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Hong Kong has lengthy been the world’s busiest air cargo hub, dealing with greater than 4.3mn tonnes of cargo final yr. Town’s airport performs a crucial position within the international provide chain, connecting China’s industrial base with the remainder of the world. However its strategic place additionally makes it more and more weak to escalating geopolitical tensions between the US and China, in addition to the affect of US President Donald Trump-era tariffs.
Multinational corporations depend on Hong Kong for warehousing and distribution, whereas international logistics suppliers akin to UPS and all-cargo airways like Air Hong Kong use the town as a key trans-shipment hub. Cathay Pacific, the town’s flagship service, has been one of many largest beneficiaries of this cargo quantity, with cargo companies accounting for greater than 1 / 4 of its whole income.
Cathay’s cargo income has been rising steadily, pushed by larger freight charges and robust demand from ecommerce and increasing commerce, significantly in electronics. Total, the group’s cargo tonnage elevated 11 per cent final yr. Between Europe and Asia, pharmaceutical merchandise and perishables — together with China-bound shipments from markets just like the UK, France and Belgium — are driving development in its particular cargo enterprise.
Escalating tariffs levied by Trump’s administration and renewed scrutiny on Chinese language exports depart Hong Kong’s air cargo sector more and more weak to exterior shocks. Tariffs drive up the price of cross-border commerce, squeezing firm margins and making air freight much less reasonably priced. Companies trying to shield their backside strains might start shifting cargo to cheaper, albeit slower, options akin to maritime or land transport.
If multinational companies diversify their provide chains in response to geopolitical dangers, akin to relocating manufacturing to the US or south-east Asia, provide chains will grow to be extra fragmented, lowering cargo volumes by Hong Kong as demand for various re-export hubs grows.
The long-term affect extends past freight. Financial uncertainty may also weaken demand for enterprise journey, a key income driver for carriers working US-China routes.
Hong Kong stays indispensable to international logistics, and Cathay Pacific continues to reap the rewards. Its revenues rose greater than a tenth final yr to HK$104.4bn ($13.3bn) whereas its shares are up a 3rd up to now six months, reflecting robust development.
However the forces at play now are bigger than any single airline or airport. The resilience of Hong Kong’s cargo sector relies upon not simply on freight demand, but in addition on broader geopolitical dynamics. On that entrance, an important air site visitors controller is the one who sits within the Oval Workplace.
