of global airfreight hubs, specifically in Guangzhou, Shenzhen and Xiamen, was one of the three big challenges facing Hong Kong's airfreight industry. The others were the challenge to remain cost competitive, and the need to maintain fast and efficient customs procedures. The company is forecasting a surge in volumes in the second half of the year, but believes rates will remain relatively steady. 'The Hong Kong market is mature enough to cope by means of additional capacity on charters or extra flights,' Mr Weber said. Despite the intense competition, K&N's goal is to expand its airfreight business at twice the average market rate. It believes that the introduction of innovative products and greater efficiency in management processes will provide the necessary edge. In this respect, the company is rolling out three globally standardised services, which offer an all-in price structure and time-defined delivery. These are available for consignments of any size or weight, with the essential difference being the length of respective transit times. To view the progress of a consignment, customers can log on to a track and trace system, which displays a corresponding route map. It shows the precise time required for each step of the delivery process and the latest status. 'All parties involved are linked to provide an integrated flow of data throughout the life span of the shipment,' Mr Weber said. 'Any deviation from the transport plan triggers an automatic alert to facilitate prompt corrective measures.' Where necessary, these services can be adapted to meet the specific needs of customers in the automotive, hi-tech, FMCG, pharmaceutical and health-care sectors. 'Complex multinational procurement and distribution systems require a high degree of precision and reliability on the part of the logistics provider,' Mr Weber said. 'Only solutions with a customer-oriented approach can secure the future of the business.' K&N has also implemented the Cargo 2000 quality programme endorsed by the International Air Transport Association. This helps to automatically plan and monitor airfreight shipments in compliance with defined industry standards. Its secondary aim is to promote 'e-freight' by drastically reducing the amount of paperwork involved. Haffa's Mr Leung said initiatives such as these made the airfreight sector both exciting and challenging. In terms of general recruitment, all kinds of skills were needed, but people must be willing to invest the time to build a career. 'Many of the degree and diploma courses offered locally provide a good foundation in logistics, but they could include more practical issues and work experience,' he said. Hactl has its own two-year supervisor trainee programme for graduates. This involves on-the-job training in various operational functions, plus courses to develop leadership and management skills.