Hong Kong Air Cargo Terminals Chief Executive Wilson Kwong is on Straight Talk this week. He talks about how Hong Kong benefits from being the world's busiest air cargo hub and the way forward for the industry in order to maintain our competitive edge.
Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Wilson Kwong:
Chan: Good evening and welcome to Straight Talk! I'm Eugene Chan and our guest this evening is Wilson Kwong, the chief executive of Hong Kong Air Cargo Terminals Limited (HACTL), the operator of one of the most modern and the biggest air cargo terminals in the world. Prior to this appointment seven years ago, Kwong held various leadership roles within the Jardine Matheson Group, including being the CEO of Jardine Engineering Corporation and CEO of Raffles Quay Asset Management in Singapore. Wilson is also active in industry leadership, serving as the chairman of the Employers Federation of Hong Kong and holding key roles in the various logistics and commerce committees. Welcome, Wilson, to the show!
Kwong: Thank you for inviting me. Eugene, thank you!
Chan: I think we all know that Hong Kong Airport is one of the world's busiest passenger airports. But many will be surprised after the show today that we know that Hong Kong is also one of the world's busiest air cargo hubs, and HACTL, the company that you work for, is the oldest and largest independent cargo handler at this airport hub of Hong Kong. So, the reason why we invited you as a CEO is to let our viewers know how Hong Kong can benefit from being the world's busiest air cargo hub. Maybe we start with what actually an air cargo terminal is as compared to the passenger terminal that we always use when we travel.
Kwong: Thank you, Eugene. And a great question. I think many of our viewers would have no doubt been through a passenger terminal. Of course, as passengers, we go through a check-in process for departure, at least the immigration. And then we wait for the aircraft, then we board the aircraft. And hence the story goes, actually, a very similar story goes for cargo as well. A cargo has to be accepted before it can be accepted for flying, it has to wait for a certain time for the aircraft. It has to be towed to an aircraft, and then it will be loaded to an aircraft. The only difference is the cargo itself cannot move by themselves, and this is what we, as an air cargo terminal, do to help the seamless travel of the cargo from the point of acceptance all the way to the aircraft and vice versa, for an improved process.
Chan: Wilson, thank you for a very detailed description of actually what happens, but what exactly is a cargo? I'm sure the viewers will be saying, when we travel, we have our luggage, and we do carry some extra luggage, sometimes, we pay extra for that. What else is classified as cargo?
Kwong: Well, I think that's a very spot on question, because apart from the passengers, apart from their baggage and apart from mail, as in the air mail, all the other items which go on the aircraft would mostly be cargo. Many of these items would be called general cargo. So, items which we ship with a view to be transported by air. It could be anything – things that we wear, phones that we use, you know, the daily livelihood. The beauty about air cargo is that people often don't see it, but people would have no doubt been using items which have been airfreighted.
Chan: As I said earlier, HACTL has been part of the Hong Kong air cargo story since 1971. So, how has this part of Hong Kong evolved in the last five decades?
Kwong: I can go on forever. Hong Kong has always been a trading hub, okay? And I think we have seen it in the growth of Hong Kong. And HACTL has been so proud and honored to have witnessed this growth since we established in 1971 and since we operated, since 1976. In the days of Kai Tak airport, we have seen the phenomenal growth of air cargo along with the passenger side. And since the move to Chek Lap Kok in 1998, the growth has very much continued. Of course, during the past five decades, things have changed, the trade mix have changed, the trade links have changed. But what hasn't changed, Eugene, is the commitment of the people working in Hong Kong, not just in Hong Kong International Airport, and not just in our very trade, facilitating the government. But you know, everyone in Hong Kong is so determined to ensure that Hong Kong remains as the busiest cargo hub for the world.
Chan: Right. You know, Hong Kong has been faced with many challenges and I personally am very happy to know that Hong Kong is still the number one of the most busiest air cargo hubs. With what you have just explained to us, I kind of understand air cargo is sort of signaling international trade. So, with this, with Hong Kong being the most busy air cargo hub, how is all that going to benefit Hong Kong's economy in general?
