Hong Kong Air Cargo Down 6 Percent

October 24, 2011

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Hong Kong Airport, the world's busiest air cargo hub, posted a 6.1 percent decline in September cargo volume, as the European and US economic woes dampen consumer demand for high-value exports from Asia, especially China.

Air cargo is an important indicator of trade and economic momentum as it accounts for about 35 percent of world trade by value.

Air freight handled by HKIA fell to 325,000 tonnes last month, it said, as consumer sentiment in Hong Kong's two major export markets, North America and Europe, remains fragile.

"Air freight is likely to remain weak in coming months as the base of last year was high because of re-stocking amid an economic recovery," Daiwa Securities aviation analyst Kelvin Lau said before the data was released.

"With a looming recession, people are now unwilling to take more stock, reflecting weak consumer confidence," Lau said.

US consumer sentiment unexpectedly slumped in early October with consumer expectation back down to the lowest level in more than 30 years, a survey released on October 14 showed.

Consumer confidence in the eurozone fell sharply in September.

"Air cargos are largely electronic products. This is more sensitive to the US side then the other part of Chinese exports," said Dong Tao, senior economist at Credit Suisse, adding that China's export growth will likely slow further.

Hong Kong, a former British colony, is mainland China's largest trade partner. Imports and exports between Hong Kong and China hit USD$230 billion in 2010.

China's exports rose 17.1 percent in September from a year earlier, the lowest since February, and economists widely expected demand from its biggest trading partners, Europe and North America, to weaken in coming months due to the impact of the European debt crisis and slowing US economy.

Exporters at China's largest trade show, which lasts for about three weeks from October 14, said that a darkening economic outlook in the west was weighing on orders for China-made good.

In the first nine months, HKIA moved 2.9 million tonnes of cargo, down 3.9 percent from the same period last year.

Cathay Pacific Airways, the world's largest air cargo carrier, said last week its cargo throughput fell in September, the sixth consecutive drop.

Global air freight markets posted a 3.8 percent contraction in August, more than double the pace of July's 1.8 percent decline as business and consumer confidence continued to slump, according to the International Air Transport Association (IATA).

HKIA overtook Memphis Airport in the US as the world's largest air cargo hub in 2010, when it moved 4.1 million tonnes of goods against Memphis' 3.9 million tonnes.

(Reuters)