It was a demanding 2016 for the air freight industry, but the year emerged better than some of the players had actually expected. E-commerce is being seen as a potential segment that has been evolving and maturing with time. In an interview with STAT Trade Times, Mark Whitehead, Chief Executive, Hactl talks about the trends and opportunities in the air freight sector.
How would you evaluate 2016 in terms of air freight business?
2016 has emerged better than we expected, both for the industry as a whole, and for Hactl. Traffic levels have certainly improved in the second half of the year, and we have recently won two new carriers (and a third, soon to be announced) which will positively impact our business in 2017.
Which sectors do you see maximum growth potential in the coming years?
Pharma continues to grow at above industry average rates, and is important business for Hactl and its customer airlines. Perishables coming into Hong Kong, and transiting Hong Kong to reach China and the Pearl River Delta region, are also important and growing business. Traffic out of China via Hong Kong is not as strong as it was but this is being made up for by the growing role of Hactl and its 100+ airline customers to carry cargo throughout and within Asia. We expect airfreight in ASEAN to become a larger share of our total business over time.
Which are the emerging markets and regions for the air cargo sector?
As above, ASEAN is certainly a growth region, and the development of manufacturing in Vietnam, Laos, Myanmar and Thailand (among others) is likely to create exports and develop wealth that will fuel imports in the future. Hong Kong has such strong global connections and air cargo infrastructure (which includes Hactl, and its ability to transfer cargo between carriers within 2 hours), that it is developing its role as a regional hub and a global gateway for Asia.
How much potential do you see in the e-commerce segment?
We see huge potential in e-commerce. E-commerce is evolving and maturing, products are becoming more price-sensitive, and so e-commerce supply chains are under pressure to deliver at lower cost. This provides a dividend for the “traditional” airfreight sector, which is replacing the early one-at-a time shipping model, using high-cost integrator services, with bulk shipping and fulfilment nearer end-market. This is a trend which our value-added logistics arm, Hacis, is exploiting with great success. Chinese consumers are driving an e-commerce explosion, and Hacis is using Hong Kong as an entry point for China and the PRD, providing low-cost, high-speed RFS connections to 8 depots. This network will increase, particularly when the new Hong Kong-Zhuhai-Macau Bridge enables us to reach Macau by truck in 40 minutes. E-commerce exports from China and the PRD are also switching to our road-air model, thanks to expedited Customs and the ability to use through MAWBs from our depots.
What are the challenges in the current regulatory framework? What changes do you think are critical to push for smarter regulations?
Hactl has always stayed ahead of the game on all impending safety and security legislation, so it’s not a challenge now, but a fact of daily life. Yes, it has added administration and potential delay to the airfreight process, but the streamlining we have performed on our systems, and the investments we have made in additional scanning equipment, have mitigated these burdens. Regulation evolves when driven by changing circumstances; you cannot predict situations like the dramatic rise in shipment of lithium batteries, and the problems that then arose over battery fires. The regulators’ response was necessary, and we all have to work around such situations. It’s what we do.
Do you think Brexit would have an impact on the air cargo sector in the coming year?
It’s too early to say exactly what effect, if any, Brexit will have on air cargo. And the speed of negotiations is unlikely to see any impact in the next year, anyway. If the UK ultimately retains access to a revised single market, the impact on traffic flows would be minimal. If the EU tries to punish the UK by restricting entry except on unacceptable terms, the UK would be forced to buy and sell in other markets. That would simply see a shift in traffic flows onto other trade lanes. Ultimately, overall traffic levels are unlikely to change, just their lanes.
Sustainability in the air freight sector is becoming an increasing concern. How do you plan to tackle the issue?
Hactl cares passionately about sustainability. We have taken many measures in recent years, and continue to do so. Our aims are always to reduce consumption, reduce our carbon footprint, reduce pollutants, and recycle. We have won many awards for our work and our achievements. As in all things, we don’t trail behind others: we proactively look for better ways of doing things. Sustainability is not just the right thing to do: it often pays a handsome dividend in greater efficiency and improved customer service. We only have one planet, and Hactl is doing all it can to preserve it.