Kwong: Okay, well, I think let's look at some statistics. If one looks at trading and logistics, it is an industry which accounts for almost one quarter of Hong Kong's GDP. This industry alone, the trading and logistics, employs one sixth of the working population in Hong Kong. So, however you look at it, and of course, air cargo is part of it. We contribute significantly towards Hong Kong's development.
Chan: Can you share some examples of industries in Hong Kong that will sort of particularly thrive because of this status?
Kwong: Oh, there are many, because for air cargo, it is not just, you know, the carriers which help transport the cargo from A to B. The industry is very wide, is segmented and involves many different stakeholders. For example, there are, of course, the airlines which we talked about, the freight forwarders, which help direct the freight, you know, depending on which mode they travel, there are the agents, the truckers. We touch on many aspects. But above all, Eugene, I think the air cover industry does best is ... it helps ships, you know, items that are valuable, that are, you know, time sensitive, and in many cases, critical for the well-being of not just Hong Kong, but for the world. I give you one particular example. During COVID, which, you know, it was a few years ago, one of the things which the air cargo industry did, not just in Hong Kong but worldwide, was the shipment of critical items. What do I mean by that? Vaccines, ventilators, to start off with the PPEs that we talked about, and the people started to work from home. There are so many items that air cargo plays such an important role to facilitate. At HACTL, we always say that our mission, our role, is to keep the air cargo supply chain going, and we do that, not as for HACTL and not as for Hong Kong, but for the world. Hence, your question is absolutely valid. Hong Kong has many things to be proud of, and being the busiest cargo airport is one of them.
Chan: Hong Kong is often called a super connector. As you were explaining to me, I'm just trying to think Hong Kong will be a very good place to link up the Chinese mainland, even the Greater Bay Area, with the rest of the world. Am I correct in saying that?
Kwong: Absolutely, yes. I think if you look at the profile of the goods traveling from Hong Kong, you will see that a majority of items are for export, i.e., items that are manufactured in the motherland and increasingly from GBA; we can talk about e-commerce later. They get transported to Hong Kong, get consolidated in Hong Kong and they get exported out to the rest of the world. Just that alone already helped being a super-connecter role. But it isn't just that. The physical movement is just part of it. There is, of course, trade facilitation. There is the financing, which can be done as well. So, I think air cargo is more than just the actual shipment itself. It benefits others. But going back to your point about the super-connector role, yes, of course, from GBA to Hong Kong and then to the rest of the world. But the reverse is also true. So, items can be imported into Hong Kong and then be subsequently re-exported back to the GBA. And that's a role which we have been playing, and increasingly, I see more and more opportunities as the wealth thrives in GBA, and hence demanding more import into the GBA.
Chan: Right, it sounds that Hong Kong will have a very important role in facilitating these exchanges of goods, and actually businesses, export.
Kwong: Absolutely.
Chan: I just also read that you have handled 3.5 million tons of cargo annually, and then you have what we call a ‘super terminal one’, which is the world's largest multi-level air cargo terminal. And also I want to congratulate you, because I've been doing a bit of homework. HACTL is going to be winning the Supply Chain Innovator of the Year, and also air cargo terminal operator of the year. Do you think all these prizes reflect Hong Kong's unique location or ability, or is it our overall advantage? I mean, getting a prize is not easy. I'm just wondering, what does that imply?
Kwong: Absolutely, thank you for that question. And I'm truly humbled, you know, to get all these accreditations, which is mainly for the team. Hong Kong has many advantages and unique advantages. One of them, of course, is our geographic location. Now, if you look at many statistics, we will see that actually one-half, half of the world's population is within five hours of air travel from Hong Kong. I mean, Hong Kong has a very, very good geographic location. But more than that, Eugene, we have got excellent connectivity. And before COVID, the Hong Kong International Airport was serving 220 destinations from Hong Kong. Now, of course, after COVID, there has to be a phase of recovery, and recovery is taking place rapidly as we know. So, that's two of the physical location advantages. But Hong Kong has more than that. One thing I must highlight is the very trade facilitating government and regulatory framework.
