Local air traders in Hong Kong noted an "improved" outlook for overall air trade in the first quarter of the year amid persisting global economic uncertainties, according to the latest DHL Hong Kong Air Trade Leading Index (DTI) findings.

The report said the Overall Air Trade Index has stabilised in Q1 2023 as a result of the improvement in import performance and a more positive outlook on B2C business.

The report — commissioned by DHL Express Hong Kong and compiled by the Hong Kong Productivity Council — noted that despite the global economic uncertainties, nearly 60% of local air traders identified new potential markets in 2023.

"Contributed by the growth in imports (+2.6 points), the Overall Air Trade Index slightly stabilised (+0.6 points) after the retreat in the previous quarter. Also, all sub-indices rebounded, especially Product Variety Index and Shipment Urgency Index, both of which rose by 4 points," it said.

It added that a strong recovery in the online B2C business outlook was observed, as the proportion of local air traders with online businesses expecting an increase in their sales in Q1 2023 rebounded by 10 percentage points.

The report said local traders had a better outlook on European (+4 points) and Asia Pacific (+2 points) markets at the start of 2023, while their outlook on the Americas markets have been on a downward trend since Q1 2022.

 Source: DHL 

Nevertheless, the United States was identified as the market with the highest potential in 2023 among local air traders, followed by China and Germany.

"The worst may be over"

"Mixed results from this quarter's Air Trade Index have been observed. On the positive side, the Overall Air Trade Index has slightly stabilised," commented Edmond Lai, the chief digital officer of HKPC.

He noted that air traders had an improved outlook towards the European and Asia Pacific markets, and expectations towards online B2C business also became more positive.

"All these suggest that the worst time may be over. However, the declining trend in the Americas Index as well as the economic recession in the European markets, have also brought along a gloomy outlook to the air trade business," Lai said, noting, however, that the United States was chosen to be the top market with the highest potentials in 2023, reflecting that air traders are still confident towards this traditional air trade market.

"On the other hand, with China re-opening to the world and Hong Kong lifting almost all its quarantine and social distancing measures, air traders are advised to prepare for the increasing demand," the  HKPC executive said.

"They should also expand to other markets to minimise the impacts on business by the economic recession in Europe and continuous inflation in the United States," he added.

No adjustments to shipping rates in Q1

Although global inflation is strongly affecting all aspects of the economy, the report said over half (54%) of the local air traders had no plan to adjust their shipping prices in Q1 2023, with 23% indicating they would maintain their previous price adjustment range.

The DTI findings also said the proportions of air traders who expected to increase or lower their shipping prices more than usual or lower were 10% and 13%, respectively.

"When asked to identify the market(s) with the highest potential in 2023, 57% of local air traders identified 1 to 2 market(s) outside of their main import / (re-)export markets, which implies the possibility of expansions to new markets," the report added.