Air traders in Hong Kong remained cautious about the impact of the ongoing coronavirus outbreak worldwide and the overall air trade outlook declined to its lowest in six years according to the findings of the latest DHL Hong Kong Air Trade Leading Index (DTI).

The report — conducted in early to mid-March 2020 among Hong Kong-based companies with either in- or out-bound air trade — said the overall air trade outlook saw a drop from last quarter to 23.7 points, which is the lowest reading since the report launched in 2014.

It noted that air traders remain cautious amid the COVID-19 outbreak, as the survey was conducted at the time when the World Health Organization declared coronavirus as a pandemic. 

An index value above 50 indicates an overall positive outlook while a reading below 50 represents an overall negative outlook for the surveyed quarter. The further the reading is from 50, the more positive or negative the outlook is.

"Air trade indices have shown a decline across all markets, except in the Americas. It is worth noting that the study took place early to mid-March 2020, before the reported infection cases in the United States significantly increased," the report said.

Although sales volume and product variety decreased, shipment urgency has slightly risen due to the anticipated increase of urgent orders brought about by the gradual resumption of work in China, it added.

Meanwhile, the report found that while all other commodities slid down, especially Food and Beverage (dropped 9 points) as well as Gifts, Toys and Housewares (down 7 points), the export index for Apparel and Clothing Accessories inched up slightly by 5 points compared to the reading in the last quarter of 2019.

Many of the survey’s respondents stated that their profitability in February this year was negatively affected by the pandemic, with a few traders expressing optimism due to China’s lowering of tariffs on US-made goods as part of the trade deal currently in progress. 

“Air traders are currently facing the adverse economies and operational difficulties from the COVID-19 outbreak, despite signs of improvement in China-US trade relations during the survey period for this quarter. Already, 68% of them are running at a loss in February, with the worsening situation expected in the months that follow as the pandemic engulfs two key export markets - North America and Europe,” said Edmond Lai, chief digital officer of the Hong Kong Productivity Council (HKPC).

The DTI was commissioned by DHL Express Hong Kong and compiled by the Hong Kong Productivity Council. It is the first indicator of its kind in Hong Kong and aims to provide a forward-looking perspective on overall air export and import trade volumes.

Hong Kong is one of the major regional aviation hubs in the Asia Pacific. Hong Kong International Airport is globally recognised as one of the busiest airports in terms of international cargo throughput. The city’s dynamic air trade industry generates total revenue of over HK$150 billion (US$19.35 billion) annually, with HK$37 billion (US$4.4 billion) from freight revenue.

The first quarterly DTI was released in Q2 2014 by analyzing the key attributes of business demand based on a survey of more than 600 Hong Kong companies that focus on in- or out-bound air trading.