News / Hong Kong cargo community in plea for financial help, particularly for airfreight

Hong Kong’s cargo community has warned of looming bankruptcies, particularly in airfreight, unless financial assistance comes from government.

In a letter to the transport ministry, nine logistics groups call for financial relief to survive the havoc in cargo markets due to the coronavirus pandemic.

“Up to 95% of shipments are cancelled, put on hold or disrupted,” said Alice Lui, director general of the Hong Kong Association of Freight Forwarding and Logistics (HAFFA).

“Logistics operators are facing unprecedented threats, tremendous risks from default payment and liquidity difficulties.

“Without timely relief measures of government on rental, employees’ salary and fuel, or rental relief from the landlords, it is estimated that a substantial number of SMEs and micro companies in the industry will close down or go bankrupt, forcing hundreds of thousands of workers out of a job.”

The logistics industry represents 20% of Hong Kong’s GDP and employs over 700,000 people, aviation alone represents 10% of GDP and 330,000 jobs.

Over the first two months of this year, Hong Kong International Airport suffered a 9.8% year-on-year drop in cargo throughput, to 611,000 tonnes.

Wilson Kwong, CEO of Hong Kong Air Cargo Terminal Ltd (HACTL), told local media it was vital to safeguard the airport’s skilled labour pool in the event of a recovery, which would otherwise make it difficult to get back to previous volumes.

Airport Authority Hong Kong (AA) has provided a relief package, worth up to HK$2bn (US$258m), to airlines and aviation support services, but although discussions are underway, no specific support has been earmarked for logistics yet, according to HAFFA chairman Brian Wu.

“We anticipate a very tough year ahead,” he told The Loadstar. “Retailers are closing in the US and Europe, and most urgent air shipments are medical products and equipment. Many shippers have had their purchase orders cut or delayed dramatically.”

With airlines forced to cancel the vast majority of passenger flights, Cathay Pacific Cargo and others began using passenger jets for freight-only flights. But Mr Wu said cargo capacity was still down significantly, leading to spikes in freight rates.

Intra-Asia routes have been particular impacted, due to the reliance on previous belly capacity, and there are reports of rates between Hong Kong and Singapore increasing six-fold, to HK$25 per kg, for example.

Meanwhile, forwarders and shippers were given some respite by Hong Kong Airlines’ decision to shelve a planned security charge hike last month, said Mr Wu.

“Security charges have been a long-standing issue for our members and have a very negative impact on Hong Kong’s competitiveness. The increase would have had a detrimental impact on both our members and overall trade.”

The new ICAO cargo security screening rule started in January, with 25% screening of export cargo, however, and the regulation will continue to be phased-in before full implementation by July 2021.

“It will definitely affect the competitiveness of Hong Kong Airport, in terms of costs and efficiency,” said Mr Wu.