In a study, Value of Air Cargo: Air Transport and Global Value Chains, which was commissioned by the IATA and published at the end of 2016, a quantitative link has been identified between a country’s air cargo connectivity, and its participation in global trade: a 1% increase in connectivity was associated with a 6.3% increase in a country’s total trade, thus increasing its competitiveness. The findings serve as evidence in support of policy deliberations on improving the trade facilitation environment and helping countries integrate into global value chains (GVCs), highlighting that countries with well-developed air cargo connections combined with good quality customs services and smart borders, are better at integrating into GVCs. While success depends on the level of harmony achieved in the overall air freight supply chain, most of the interaction between customs and the industry take place at airports and as such airport authorities can play the role of facilitators, bringing the industry and their stakeholders together to define well-structured solutions and better industry standards for the future, something Wilson Kwong, Chief Executive of Hong Kong Air Cargo Terminals Limited (Hactl) alsohighlights. Industry players and customs and aviation authorities should help one another in their efforts to address deficiencies and provide timely facilitation – as we move into a future where the concept of airport communities is gradually transformed into a global air cargo community. Upamanyu Borah speaks to him more on how global air cargo can stay on course.
CARGO OUTLOOK IMPROVING, DEMAND AND SUPPLY IN BIZ A WORRY
We are in the midst of an unprecedented Q4 and although this will inevitably tail off in the New Year, the base line can be expected to show an uptick on 2020 and 2019. Pent up demand alone will see 2022 performing strongly, partly influenced by an ocean freight sector that has long-lasting capacity problems.
The aviation sector’s revenues are now more evenly balanced between passenger and cargo; many more airlines are now alert to the value of cargo and will continue to adjust their business decisions accordingly. They will therefore place new pressures on handlers and airports to support their changed business models: better facilities, wider service scope, greater efficiency and improved transparency. This all demands huge investment in ground infrastructure, which must be paid for.
Hopefully, some of the improved yields in air cargo will find their way to those companies like us who are well set to resource for the future.
MANDATE AND PROGRAMMES TO DRIVE THE NEXT STRATEGIC STEPS TOWARDS GROWTH PLANS
The most obvious changes and the ones which will stick are – the swing back towards freighter operations and the boom in e-commerce. While passenger flights are steadily returning to the skies, it could still be years before we are back to the same levels of bellyhold capacity and the same spread of destinations we enjoyed pre-COVID. Meanwhile, global trade needs air cargo capacity and airlines need revenue – hence the greater interest in cargo and the return of maindeck capacity. As a result, airports that have never seen freighters before are now forced to serve them, and volumes of air cargo are anyway climbing above pre-COVID levels. These factors must drive future airport design and layout, for example, placing cargo terminals nearer to passenger terminals and allocating more freighter parking space.
On the e-commerce front, the urgency and volume of traffic demand greater visibility that only digital supply chains can provide. Anyone who refuses to accept this fact will become irrelevant. Manpower is also an issue that will not go away. Some elements of our work are physically demanding, involve unsocial hours and working outside in inclement weather. Little wonder recruitment becomes ever more challenging. Accordingly, Hactl is seriously looking at ways to automate further processes – not to eliminate jobs, but to ensure they are still performed even when manpower is unavailable. Of course, this will help make our industry more resilient to any future pandemic and necessary quarantine measures.
KEEPING ABREAST OF EMERGING NEEDS IN REGIONAL INTEGRATION AND TRADE
Hong Kong in general and Hactl in particular have an important role as a gateway between China and the world. Our modern customs processes and the work we have done to facilitate easier cross-border multimodal traffic are the key drivers facilitating this. There are other parts of the world in which customs authorities need to adopt a new role of trade facilitation rather than just border policing and duty collection. Globally, this will continue to be a gradual process managed by individual governments. But, more and more economies recognise the need to partner in global trade and therefore coming on board. The emergency medical aid and shipments in 2020 played an important role in revealing this.
A MULTIFACETED APPROACH TO OPERATIONAL DECISION AND INNOVATION
Hactl was born from the need to utilise more efficiently the very restricted space at the old Kai Tak Airport. This was seen as the only way to build a reputation for Hong Kong as an effective gateway between Asia and the world. Our first true innovation was the construction of a multi-level cargo terminal which segregated exports and imports, while enabling extra throughput capacity on a relatively small footprint. We took this even further in 1998, when we opened SuperTerminal1 at Chek Lap Kok which is highly-automated and embodies a multi-storey Container Storage System – probably still the largest-of-its-kind anywhere in the world. Behind this, we have continued to innovate our systems and processes. Our in-house-developed COSAC system that links all elements of our community is now in its third iteration. We switched our operations to mobile computing using hand-held devices to input data and receive instructions to our terminal and ramp teams. This has revolutionised our operations, using manpower and equipment more efficiently, increasing productivity, enabling constant information updates that are visible to customers, and reducing our carbon footprint. We have further digitised ramp operations to eradicate paper, enable last-minute manifest changes and provide visibility to customers.
Recently, we opened our new Integrated Hactl Control Centre (iHCC) which consolidates all systems management and workflow monitoring in a single control tower – also enabling more effective response to any emergency. We are now experimenting with robotics to learn how this could enhance our overall operations. Innovation is driven by our Performance Enhancement Team and Information Services Department with the aim of rooting out inefficiencies and solving them through tech solutions.
AN AIR FREIGHT HANDLER TO AN INTELLIGENT AIR MOBILITY SERVICES COMPANY
Everything we do is driven by a desire to maximise our airline customer’s opportunities. We were ahead of the curve with pharma years ago, establishing state-of-the-art facilities and working methods ahead of any accreditation standards such as WHO GDP and CEIV Pharma – which made our subsequent applications for these standards little more than a formality. The latest big opportunity is e-commerce, and this is an area in which digitisation is vital in order to facilitate seamless information flows throughout the supply chain. Hactl has been a digital business for many years, and we are finding that parts of the community who were slow adopters and are now getting the message and catching up. We want our customers to be able to integrate into e-commerce supply chains and we are doing all we can to assist in this process.
ROLLING AROUND FUTURE LOGISTICS AND SERVICES EVOLVING AROUND THIS CONCEPT
Hactl development is based on four pillars: Continuous Improvement through process optimisation; Business continuity through solid contingency planning and investment; Increasing the scope of services to optimise airline customer’s business opportunities; Looking after our people, our customers, and the planet. These are our constant long-term targets and will remain so in 2022 and beyond.