Authority defends new DHL terminal
Despite questions about its impact on existing terminal operators at Chek Lap Kok, DHL Worldwide Express's planned new express cargo terminal will help Hong Kong achieve its goal of becoming the leading logistics centre for southern China, the Airport Authority says.
According to Hans Bakker, the authority's commercial director, the ultimate aim is to take advantage of production growth in the Pearl River Delta and the increasing sophistication of its output.
"There's only the question of how to do it, not whether to do it. If the airport is to be involved in express products and logistics, we have to resolve who will lead it and how do we plan for the flow in freight ," Mr Bakker said.
"Express freight is such a young industry. Six or seven years ago, it was less than 1 per cent of volumes. Now it's 6 or 7 per cent. We have to accommodate this growth, that was the key issue in the terminal's development," he added.
Mr Bakker said for all the plans being formulated by rivals in southern China, particularly by the Shenzhen and Guangzhou airports, Hong Kong – the busiest cargo airport in the world – still has its advantages.
"Competitiveness in logistics is not only about prices but it's about efficiency and the depth of your network. The competition is not yet mature in China, so we have to make the next step now," Mr Bakker said.
Still, the authority's confidence in continued expansion of the market has not stopped the existing cargo operators at Chek Lap Kok from fretting over their future.
Hongkong Air Cargo Terminals (Hactl) and Asia Airfreight Terminal (AAT) have held discussions this year with the authority on how the new facility will affect their businesses.
For Hactl, the most immediate impact will be the loss of its biggest tenant, DHL, at its Superterminal 1 facility.
There were also fears that the weaker economic environment meant the terms of DHL's new franchise agreement would give it more favourable operating costs.
Mr Bakker denied these claims, although he declined to reveal DHL's franchise terms.
"We want to create a level playing field. The Airport Authority is not here to give anyone special advantages," Mr Bakker said.
"The land for the express terminal has not been subsidised by us. The rent is the same as for Hactl and AAT. We want to create a healthy, competitive environment," he said.
"There has been no talk of compensation to them . That would imply exclusivity and monopolies and we don't do that" with any of our franchisees, he said.
"It's not our intention to harm our partners, but the underlying theme is 'the future'," Mr Bakker said. "This is a growth industry and it is difficult enough coping with the growth."
He said the 15-year term in DHL's agreement, which some industry figures questioned as too short to be profitable, gave the airport flexibility to expand its general air cargo activities.
If volumes warranted, the express terminal could be moved between the runways and its existing location used for expanding the number of general-cargo sorting facilities, he said.
"The theme is growth," he said.
Mr Bakker acknowledged that the new facility would mean an expansion in revenues for the airport.
"We charge a lease and royalties, same as for all franchises. For us, it will mean more cargo and flights, meaning more landing charges," he said.
"But it will mean growth in Hong Kong's competence as a logistics centre. It is a small sector now; we've got the Tradeport.
"More businesses will emerge and they will help complete the supply chain," Mr Bakker said.
The new terminal was given a vote of confidence by Cathay Pacific, which last week agreed to create a joint-venture cargo airline with DHL to service the new terminal.
"I have much respect for Hactl's entrepreneurship. They invested a lot of money in their facility and have improved their efficiency," Mr Bakker said.