Chan: Okay.
Kwong: Of course, we have to follow the rule of law. We have common law, which definitely helps, as it gives a sense of certainty when it comes to dealing with businesses. But we also have a free port. We have a very trade facilitating customs regime, and a very efficient, one of the best, if not the best, Customs and Excise Department. And of course, all the other government departments and bureaus, who were very committed to keeping that advantage.
Chan: Alright, Wilson. Let's take a short break now. But viewers stay with us, we will be right back.
Chan: Thank you for staying with us. Wilson Kwong, CEO of Hong Kong Air Cargo Terminals Limited or HACTL, has been sharing with us how being the world's busiest air cargo hub benefits Hong Kong's economy and our businesses. So, Wilson, in the first half you explained to us, actually in very good terms, simple terms, that we know how Hong Kong is, why we are so important. Just going back to the niche of Hong Kong, or being the busiest air cargo hub, and also accounting for nearly one quarter of the GDP. It is a very important area of Hong Kong's economy. You mentioned about the connectivity, the location, the framework, the rule of law. However, we have been sort of behind it by the last few years of COVID and we have been catching up. How much do we have to catch up? And how much have we lost to other competitors? The reason why we say that is: at Straight Talk, we always talk about like Singapore, recent GBA. So, how about in this area, how disadvantaged have we been by this COVID?
Kwong: It is an interesting question because during COVID, thanks to the entire airport community and of course the entire logistics community, our air cargo volume actually rose in 2021. It dropped in 2022 and 2023, but for the first 11 months of 2024, the entire Hong Kong International Airport handled 4.5 million tons of cargo. And that is an improvement of 14.8 percent compared to last year. Now, of course, the December numbers isn't released yet, but 2024 we will see a growth. But going back to your question about how is our competitive edge, whether we are retaining it or whether we are losing, I must say Hong Kong still has an edge, but as with always, one cannot be complacent. One always has to look internally to see how we can do better, so that we can accommodate the changing trade mix and the changing trade lanes, and in order to ensure that we continue to give the reliability that shippers, that agents, that freight forwarders, and of course, the airlines required to make sure that they always put Hong Kong as the hub of their choice.
Chan: Wilson, thank you for explaining it to us. One area that I am sure many viewers will start to ask us is about the GBA. We all say the GBA is our central sort of direction for Hong Kong's future. But in recent months, we know that because of the opening of the borders, a lot of Hong Kong residents are going up to spend, and the Hong Kong retail and the F&B are sort of having a temporary setback. But with the GBA developing at such a great speed, how are they, sorry to ask a direct question … are they going to be a friendly competitor? Or are we losing businesses to them because they also have to develop? So, how can we maintain the niche? Sorry, a direct question.
Kwong: No, no problem at all, Eugene. And thank you for that question. If you look around, the Greater Bay Area, there are five airports around the vicinity. Two of them are Shenzhen and Guangzhou. Both have international airport and both have a growing cargo volume. And of course, there is Macao on the western side, and Zhuhai, okay? Now that is putting aside the new ones. I must say, I think with the closer GBA integration, it presents us with competition, friendly competition, I must say, but also more opportunities. What do I mean by that? Of course, as Shenzhen and as Guangzhou further develops, you will see more and more international airlines flying international routes from those airports. And in fact, we are seeing increasing cargo volume through these airports. But so is Hong Kong, just like what I mentioned earlier, for the first 11 months, our Hong Kong International Airport tonnage has been up by 14.8 percent.
Chan: Right.
Kwong: But we are not resting on our laurels, we are not, you know, being complacent. In Hong Kong, and thanks to the Airport Authority of Hong Kong, we have already established an operations in Dongguan. What that does is that now the cargo can be tended for acceptance at Dongguan, and through a barge, which directly connect the Dongguan port to Hong Kong, and they can be transported directly into the airside of Hong Kong; it can be towed directly to the aircraft. Hence what we are actually trying to do as a community or as the Airport Authority is doing right now is to enlarge its catchment area as well, better serving the customers within GBA. That is for export. For import, the vice versa is also true. But ultimately, for the Greater Bay Area, as the wealth effect continues to prosper and to improve, there will be more and more demand for air cargo because there will be more and more shipments. We are all buying more, we all want our shipments faster, and there will be more opportunities for air cargo.
