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Airport expansion timely for Hong Kong to remain competitive

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Written by editor

HONG KONG – DHL, the world’s leading logistics company, supports Airport Authority of Hong Kong to commence the third runway project, no later than next year, so as to let Hong Kong stay ahead in Grea

HONG KONG – DHL, the world’s leading logistics company, supports Airport Authority of Hong Kong to commence the third runway project, no later than next year, so as to let Hong Kong stay ahead in Greater China’s vibrant air cargo market, fuelled particularly by the surging demand of e-commerce and high-value perishables.

The Hong Kong International Airport (HKIA) reported yet another record year for cargo throughput in 2014/2015 by handling 4.4 million tonnes of cargo which saw the airport as the world’s busiest air cargo hub for five consecutive years since 2010. The cargo throughput in HKIA increased by almost 6 per cent annually during the period.

The latest DHL Global Connectedness Index (“GCI”), which measures a region’s international flow relative to the size of its domestic economy, also revealed that Hong Kong is ranked 11th globally[2] and continues to lead the world in depth of global connectedness, mainly driven by strong flows from mainland China. Cross-border flows between Hong Kong and mainland China remain robust and are ranked among the world’s top 3 largest flows in terms of merchandise trade and tourist flows. Hong Kong retains its strong standing as the export gateway for mainland China.

“Our Central Asia Hub in Hong Kong boasts of the region’s largest throughput. This large volume can be attributed to the surging exports from mainland China and the Pearl River Delta, as well as growing demand and rising consumption across Asia Pacific. In response to rising customer demand, we are continuously expanding our Asia air network to boost our connectivity and shorten transit times — we have launched a new intra-Asia flight that connects Bangkok, Hanoi and Hong Kong five times per week and increased the frequency of a service connecting Penang, Ho Chi Minh City and Hong Kong from five to six days per week, thereby increasing capacity on the route by 20 percent,” said Jerry Hsu, CEO, DHL Express Asia Pacific.

“We are positive about the future of HKIA based on the Airport Authority’s forecast of 8.9 million tonnes of cargo going through the airport by 2030. The investment of more than HK$140 billion (EUR16 billion) in the expansion of HKIA is a substantial commitment for the future of the logistics industry in Hong Kong. As one of the four-pillar industries in the city, we think that it is a rational and necessary investment to help boost the economic growth in Hong Kong,” said Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific.
One of the key factors driving cargo growth in the Greater China market is the robust development of e-commerce in the region.

E-commerce in mainland China grew 31 percent year-on-year to 13.4 trillion CNY (EUR1.95 trillion) in 2014 as mainland consumers took to online shopping for anything from baby formula to apparel and electronics. The fastest growing sector was online retailing, as opposed to B2B e-commerce, where the rapid growth of Chinese online shopping malls, mobile internet and mobile payment services have made e-retailing go viral throughout the country. In addition, the increasing demand for high-value perishables like premium seafood as well as infant milk formula and imported cherries are also fuelling cargo growth as the purchasing appetite of Chinese consumers grows.

“China has overtaken the United States as the largest online shopping market in the world since 2013 in light of the growing middle class. It has prompted many international e-retailers as well as luxury brands to set up regional distribution centers in mainland China and Hong Kong is one of the top choices amongst other cities,” added Leung. “Hong Kong plays an important gateway for mainland China’s rising e-commerce trade and this is a great growth area for us — working with consolidators that help buyers with sourcing and consolidation for shipments back to mainland China. Prevailing market research has predicted that e-commerce in mainland China will almost double to 24.2 trillion CNY (EUR 3.5 trillion) by 2018 and we are well-positioned to take advantage of that growth.”

One of the major concerns on the third runway is that the airspace in South China is deemed to confine the efficiency of the new runway. However, the Housing and Transport Bureau has assured that a plan has been drawn up in 2007 to optimize the use of the airspace and enhance safety in the region by a tripartite working group set up between mainland China, Hong Kong and Macau. Liaisons have been held between the officials of Hong Kong and the Civil Aviation Administration of China (CAAC) to expedite the implementation of the 2007 plan while CAAC is supportive of the development of the third runway in Hong Kong.

Currently, approximately 70% of the air space in mainland China has not opened fully to commercial flights which will provide leeway for the implementation of the enhanced measures to accommodate not just Hong Kong but also the expansion plans of the airports in Shenzhen and Guangzhou.