Freight volumes between Hong Kong and China “are gradually returning to normal” when production on the mainland begins to stabilize after weeks of freezing due to the outbreak of the Covid-19. Hong Kong Air Cargo Terminals Limited data confirm that Hong Kong continues to facilitate import and export from China to the rest of the world, as flight cancellations still largely remain in effect.
Volumes are gradually returning to normal, but it is difficult to predict when we could see a lasting recovery, because large parts of the world are still in the block. Airlines initially canceled over 200,000 flights, mainly to and from China due to the virus, but the worldwide spread of the epidemic has forced airlines to stop most operations elsewhere as well.
Hactl, Hong Kong’s largest independent cargo handler, noted that there are currently no restrictions on the movement of goods by air from Hong Kong, as the carriers of the sector are offering more air capacity at a time when passenger services are reduced. The picture is still complex. Chinese exports are still falling as their industry has returned to work late, but traffic appears to be increasing in China through Hong Kong due to severe passenger flight cuts and stowage capacity.
There is a growing increase in air freight shipments as governments and businesses hurry to transport necessary medical supplies from China. Many operators argue that there is a transition from sea to air transport, as importers around the world take urgent steps to replenish stocks after months of freezing.
Freight transit volume at Hong Kong International Airport (HKIA) declined 10.4% year-on-year in January due to the closure of factories and businesses in mainland China during the Chinese New Year holidays. Imports decreased by 15% during the period, transhipments decreased by 10% and exports also decreased by 9% due to the strong impact of traffic to and from Asia and North America.
Also in February, volumes in Hong Kong dropped further by 8.9% due to the impact of the coronavirus pandemic and the recent upswing in factories in mainland China. This time, North America and European markets saw the most significant drop.
Overall, Hong Kong experienced a drop in traffic, but not as expected. All parts of the supply chain are attempting to restore supply chains. Manufacturing activities in China have resumed production and they are already at 80%, but the supply chain is still weak because the supply of parts and raw materials remains uncertain.
At the moment, almost 95% of exported goods are affected by delays, interruption of the supply chain and cancellation of orders, because the freight rates have been increased by more than 30% and the services are unreliable.
Since mainland China began the lockdown in late January, regional passenger traffic was affected first, and with it the capacity of the hold of passenger flights, which play an important role within Asia, has failed. Long-haul charter flights, however, have not been very affected.
At the beginning of March, with the pandemic and the subsequent global blockade, western buyers proceeded to block shipments, cancel, refuse, fail to collect those arrived, or request the extension of credit periods. New orders are weak, and in fact the risk is high for a new drop in orders.