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Hong Kong Freight Transport Report Q3 2010
Business Monitor International, May 2010, Pages: 36
Business Monitor International's Hong Kong Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hong Kong's freight transportation industry.
Remember the recession? In Hong Kong's airfreight successor the gloom of 2009 is now beginning to feel like a long time ago. Hong Kong Air Cargo Terminals (HACTL) registered a 42% year-on-year (y-o-y) surge in air cargo tonnage to 248,027 tonnes in April 2010. This rise was attributed to a recovery in the global economy. The firm recorded a 38.7% y-o-y increase in cargo tonnage to 884,770 tonnes in January-April 2010. The strong growth is linked to a general increase in global air cargo volumes. For the first two months of 2010, there was a 28% y-o-y surge in global air cargo traffic, according to IATA, with the Asia Pacific region being a key driver of increased cargo volumes. Asia-Pacific carriers boasted a 37.2% increase in freight traffic in the period, compared with a gain of just 9.3% in Europe. According to figures from HACTL, the Asian recovery began in earnest in December 2009. The data is encouraging to many of the world's beleaguered airlines. IATA claims that combined losses in the global air industry will hit US$2.8bn in 2010 following a US$9.4bn loss in 2009. Asian carriers are in a particularly strong position as a result of exploding demand in China and India. The longer-term prospects for air freight, particularly the regional trade in electronics, IT products and express/parcel delivery, are strong. Hong Kong's freight sector is benefitting from the upturn in world trade. After a 2.7% GDP contraction in 2009, we now project growth of 2.4% in 2010. Over the next five years, we expect the Hong Kong economy to expand by an annual average of 3.3%. The government is promising new reforms in the runup to the 2012 elections, with a move towards universal suffrage, but opposition parties are unconvinced and believe Beijing's fairly tight grip over the affairs of the Special Administrative Region (SAR) will be maintained. BMI's view is that the status quo - described as 'one country, two systems' will remain in place.
Across the main freight modes, the current picture is one of fairly clear recovery, with the medium-term outlook set at moderate-to-good. As mentioned, the short-term outlook for airfreight is strong. We now forecast air cargo volume to grow by 4.8% in 2010 to 3.511mn tonnes, and to remain in the 4-5% growth range in the next few years. Fastest growth will come on the roads, as Hong Kong integrates its trucking industry more closely with Mainland China. In the five years to 2014, we expect annual road freight volume to expand by an average of 14.3%. Even faster will be the growth of railfreight, but this is from a very low base, as the sector begins to develop. The maritime trade picture is more muted than the other modes. For 2010, our scenario for the Port of Hong Kong is for moderate recovery, with a gain of 2.6% to 221.32mn tonnes. Given strong competition from ports in the Chinese mainland, our medium-term forecast is for tonnage to grow by an annual average of 2.4%, lagging behind he general rate of Hong Kong economic growth.
Foreign trade will continue to be the engine of Hong Kong development but it is an engine turning over a little slower than in the earlier years of the last decade. This reflects a number of factors, including the territory's decreasing role as the only 'gateway' to China, together with a generally more sluggish world economy and tougher price competition among many international exporters. In real terms, Hong Kong's trade growth fell from 8.7% in 2007 to 2.3% in 2008, before turning negative during the 2009 recession, when it fell by a substantial 7.4%. Now, we are projecting 4.7% expansion in 2010 and 4.6% growth in 2011. Over the five years to 2014, we expect annual trade growth in real terms to be 4.4%, ahead of GDP expansion by just over one percentage point. Imports will growth very marginally faster than exports. On the whole, we see the main risk to our freight forecasts in Hong Kong as a downside one, represented by the threat of a 'double-dip' recession in global terms. Such a downturn could be led by one, or by a combination, of the world economy's leading power centres: Asia (overheating followed by an enforced slowdown in China), Europe (worsening outlook triggered by further eurozone debt worries) or the US (potential problems with the unwinding of the current fiscal and monetary incentives).
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