Cargo volumes between Hong Kong and China are “gradually returning to normal” as manufacturing in the mainland starts to stabilize after weeks of lockdown due to the coronavirus (Covid-19) outbreak.

Hong Kong Air Cargo Terminals Limited (Hactl) said Hong Kong continues to facilitate goods coming in and out of China to the rest of the world as flight cancellations in the mainland still remain largely in effect.

“Volumes are certainly gradually returning to normal, but it’s hard to predict what the picture will look like in a few months’ time, when we may see falling global demand for some commodities as large parts of the world are in lockdown,” Wilson Kwong, chief executive of Hactl, told Asia Cargo News.

Most airlines have discontinued passenger operations and routes beyond China due to travel bans implemented by various governments both as a precaution and means to stop the spread of the deadly coronavirus.

Airlines initially canceled more than 200,000 flights, mostly to, from and within China because of the virus, but the worldwide spread of the outbreak forced airlines to also halt most operations elsewhere, as well.

Uninterrupted cargo flow at Hong Kong

Hactl  – Hong Kong’s largest independent cargo handler – noted that there are no restrictions at present on the movement of goods by air via Hong Kong, as freighter services are becoming increasingly important in providing air capacity at a time when passenger services are reduced.

There are also currently no restrictions on cross-border movements of goods.

“The picture is complex. Chinese exports are still down as their industry was delayed in returning to work, but it seems more traffic is exiting and entering China via Hong Kong, due to the severe cuts in passenger flights and bellyhold capacity,” Kwong added.

“Hactl’s subsidiary, Hacis, continues to operate road feeder services between Hong Kong International Airport and its nine bases on the mainland, linking China with Hong Kong’s continuing freighter flights, and providing an essential link between China and the world,” he added, referring to the Hong Kong Air Cargo Industry Services Limited (Hacis).

There is also a growing shift to moving cargo by air as governments and businesses rush to transport much-needed medical supplies out of China.

“We believe there is also a shift from ocean to air, as importers worldwide take whatever urgent steps they can to replenish stocks after weeks of disruption,” Kwong said.

Hong Kong volumes down, but not as bad

Cargo throughput at Hong Kong International Airport (HKIA) was down 10.4% year-on-year in January due to closure of factories and businesses in mainland China during the Chinese New Year holidays. Imports dropped 15% during the period, transhipments were down 10% and exports also decreased by 9% as traffic to and from Asia and North America was greatly impacted.

In February, air cargo volumes in Hong Kong dropped further by another 8.9% due to the impact of the coronavirus pandemic and the late resumption of mainland China factories affecting production. This time around, North America and European markets saw the most significant decrease.

For Hong Kong’s air cargo volumes, Kwong told Asia Cargo News that traffic is down as expected — but not as bad as anticipated.

“Overall, our traffic is down, but not as badly as might have been expected. And we are doing all we can to help shippers and their agents restore supply chains, in conjunction with our airline customers,” Kwong said.

Meanwhile, Sunny Ho, executive director of the Hong Kong Shippers Council, said “weak demand and poor prospects” prompted shipping lines to cut 50% of their capacity after the Chinese New Year holidays compared to the pre-holiday level — with more capacity cuts seen at present.

He noted that manufacturing activities in China are currently already at 80% production level but supply chain reliability “remains a great challenge” as supply from vendors for parts and raw materials remains uncertain.

Uncertain future for carriers, freight forwarders

Ho told Asia Cargo News that, right now, almost 95% of outbound cargo is affected by delay, disruption of supply chain, and cancellation of order as freight rates “have been jacked up by over 30%,” fluctuating widely, and that services are “not reliable.”

“As mainland China started to lock down in late January, the regional passenger traffic was affected first, and with it went belly capacity of the passenger flights,” Ho said, noting that intra-Asia relies “quite heavily on belly capacity.” Long-haul chartered flights, however, have not been affected much, he added.

“There were some rush shipments, especially e-commerce shipments, up to early March, but as the pandemic develops and the subsequent global lockdown, western buyers are putting shipments on hold, cancelling or refusing them or do not pick up arrived shipments, and requesting lengthening of credit periods. New orders are scarce, and indeed risk is high,” Ho, who represents Hong Kong exporters, importers, traders and manufacturers in matters relating to the transportation of merchandise by sea, land and air, added.

“Carriers, freight forwarders, and their clients alike are uncertain of the future. The number of casualties will be high,” he said.

So far, more than 2.5 million people have been sickened by the coronavirus disease worldwide, most of them now reported outside of China.

By Charlee C. Delavin

Asia Cargo News | Hong Kong