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The Hong Kong Air Cargo Industry: Threats and Opportunities (Part 1)

Ir. Dr. Anthony Lau BBS 


What are the major challenges facing the Hong Kong Air Cargo Industry?

Indeed, there are quite a few of challenges. Here are the major ones that worry me the most.  First of all, it has always been difficult for the industry to recruit sufficient manpower to sustain its development.  The general perceptions of “low-skilled” and “harsh working environment” push away many of the younger generations, particularly the better-educated ones.

Secondly, we are now facing serious shortage of slot for aircraft movements which drives business opportunities away. The air cargo industry has been turning down businesses from our clients since we do not have enough slots to accommodate them. The lost businesses often go to our direct competitor - Guangzhou, a booming city equipped with state-of-the-art infrastructure and sufficient yet less expensive labour. 

Thirdly, we could have more support from the government. For example, the development of new infrastructures and the relaxation of the fifth freedom traffic right have been sluggish in recent years.  All these hinder the industry’s growth.   

What are the possible strategies to lighten these challenges?        

To tackle the problem of labour shortage, the government should consider importing labour from China in a controlled manner.  Of course, it should be carefully designed and exercised on the premise that suitable protections are given to the local workforce.  Universities could offer more relevant programmes to train more professionals for the industry.  On the other hand, the industry may adopt apprenticeship scheme.  Logistics related apprenticeship scheme practiced in the German speaking countries such as Germany and Switzerland has been very successful.  Logistics practitioners can learn the logistics flow through the apprenticeship scheme coupled with extra upgrading efforts can work their way to the managerial level.    

Slot shortage is a complicated issue that could not be resolved easily and in the short run.  As an interim measure, Hong Kong should cooperate with Macau or Zhuhai airports to work out short-to-medium term mutually beneficial solutions in dealing with the capacity problem before the Hong Kong International Airport (HKIA) could expand its operational capacity via the third runway project. 

Policy supports from the HKSAR government are indispensable to the sustainable development of the logistics industry. In addition to relaxing the fifth freedom traffic right, the HKSAR government should provide proactive assistance to Hong Kong logistics companies expanding businesses in the Pearl River Delta (PRD).  The establishment of a subsidized cargo village in Hong Kong could, through economies of scale, lower operation costs, improve profits and sustainability of the logistics industry.  

I also advocate the use of community IT platform (i.e. Digital Trade and Transportation Network) which enables industry members within 30km radius from Hong Kong to efficiently and effectively interface with other members of the supply chain.   This will improve the overall supply chain management effectiveness and strengthen our position as aviation and logistics hub in the region.  

… to be continued

Biography of Ir Dr Anthony Lau, BBS

Joining the then glamourous airline industry since the mid-60s, Ir Dr Anthony Lau BBS has been contributing tremendously to the development of the industry for over 40 years.  From starting a regional office for a global forwarding group, to starting his own logistics business and turning it into the largest Hong Kong based public listed group with 65 offices in APAC, EMEA and North America with US$650m annual sales at exit 2008.  

Ir Dr Lau is currently the Executive Chairman of the Pacific Air Limited; Advisory Member of the Asia-Pacific Academy of Economics and Management, University of Macau; Advisory Member of the Asian Institute of Supply Chains & Logistics, Chinese University of Hong Kong; Adjunct Associate Professor of the Chinese University of Hong Kong; and lead author of “The Challenges and Opportunities Facing the Hong Kong Logistics Industry” published in March 2012.

Ir Dr Anthony Lau BBS, a logistics entrepreneur with over 40 years of experience in the industry, shares his insights over the major challenges facing the contemporary air cargo industry in Hong Kong.