Air freight’s future: capacity and consumer trends

A panel discussion at the Hong Kong International Airport Super Terminal Expo last week focused on the evolving air freight industry in the Greater Bay Area (GBA) and globally, particularly in the context of e-commerce and operational capacity. The panel’s participants included Paul Cheng, Executive Director of Operations at Hong Kong Air Cargo Terminals Limited; Cao Yunchun, Director of the Civil Aviation University of China; Cissy Chan, Executive Commercial Director of the Hong Kong Airport Authority; and David West, Vice President of Cargo at IBS Software. Each panelist brought their unique insights to the challenges and opportunities facing the air freight industry today.

Paul Cheng opened the discussion by emphasizing the importance of capacity within air freight operations.

“As a cargo terminal, we always focus on our material handling systems,” he said.

Cheng said Hong Kong Air Cargo Terminals Limited (Hactl) has two major, fully-automated container storage systems capable of handling 3.5 million tons of freight annually. He noted that in 2023, Hactl processed 1.6 billion tons of freight, indicating significant room for growth.

“We can support the development of Hong Kong International Airport and handle more freight when our three-way systems become fully operational by the end of this month,” he said.

Cao Yunchun discussed the efficiency of ground-based aviation logistics. He suggested that while many believe only 10% of the human brain is efficiently utilized, it might be closer to 60-70%.

“The tranquility of customs processes, as well as the coordination among various links—like unloading and storage—are critical,” he explained.

The Director of the Civil Aviation University of China stressed that as automation and digitalization improve, management practices must evolve accordingly, keeping pace with technological advancements.

The discussion then shifted to the impact of e-commerce on air freight operations. David West provided an industry perspective, noting that while capacity utilization might be around 50%, it varies significantly based on operational efficiencies and access points.

“It’s not just about how much you can store but how quickly you can turn over inventory,” he said.

He said e-commerce has transformed consumer expectations, leading to shorter delivery times and increased pressure on logistics providers.

Cheng echoed these sentiments, stating that e-commerce has become a “new norm” in the industry.

“It supports growth across the entire aircraft industry,” he remarked. However, he also acknowledged that this shift places additional demands on freight handlers to ensure efficient processing and timely deliveries.

“Consumers want shorter delivery times, which means we need to be prepared for peak demands,” he noted.

Cao characterized e-commerce as a consumer revolution that has fundamentally changed purchasing behaviors.

“We can now buy goods from anywhere in the world at any time,” he said. He said that while this has enhanced consumer welfare, it also poses challenges such as increased packaging waste and reverse logistics pressures.

Diverse needs

Cissy Chan highlighted the necessity for tailored solutions within air freight operations to meet diverse customer needs driven by e-commerce.

“One size does not fit all,” she asserted, explaining that different products require different handling processes.

For instance, luxury items like watches, necessitate express services for visibility and security, while general merchandise may be shipped via standard freight practices.

Chan also mentioned ongoing developments at Hong Kong International Airport to accommodate these varying requirements.

“Alibaba’s Cainiao has established a premium logistics center here primarily for e-commerce fulfillment,” she revealed, underscoring the airport’s commitment to adapting its infrastructure for future demands.

Located in the South Cargo Precinct of Hong Kong International Airport, Cainiao Smart Gateway is developed by a joint venture led by Cainiao Network, a subsidiary of Alibaba Group, which includes China Aviation Group and Yuantong Express as major stakeholders.

Looking ahead

As the discussion concluded, panelists agreed on the importance of collaboration across sectors to navigate the complexities introduced by e-commerce. Cheng said adapting to these changes requires not only robust infrastructure but also innovative business models.

“We started a new model 24 years ago called one-stop-shop solution services,” he explained. This model integrates various aspects of freight handling to ensure efficiency across operations.

West added that as e-commerce continues to evolve, so too will its challenges and opportunities for air freight operators.

“With problems come opportunities,” he noted optimistically.

The insights shared during this panel reflect a dynamic air freight industry poised for growth amid evolving consumer expectations and technological advancements. As stakeholders work together to enhance operational efficiencies and adapt to new market realities, the future of air freight in Hong Kong appears promising yet challenging.

Speaking to the Times at the opening ceremony of the expo, Michael Duck, Executive Vice President of Commercial Development at Informa Markets, emphasized the significance of the Asia-Pacific region.

“This event encompasses all countries and regions within the Asia-Pacific area, and my company is based in Hong Kong to leverage this strategic location.” He highlighted the importance of Hong Kong as a hub for trade shows, noting, “We host numerous trade shows here, catering to markets throughout the region.”

Duck also acknowledged Macau’s pivotal role in regional connectivity, asserting that “Macau has always been, and remains, a vital hub for tourism, banking, and leisure activities.” He further elaborated on the operational significance of the Macau airport, stating, “The Macau airport plays a crucial role in facilitating the movement of people in and out of the city.”

In discussing collaboration between airports in the region, Duck remarked, “If you speak with the Hong Kong International Airport Authority, they’ll outline the various agreements in place to collaborate on air traffic control and passenger movement.” He concluded by expressing optimism about future developments:”As these connections expand in Hong Kong, they will similarly enhance connectivity with Macau.” By Nadia Shaw, MDT, Hong Kong