Chan: Right. It is often also cited by our government officials that we all in Hong Kong must not be complacent. Being into the GBA, we have got a greater market. But we also have more competitors, and we have to do our work better because we are not going to fight them with a lower cost as we discussed earlier, just like medical and dental services, we are going to be better. So, what unique services or innovations Hong Kong has that you can see we have a large sort of leading edge at the moment? Do we have anything like that?
Kwong: Yes, absolutely. Hong Kong still has many leading edges when it comes to air cargo industry. I mentioned the regulatory framework earlier, I mentioned about our connectivity earlier. What is more is the commitment from the government, the world-class infrastructure, which we have in Hong Kong, and of course, the people, which we have developed over many years, and many generations of leaders. And these are actually accredited and are deemed as one of the most efficient crew members in the world.
Chan: Right. You know, apart from our Super Terminal, as we mentioned earlier, are we doing any more capital investments, just making sure we are leading the rest?
Kwong: I would say, I will answer this question in two perspectives. At HACTL, at Super Terminal One, each year we are pumping in millions of dollars when it comes to … millions of US dollars … that is because we have got overseas viewers as well, you know, onto the upgrading of facilities. Just this year alone, we opened, just in 2024 alone, we opened a Cool Chain Complex, we opened a new terminal services center for export, among many others. But the Hong Kong International Airport in general are also doing a lot. So, apart from the Dongguan facilities I just mentioned, everyone is investing. DHL has just expanded the facilities, Cainiao has opened its very significant and massive complex, UPS has announced expansion plans. The entire Hong Kong community is not being complacent and we should not and we will not.
Chan: Right. And then in the last part of the show, I want you to explain to Hong Kong people how your industry is facing the challenges that the air cargo is. For example, we have a lot of disruption because of geopolitics and because of also the pandemic that we had, also with rising cost of labor or shortage of labor in Hong Kong. So, in general, how are you facing labor, rising costs, competitiveness, and also with geopolitics? I think I asked you everything in the general question.
Kwong: This question can have a very, very long answer, but I will try to be brief. Air cargo intrinsically deals with trade and trade intrinsically deals and very closely associated with geopolitics. But there will always be geopolitical developments, okay? And one thing which the air cargo industry has shown consistently and in the case of HACTL over the past five decades is that we are very agile because there will always be changing threats, but there will always be changing and emerging opportunities.
Chan: Right.
Kwong: So, one thing which we have to do as Hong Kong is to make sure that we have the right infrastructure and the right investments in place to capture the upcoming opportunities, which there are plenty. But of course, apart from the geopolitics, there will be, well, there is, as you said, the labor shortage. Hong Kong has a very low unemployment rate, and I think everyone knows that. So, thanks to the government, we now have a labor import scheme.
Chan: So, that helps?
Kwong: That helps. And at the airport, at the aviation sector, we have 6,300 quotas. And many of the companies at the airport, including HACTL, has actually been applying for that. So, we actually have import labor working in the super terminal now, and they are working well. We will ensure that we have adequate manpower and adequate infrastructure to cater for the upcoming needs. Why? Because on Nov 28 last year, the three runways system officially opened. We now have three operational runways. That is a key milestone for Hong Kong. And with that, by 2035, the annual handling capacity for cargo would reach 10 million tons. Everyone, including HACTL, would therefore be committed and interested to invest, and to make sure that we can handle this additional volume as they come through.
Chan: Well, Wilson, thank you very much. I think we have to wrap it up there. Thank you for taking us all behind the scenes of the air cargo business. It is clear that the air cargo is not just a vital pillar of our economy, which it does boosting trade, supporting our industries, like e-commerce that Wilson has mentioned, and logistics, and reinforcing our position as a global gateway, but also a key driver of Hong Kong's connectivity and prosperity. Thank you for joining us and have a good evening. Thank you!
