Hong Kong air cargo sector plead for state aid to avert disaster

HONG KONG's cargo sector has warned of looming bankruptcies, particularly in air freight, unless financial assistance comes from the 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 per cent 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 per cent of Hong Kong's GDP and employs over 700,000 people, aviation alone represents 10 per cent of GDP and 330,000 jobs.

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

Hong Kong Air Cargo Terminal Ltd (HACTL) chief executive Wilson Kwong said 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$2 billion (US$258 million), 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 London's 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 kilogramme.

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 per cent 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.

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