Consultant’s Insight: Hong Kong expands as hub for China, Southeast Asia

Geopolitical concerns and sourcing shifts from mainland China may have shippers rethinking the use of the Hong Kong International Airport as an air freight hub. [caption id="attachment_69752" align="alignleft" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] Indeed, investment flows to Hong Kong fell by 16% to $118 billion in 2022, according to United Nations Conference on Trade and Development ’s World Investment Report 2023. However, airport expansions and emerging transportation options connecting Hong Kong to China and Southeast Asia are attracting more logistics providers. A UPS study, “Clearing the Runway for Intra-Asia Trade,” indicates cross-border trade in the region could double in value to $13.5 trillion annually by 2030, with China being the largest country in terms of value. Hong Kong could serve as an essential logistical link between China and Southeast Asia. As such, UPS recently announced it would construct a hub at Hong Kong International Airport (HKG) near the Hong Kong-Zhuhai-Macau Bridge, which connects Hong Kong to China’s Pearl River Delta region, a significant manufacturing location. The new hub will serve as UPS Hong Kong’s main facility for processing and sorting imports, exports and transshipments to and from Europe, the United States and parts of Asia. DHL Express , meanwhile, launched its expanded Central Asia Hub (CAH) in November at HKG. “Asia is home to some of the fastest-growing markets in the world,” Ken Lee , chief executive for DHL Express Asia Pacific, said in a statement. “Since [CAH] was established in 2004, we have seen a continued increase in air cargo demand driven by trade between Asia and other regions and cross-border e-commerce. Additionally, the strategic location of the hub in Hong Kong opens doors to many opportunities for our customers in this region. We are confident that the expanded CAH will foster interconnectivity and underpin Asia’s status as a powerhouse of global growth.” The CAH expansion will complement the launch of HKG’s three-runway system, according to DHL Express. The project includes a new runway, a supporting taxiway and the expansion of Terminal 2, which is set to be completed in 2024. “CAH is strategically located within a four-hour flight time to major cities in Asia-Pacific and the Pan-Pearl River Delta region, making its location in the city significant,” according to the DHL Express statement. Intermodal option Trucking is the primary mode of transportation that links HKG to China. However, intermodal options are growing. For example, Cathay Cargo Terminal, operated by Cathay Pacific Services, has become the first service provider to offer intermodal cargo handling services via sea between Dongguan, China, and Hong Kong. “We will be working closely with the airport authority, Hong Kong and customs to continuously streamline the process of both southbound and northbound operations, further strengthening Hong Kong as the leading air cargo logistics hub in the world,” Cathay Cargo Terminal said in a statement. Dongguan, located in China’s Pearl River Delta region about 56 miles from Hong Kong, offers ocean freight, direct air, rail and road connections to Vietnam and other Southeast Asian countries. As more sourcing shifts to Southeast Asia, intermodal transportation services will be embraced from a cost and sustainability perspective, with hubs such as Hong Kong playing significant roles.

Consultant’s Insight: Hong Kong expands as hub for China, Southeast Asia

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