Cathay Pacific Airways will open its HKD5.9 billion air cargo terminal at Hong Kong International Airport about five months early on February 21. The complex, which will become fully operational by the end of this year, will boost airfreight capacity at the airport by 50% to 7.4 million tons. By comparison, total cargo throughput rose about 1% last year to 4 million tons. Cathay Pacific Chief Executive John Slosar was able to shorten the construction and development program by carrying out more detailed project planning when work on the 240,000 square meter complex stopped due to poor global economic conditions. Construction of the facility, which will be able to handle 2.6 million tons of cargo, was halted soon after work started in late 2008, and restarted in April 2010. The complex, which has been built on a 109,000 sq m site between Hong Kong Air Cargo Terminals (HACTL) and the Asia Airfreight Terminal (AAT), will become operational in three phases. Portia Cheuk, Spokeswoman for Cathay Pacific Services, which was set up to design, build and operate the terminal, said the facility will initially handle transit and valuable cargo. Phase two will see the terminal handling transshipment and import cargo from summer, while the third phase, covering export cargo, is planned to start “late in the third quarter or early in the fourth quarter”. Slosar said the facility will first handle Cathay Pacific and Dragonair cargo, but under its 20-year franchise from the Airport Authority, Cathay Pacific could later handle cargo for other airlines in competition with HACTL and AAT. The facility is equipped with an automated material handling system to help move and store laden and empty airfreight containers together with areas for bulk cargo, dangerous goods, livestock and perishables such as seafood and flowers. About 1,800 people will be employed at the seven-story building when it is fully operational, including 500 to 600 directly employed by Cathay Pacific Services, the South China Morning Post reports.

A pickup in air cargo shipments from Asia may benefit shares of Expeditors International and FedEx as global economic growth improves. Exports at Hong Kong Air Cargo Terminals (HACTL) grew 5.9% in December from a year earlier, following an 8.5% increase in November, based on data from the biggest handler in the world’s busiest freight airport. The recent gains came after shipments had contracted by an average 4.2% in the 24 months to October. The rise in shipments from Asia was encouraging for Expeditors, with 2011 revenue of USD2.9 billion from airfreight services, and FedEx, said David Ross, Transport Analyst at Stifel Nicolaus. These exports – particularly high-technology shipments – were “part of the equation” that boosted earnings for those companies. While Expeditors had missed analysts’ earnings estimates for the past four quarters, it might be “nearing a beatable quarter” this year, he said. The company is scheduled to report fourth-quarter results on February 26. Exports from Hong Kong Air Cargo Terminals have a “strong correlation” with annual growth in airfreight revenue at Expeditors and yearly gains in the average daily weight of FedEx’s international priority freight, according to Peter Nesvold, Analyst in New York at Jefferies & Co.

Hong Kong’s logistics industry has to act quickly to meet tougher anti-terrorism security measures overseas, Financial Secretary John Tsang said. There are concerns in the logistics sector about whether the process can be successfully implemented, given the high cargo volume from the southern mainland for shipment out of Hong Kong’s airport. “If Hong Kong businesses are among the first batch of service providers that satisfy these requirements, it is very possible that we can beat other less-prepared rivals”, Tsang said. “Hong Kong is best known for its efficiency and speed in terms of cargo handling,” said Transport Sector Lawmaker Frankie Yick. “But our three [cargo terminal operators] do not have the capacity to comply with the proposed requirements at present.” The “air cargo advance screening” regulation implemented in the U.S. last month requires details about the shipper, consignee and cargo to be lodged with the Transportation Security Administration before the cargo is loaded onto the aircraft. The U.S. authorities plan to extend the advance screening pilot scheme to cover cargo transported on freighter aircraft, and local businessmen expect the law to come into full effect by the middle of next year. Meanwhile, EU regulation 859, which will take effect from July next year, requires all air cargo shippers and forwarders to be independently validated. Any suspect cargo to Europe will have to be X-rayed before being loaded on to the aircraft. Yick said the EU regulation could pose a difficulty for local businesses, because many Hong Kong companies own factories in the Pearl River Delta, and the ways through which their products can be validated have yet to be addressed.

Last year saw 5.7 billion packages delivered through express services in China, prompting analysts to speculate over whether the country has surpassed Japan to become the world’s second-largest market for express deliveries. Ma Junsheng, Director General of the State Post Bureau of China, said that China’s postal industry made significant strides in 2012, with the domestic express industry earning CNY106 billion in revenue last year, a year-on-year increase of 40%. The number of packages delivered in 2012 was up 55% from the previous year, Ma said, and he expects the figure to increase by 40% this year, hitting 8 billion. Xu Yong, Chief Consultant with the express and logistics website www.cecss.com, said China has already emerged as the world’s second-biggest market for express deliveries. The website estimates Japan saw about 5.5 billion package deliveries in 2012, and the United States 7.5 billion. “But China’s express market is still in its initial stage of development,” Xu said. “Compared with developed economies, China lags behind in the diversity and quality of its services.” The express delivery market is expanding thanks to e-commerce. A report from the Boston Consulting Group has suggested that China is likely to surpass the United States to become the world’s biggest online retail market in 2015, a year in which the country’s online retail sales are expected to be worth more than USD360 billion. But the surge in e-commerce transactions has resulted in difficulties for Chinese courier companies. Da Wa, Secretary General of the China Express Service Association, said domestic demand for express services will far exceed the supply for at least the next five years. The combined number of packages ordered on peak days from Tmall.com and Taobao.com could even “exceed the total number of packages that Chinese courier firms can handle in a single day”, according to Daniel Zhang, President of Tmall.com. “The revenue from the domestic express industry is expected to triple in 10 years by 2020,” Ma of the State Post Bureau said, as reported by the China Daily.

Couriers are gearing up for the upcoming Spring Festival business surge after a government directive was issued requiring all express delivery companies to remain open during the Chinese New Year holiday. During Spring Festival, each company must appoint a transfer station for distribution and dispatch of parcels, and provide delivery services to both bricks-and-mortar and online vendors, according to a notice published on the website of the State Post Bureau. “The express delivery service industry is a public service in the same vein as the civil aviation and railway industries, so they should stay open during the Spring Festival,” said Shao Zhonglin, Deputy Secretary General of China Express Association. Greater supervision of the industry is also urged, after postal authorities canceled the licenses of 116 couriers in the past year for allegedly losing mail and poor sorting. Such complaints plague China’s fragmented but booming express delivery industry, where delay, damage and outright loss of packages continually erode operators’ reliability and reputations. Some vendors warn their customers that what is usually a three-day delivery could take up to two weeks. China’s express delivery sector was worth CNY48.9 billion in the first half of 2012, according to the latest data from China Express and Logistics Consulting. “The number of express deliveries will increase by 50% or could even double during the Spring Festival holidays,” said Xu Yong, Principal Analyst of China Express and Logistics Consulting website, the China Daily reports.