Hong Kong is a hive of activity and home to Hactl, one of the world’s largest air freight terminals. We speak exclusively to the new chief executive Wilson Kwong while on a visit to London.
Anyone that’s been to Hong Kong International Airport, Chek Lap Kok would no doubt have seen the sheer size and splendour of the Hong Kong Air Cargo Terminals Limited (Hactl) SuperTerminal 1. It represents an investment of $1 billion and capable of handling 3.5 million tonnes of cargo per annum.
With just a few months into the job, the new chief executive Wilson Kwong was appointed in March 2018 and has a momentous task in steering the business forward. “I’m the newest kid on the block you might say,” he states enthusiastically.
Kwong began his career at the airport 20 years ago and feels content to return. In the past two decades he has filled several roles.
He started his career with Jardine Aviation Services, he held senior management positions in real estate development, property management and engineering services.
Prior to joining Hactl, Wilson was chief executive of Jardine Engineering Corporation. Jardine, Matheson & Co Ltd is a majority shareholder in Hactl.
Kwong shows plenty admiration for his predecessor Mark Whitehead who retired in early March after eight years at the helm of the company, but sadly passed away just three weeks after retirement.
“It is a big loss to us. It has been a very well-run organisation under Mark, he did so much for the company steering it through the difficult times and laying a very firm foundation for the company going forward,” he says.
Kwong is pleased to lead what he believes is a very well-run organisation. “Mark’s passing was a shock and all of us were affected somehow but then of course Hactl is a good company. Things are now beginning to pick up and I’m learning every day.”
Hactl is a cargo terminal operator, but where it differs from some cargo handlers is that it is also very active on the ramp. It doesn’t tow freighter aircraft, but it does handle them right up to the aircraft side involving all physical handling activities.
On the ramp, Hactl only handles freighter aircraft, and does not handle any passenger aircraft – this is instead done on the other side of the airport by different companies.
SuperTerminal 1, as it’s referred to, was operational in 1998, and it’s known to be the single largest multi-level air cargo terminal in the world.
There are 3,500 container storage system positions, 10,000 box storage system positions, and specialised cargo handling facilities to cater for all cargo types, from temperature-controlled products to valuable goods to livestock.
“Air cargo is at an interesting time at the moment with lots of opportunities and I think now is the best time to be in the industry,” he reckons.
Last year Hong Kong International Airport collectively handled just over 5 million tonnes of cargo and air mail.
“If you think about it, five million tonnes basically puts Hong Kong at the top spot in terms of air cargo footprint and that has been the case for eight consecutive years now,” indicates Kwong.
Last year was an exceptional year for cargo, globally. IATA reported that full year 2017 demand for air freight grew at twice the pace of the expansion in world trade (4.3 per cent).
This outperformance was a result of strong global demand for manufacturing exports as companies moved to restock inventories quickly. Airlines in all regions reported an increase in demand in 2017.
“We have noticed over the last five months of 2018 that there is growth but, the growth rate is not the same compared to what happened in 2017, eventually we will have to see what the rest of 2018 will be like.”
There are various types of commodities going in and out of Hong Kong – anything from outsized cargo, electronics to seasonal goods, and at every corner there is a link to the important Chinese market.
He explains that Hong Kong, being a services economy, does not have much manufacturing activity, and therefore goods moving to and from China make up a significant chunk of traffic.
“There are a lot of goods manufactured in China and shipped through Hong Kong and to the world. We don’t have a significant portion of manufacturing, but Hong Kong has excellent connectivity through our airport.”
Recent figures indicate that Hong Kong International Airport is served by over 100 airlines to 220 destinations worldwide, including 50 which are in China.
Hactl has secured several new cargo handling contracts this year. One of those newcomers is the newly-launched Air Belgium for its recently launched long haul service between Brussels and Hong Kong.
Air Belgium commenced twice-weekly services on June 4, using A340-300 passenger aircraft with approximately 14 tonnes’ cargo capacity per flight. It has chosen Brussels South (Charleroi, CRL) as its hub, as the airport does not suffer from congestion.
Hactl provides the Belgian airline with full terminal handling and documentation services in Hong Kong.
YTO Cargo Airlines (YG) – the aircraft operating arm of Chinese courier firm YTO Express also picked Hactl as its handling agent operating newly-acquired 30-tonne capacity B757-200Fs between Wuxi and Hong Kong.
Another notable return to Hactl is EVA Air: “Obviously we are very pleased to welcome back EVA Air, they are a client that we’ve handled for many years since the Hong Kong Kai Tak (old airport) days.”
However, Kwong highlights the loss of one major client last year, Hong Kong Airlines. He explains that this was not a result of service quality issues, but due to other unrelated circumstances that meant the airline had to move.
“At the same time, the loss of Hong Kong Airlines gave us a lot of capacity to welcome either the return of previous clients or new ones. We are very privileged that we have had a few wins this year and I’m sure there will be more,” he assures.
When asked what is bringing growth to the business he cites a mixture of factors: “Obviously we have new airlines operating into Hong Kong and that drives the tonnage. E-commerce is also something everyone is talking about. It has driven much of the growth over the last two to three years”
According to IATA, a sharp growth slowdown is principally due to the end of the restocking cycle, during which businesses rapidly increased their inventory to meet unexpectedly high demand.
“Restocking tends to happen when there is an economic up cycle, but I think apart from restocking, the e-commerce development has certainly had an impact in Hong Kong.”
He observes an increase in the number of mail bags handling e-commerce goods at Hacis – the value-added logistics arm of Hactl.
Kwong is keen to push as much efficiency into the business as possible. “We are obsessed with efficiency. We want to process goods through the terminal as quickly as possible.”
Hactl has a dedicated team of seven people known as the PE [Performance Enhancement] team comprising of staff from across various parts of the business, from engineers, IT, service delivery, and operations, who go around the terminal probing and questioning how things are done with a few to improving them.
“Secondly, we spend a lot of money enhancing our systems,” he says. COSAC-Plus is the third generation of Community System for Air Cargo (COSAC) developed by Hactl.
It is designed to facilitate efficient information sharing among all stakeholders including the airlines, freight forwarders, various authorities among others.
Kwong says this is a completely in house developed system and there is a team of more than 100 IT people within Hactl managing it and preparing the next upgrades, including one significant upgrades coming up this year – the logistic control system.
In July, Hactl announced that it was is the first cargo terminal operator (CTO) in the world to complete a pilot project for IATA’s new Smart Facility Operational Capacity Audit (SFOC).
SFOC is part of the Smart Facility programme which aims to provide total transparency on capacities and services offered by CTOs, by means of a multi-tiered validation process.
It is believed this could save thousands of man-hours every year taken up with largely duplicated auditing effort.
Hactl was chosen as the launch test site for the new audit system because of the scale and complexity of its operations, the diverse range of cargo it handles, the number of carriers (over 100) it serves, and the company’s highly-developed quality management systems.
Looking ahead Kwong shows enormous zeal for the business and industry in general. “I think the next few years will be very exciting in the sense that we have several major milestones happening at the airport.”
He points to the completion of a third runway as one of those milestones. With the airport’s current capacity of 5 million tonnes he believes that number could go up to at least 9 million with a three-runway system: “collectively as an airport that will be great news for Hactl as well”.
The other interesting development will of course be the ever-popular e-commerce. He says the primary objective going forward is for the company to position itself to welcome all these opportunities.
“The next few years we will see a continuation of investments to constantly stay ahead of the game.”
Visit hactl.com for more information.