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Cargo

Signs of the time

Signs point to steady growth in air cargo volumes on routes within Asia and this has been driven in part by significant changes in manufacturing supply chains, as Stan Abbott finds
 
Dubbed the ‘factory of the world’, the Asia-Pacific region generates about a third of global air cargo carryings according to IATA figures – it is in effect a barometer for the industry globally. So, continued strong growth across Asia, and in the Asia-Pacific region specifically, is welcome news, especially given the escalating political rhetoric around protectionism. Indeed, the so-called ‘law of unintended consequences’ appears to be responsible for driving some recent growth, as manufacturers look to move capacity from China to other countries in the region, such as Vietnam and Cambodia, in response to fears over threatened US trade tariffs, as well as rising costs in China.
 
Most recent figures from the Association of Asia Pacific Airlines – which represents 15 major carriers across the region – point to growth in cargo volumes year-on-year of more than 5%. In the organisation’s most recent traffic bulletin in July, Director General Andrew Herdman stated: “Asian airlines have continued to experience relatively encouraging growth in air cargo demand this year, up by about 5%, on top of the very strong upswing we saw in 2017, although growth in new export orders has slowed in recent months.”
 
Herdman observed that the movement of manufacturing capacity away from China to other countries in Southeast Asia was driving some of this growth – a view echoed by Taipei-based air freight forwarder, Dimerco, which has, in response, developed a network of cross-border road feeder services to hubs including Shenzhen, Hanoi, Bangkok and Singapore, as well as Penang, Kuala Lumpur and Johor Bahru, in Malaysia.
 
Felix Chen, Corporate Marketing Senior Specialist at Dimerco, cites Vietnam, which has seen several major electronics companies relocate production lines to the country, including Intel, Foxconn, LG, and Samsung. While, in other sectors, Nike, Adidas and Puma have moved production to Vietnam and Cambodia. Lower wage costs, the availability of skilled labour and the risk of US tariffs are listed as among the key drivers.
 
“Since there are no direct flights from Vietnam to the US, all freight must transit via a major transit hub, such as Hong Kong, Taipei, Singapore, Guangzhou, Seoul or Tokyo to connect to the US,” says Chen. At one of those hubs, Hong Kong, the trend is evident, as Vivien Lau, Executive Director of Hactl (Hong Kong Air Cargo Terminals) and Managing Director of subsidiary company Hacis (Hong Kong Air Industry Cargo Services) attests. Hactl handles the overwhelming majority of all cargo movements through Hong Kong, with more than 100 client airlines, including several dedicated freight carriers, as well as bellyhold shipments on scheduled lines. >>
 

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