US-China trade tariffs hit Hong Kong’s local airfreight market 

DHL Hong Kong Air Trade Leading Index’s (DTI) latest quarterly report indicates that ongoing trade disputes between the U.S. and China are also negatively impacting Hong Kong’s air imports and exports. 

The DTI quarterly report, commissioned by DHL Hong Kong and conducted independently by the Hong Kong Productivity Council (HKPC), assesses air traders’ forward-looking business outlook for air import and export through surveys. 

The most recent report for 2019’s third quarter was conducted following the U.S.’ latest imposition of 25% tariffs on US$200 billion of Mainland Chinese goods, and ahead of the G20 summit in Osaka. Overall, the report found that traders have taken a conservative approach following the introduction of new tariffs between the U.S. and mainland China in May. 

According to the report, 76% of air traders felt frictions in global trade would affect local air trade in Q3 2019. Meanwhile, 36% of respondents said their trade would be directly affected by extra costs from tariffs. Of these respondents affected, 51% said the cost would be shared between sellers and buyers, 46% said the cost would be taken on by buyers and 3% said the cost would be borne by sellers.  

The report describes demand across all markets as “slackening,” and identifies demand for American products as the most exposed. Despite this general market weakness, import demand from Japan and other Asia-Pacific countries is expected to be more resilient over Q3. 

Of airfreight commodities, watches, clocks and jewelry remain the most vulnerable to the global economy, and fell the most in Q3 2019, similarly to its drop during the 2016 Brexit Shock, the report states. Consumer goods trading for food and beverage imports and electronic products and parts exports are faring slightly better. 

Ultimately, HKPC CIO Dr. Lawrence Cheung advises enterprises in airfreight to prepare for challenges arising from the trade issues by diversifying their target markets to mitigate risks.