DHL wants work to start as scheduled next year on a HK$140 billion (€16 billion) project for a third runway at Hong Kong International Airport to ensure the territory’s position in Greater China's dynamic air cargo market, particularly boosted by the surging demand of e-commerce and high-value perishables.
Hong Kong International Airport, home to the DHL’s Central Asia Hub, aims to start work in 2016 on the project, which will cover not only a new runway but also an expanded Terminal 2 and related operational facilities, with completion scheduled for 2023. It would increase the airport’s passenger capacity by 30 million per year.
One of the major concerns about 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 drew up a plan in 2007 to optimise the use of the airspace and enhance the safety in the region by a tripartite working group set up between mainland China, Hong Kong and Macau.
In 2014/15, Hong Kong International Airport (HKIA) reported another record year in terms of cargo throughput handling 4.4 million tonnes of cargo which made the airport the world's busiest air cargo hub for five consecutive years since 2010. During this period, the cargo throughput at HKIA increased by almost 6% per year.
The latest DHL Global Connectedness Index ("GCI"), which measures international flows of a region relative to the size of its domestic economy, also revealed that Hong Kong is ranked 11th on a global level 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 strong, ranking among the world's top three largest flows in terms of merchandise trade and tourist flows. Hong Kong thus retains its strong standing as the export gateway for mainland China.
"Our Central Asia Hub in Hong Kong boasts 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%," Jerry Hsu, CEO, DHL Express Asia Pacific, said.
"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 (€16 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," Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific, commented.
One of the key factors driving cargo growth in the Greater China market is the rapidly growing e-commerce in the region. In 2014, the e-commerce sector in mainland China grew 31% year-on-year to 13.4 trillion CNY (€1.95 trillion) in 2014 as consumers increasingly turned 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. In addition, the increasing demand for high-value perishables like premium seafood as well as infant milk formula and imported cherries have also boosted cargo growth.
"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," Leung added.
"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 (€3.5 trillion) by 2018 and we are well-positioned to take advantage of that growth."
