Air cargo transport and logistics in Hong Kong and Southern China

Abstract

The initial rise of global supply chains is contributed by the “intermediate goods”, which accounts for 30-60% of the exports of G20 countries (The Economist, 2014). Given that many of these imported parts are either of high value or involved in just-in-time (JIT) production and service provision and hence are required to be shipped with high speed and high reliability, air transport is widely used in such type of global sourcing and production process. Air cargo transport and logistics in China, especially its Southern region and Hong Kong, deserves a comprehensive review and study, as parts and components are commonly shipped to this region from various countries for OEM (original equipment manufacturer) type production and then re-exported, in the form of finished products, to places where final consumers reside.In the case of air-borne trade related to China, the largest economy in Asia, Hong Kong has served as the entrepot and gateway for Mainland China for decades (Zhang, 2003). Thus, to have a good knowledge about China’s air cargo transport and related issues, we should inevitably discuss the air cargo traffic at Hong Kong International Airport (HKIA). Hong Kong’s sophisticated airfreight logistics sector offers responsive JIT services for clients all over the world, making Hong Kong the world’s No. 1 airfreight hub in terms of annual cargo volume. However, suffering from the global economic downturn since late 2008, international trade for imported components appears slowing down (The Economist, 2014) which is reflected in the volatile market performance of the air cargo industry in the recent years. Besides, various external factors in this region impose a huge uncertainty on the future of airfreight transport in Hong Kong and Southern China.Thus, this chapter firstly describes the air-borne trade pattern in Hong Kong, and then briefly reviews Lo et al. (2015)’s study on the impact of 2008 economic crisis on Hong Kong’s air cargo demand. It finally discusses various issues and factors which might contribute to the changes since 2008 and emerging issues in this sector.