Changing global trade patterns and supply chains are driving Hong Kong International Airport’s (HKIA) new strategy focusing on strengthening its capabilities as a high-value cargo hub. The three-pronged strategy consists of capturing cross-border e-commerce opportunities; targeting high-end, high-value cargo; and enhancing regional cargo services.
The plans are laid out in the airport authority’s ‘From City Airport to Airport City’ report released today, which details an extensive plan for transforming the airport into an Airport City, as a key driver of economic growth of Hong Kong and the region while also strengthening HKIA’s status as an international aviation hub.
HKIA was ranked the world’s busiest cargo airport by Airports Council International in 2018, occupying the top spot for the ninth consecutive year.
The Airport Authority Hong Kong (AAHK) says the new cargo business strategy is based on “major changes in global trade patterns and the global supply chain for high-end products.”
It notes that changes in trade patterns have been primarily driven by the development of e-commerce premised on timely delivery. “HKIA, as a hub airport in Asia, meets such demand through its extensive air network of 220 destinations worldwide, many of which are also hubs of their own or major cities served by frequent flights,” it says.
The rise of e-commerce also coincides with the increasing demand for high-value goods, most notably in Asia, the AAHK adds. Electronic goods, fresh or perishable produce, and pharmaceuticals all fall into this broad category of high-value goods that are best served by air cargo.
Adapting to the increasing volume of these high value, typically smaller parcels, many carriers are tapping the belly capacity of their higher frequency passenger flights in order to fulfill the demands for timely delivery. “Our strategy of focusing on the high-growth areas of e-commerce and high-value cargo is a direct response to such changing trends in global trade,” the Authority says.
Another major change the Authority identifies is the fact the supply chain for these high-end products is increasingly globalised and based on specialised division of labour for the manufacturing of these products. The manufacturing of a premium consumer electronic device, for instance, requires the supply of numerous parts made in a large number of locations spread across different continents.
Air cargo services provided by major hub airports such as HKIA play a pivotal role in enabling these different parts to be delivered in time to meet production schedules and demand, the AAHK says. The performance of the transshipment business at HKIA in recent years illustrates this strategic role of Hong Kong and HKIA in the global supply chain, it adds.
Seizing e-commerce opportunities
To capitalise on robust growth in e-commerce, as well as the associated cargo flow and value-added logistics activities, HKIA will expand express and airmail facilities, and develop a modern logistics facility.
The contract for the development of a premium logistics centre at HKIA was awarded in June 2018 to a joint venture led by Alibaba’s logistics arm, Cainiao Network. Covering 5.3 hectares and with an expected gross floor area of approximately 380,000 sqm, the logistics centre will be equipped with innovative features to serve e-commerce, temperature-controlled airfreight and transshipment.
The premium logistics centre will become the third largest premium warehouse in Hong Kong, and is scheduled to commence operation in 2023.
Meanwhile, the DHL Central Asia Hub is being expanded, which will increase its handling capacity by 50 per cent. The existing Air Mail Centre will also be expanded to cope with the growth of air parcel services, a significant part of which has been driven by e-commerce.
High-value cargo hub
HKIA has been accredited by the International Air Transport Association (IATA) as a Partner Airport in IATA’s Centre of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma) – a globally recognised standard for competency and preparedness in handling temperature-controlled pharmaceutical products.
This means HKIA is able to handle the entire airside pharmaceutical transportation process, from the time an aircraft lands until releasing the pharmaceuticals to agents, and vice versa.
In the coming years, HKIA will continue to invest in additional cool-chain facilities to further strengthen temperature integrity. It will also foster closer collaboration with other major international pharma hubs for the development of a ‘Cold-chain Corridor’, providing an end-to-end solution for temperature- controlled cargo connecting to other airports.
In March 2019, HKIA also obtained the world’s first IATA Centre for Excellence for
Perishable Logistics (CEIV Fresh) certification which has affirmed its capability in handling high-value perishable products.
In the coming years, HKIA will continue to invest in additional cool-chain facilities to further strengthen temperature integrity. HKIA has been investing in cold-chain facilities, such as temperature- controlled warehouses and cool dollies.
Enhancing regional cargo service
To capitalise on demand for intermodal transhipments in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), Airport Authority Hong Kong is studying the feasibility of building an intermodal air cargo handling facility at the new airside Eastern Support Area of the Three-runway System (3RS). The facility will support land-air and sea-air transshipment, tapping into the economic development of the region.
HKIA, Guangzhou Baiyun International Airport (CAN), Shenzhen Bao’an International Airport (SZX), Macao International Airport (MFM) and Zhuhai Airport (ZUH) are all located within the GBA, which contains nine cities and a population of nearly 70 million. The AAHK says that it will work with stakeholders to cooperate with the other four airports to promote passenger and cargo traffic.
A transhipment facility is also being planned at the future 3RS (expected to be operational by 2024), to facilitate the growing air-to-air transshipment and enhance the overall operational efficiency under the 3RS.