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Home > Business/Finance > Diversified Services > Shipping & Logistics
Hong Kong Freight Transport Report Q3 2008
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Long-haul budget carrier Oasis Airlines suspended all flights on April 9 2008, after announcing it wasgoing into liquidation. Chief executive Steve Miller announced the move the day before saying that aHong Kong court had appointed KPMG to act as liquidator. Local newspaper Economic Daily hadreported that the company was struggling with debts of up to HKD1bn (US$128.2mn). Oasis waslaunched in October 2006, as a pioneer of long-haul budget air travel, offering one-way tickets betweenHong Kong and London at HKD1,000 (US$128). It followed that with a Hong Kong-Vancouver service.It was using four Boeing 747-400s to operate the two routes. Cathay Pacific, the dominant Hong Kongbased airline said it was not interested in acquiring Oasis. Cathay chief executive Tony Tyler toldreporters that the airline’s fate underlines the tough and competitive nature of the airline business,particularly at a time of record fuel prices and global economic uncertainty. Despite the tougher timesexpected in the passenger business, in our latest Hong Kong Freight Transport Report BMI predicts thatHong Kong air freight will grow at an average annual rate of 5.6% over the next five years.
All the evidence indicates that the powerful economic boom in mainland China will continue to create acomplex mix of opportunities and threats for Hong Kong. In general, as the Special AdministrativeRegion (SAR) repositions itself, we believe it will be the higher-value/lower-bulk transport modes thatare most resilient. So we remain relatively confident about prospects for airfreight, particularly forregional trade in electronics, IT products and express/parcel delivery.
The territory retains some extremely important advantages. In BMI’s freight transport rating, Hong Kongscores a total of 77.3 (out of a potential maximum of 100), with particular strength in both the regulatoryand competitive environments and a satisfactory showing in the ratings for long-term economic risk andinfrastructure growth. This will continue to make it an attractive place for the freight industry, more so ifit can begin to grapple with its higher costs, relative to the mainland.
According to our latest estimates, transport and communications GDP rose by 7.3% in 2007, onepercentage point faster than overall GDP, which we estimate to have increased by 6.3%. For the 2008-2012 forecast period we expect the transport and communications sector to continue outpacing theeconomy as a whole, although by a smaller margin. It will achieve average annual growth of 6.0%, versus5.6% for overall GDP. The total value of transport and communications GDP will rise to US$32.4bn innominal terms by 2012, representing 11.0% of Hong Kong’s GDP.
We continue to trim sea-borne freight forecasts to take account of the growing competitive threat fromrival ports, particularly those in Mainland China, with lower labour costs, such as Shanghai andShenzhen. We expect throughput to grow by an annual average of 4.2%, down from the 8.0% figure overthe preceding five years. Rail freight, always relatively marginal in Hong Kong, will grow at 6.1%, anincrease on the rate over the preceding five years.
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