Hong Kong International Airport has been the world’s busiest air cargo hub for many years, resuming its position at the top after a temporary, pandemic-induced hiatus in 2020. Its speedy return is largely down to the e-commerce boom, with a significant percentage of the world’s online purchases funneling through Hong Kong from the Greater Bay Area.
But Hong Kong was ready for the business—which exceeded 4 million tons in total in 2023—and boasts some of the world’s leading cargo facilities.
Rather than rest on their laurels, however, the key players at the air cargo hub are thinking ahead. A UPS hub is expected to begin operation in 2028 handling around 1 million tons per annum, joining a DHL hub of similar size that opened in 2023. DHL has a partnership with Cathay Cargo through Cathay’s dedicated cargo subsidiary, Air Hong Kong, which operates overnight express services to 14 Asian destinations.
Meanwhile, some HKD70 million has been invested in cool dollies—mobiles fridges that ensure temperature-controlled goods maintain integrity from aircraft to warehouse—which will complement certification in IATA’s Center of Excellence for Independent Validators (CEIV) Fresh program. Indeed, the airport and home carrier, Cathay Cargo, possess the full suite of CEIV certifications, with Pharma, Live Animals, and Lithium Batteries making up the portfolio.
Arguably, the biggest difference will be made by a logistics facility in Dongguan in Mainland China, which is expected to reduce processing time by about a third and costs by half. Operations are scheduled to begin in 2025 but already pilot schemes are underway. In late 2023, for example, Cathay Cargo worked with IATA and the Airport Authority Hong Kong (AAHK) to offer IATA’s ONE Record data protocols for intermodal shipments accepted at Dongguan. It was the first time that ONE Record was used for a sea-to-air shipment, with cargo acceptance logged outside the origin airport’s cargo terminal.
Freight forwarder Yusen Logistics had shipments bound for Bangkok, Manila, and Tokyo pass through AAHK security at Dongguan. Yusen was able to follow the shipments’ progress by interfacing with EzyCargo thanks to work by Global Logistics System (GLS) HK Co Ltd.
For Tom Owen, Director of Cathay Cargo, this was just one more step in the carrier’s determination to be a digitalization trailblazer. “The alignment of digitalization in the supply chain around ONE Record will be a game changer,” he says. “It will unlock tremendous value and allow air cargo to be truly competitive. It will be especially important to serving the e-commerce industry, which is at least half of our business.”
Digital capabilities
Cathay Cargo’s digitalization efforts started many years ago. The carrier offers 100% e-air waybill (eAWB) out of Hong Kong and is at 95% worldwide. More than 50% of its shipments are booked through its Click and Ship online booking platform and the carrier has extensive IT integration with its customers through API technology.
“We want to work with companies and hubs throughout the supply chain that have a strong digital program,” says Owen. “That is why ONE Record is so important to us. It will bring significant improvements in cost savings, efficiency, and security. We are ready to implement it. ONE Record will make a positive difference to how we deliver our solutions and services and make us more competitive in the eyes of our end customers.”
Every Cathay digital product is in an agile process of iteration, adds Owen, which, together with various company-sponsored hackathons and innovative idea sharing, ensures the airline and its partners are always being progressive in their drive to improve experiences for their customers.
The carrier is also trying to eliminate inefficiency at key handover points, which are the obvious anchors to air cargo’s speed. Truckers arriving at the Cathay Cargo Terminal can use an app not only to book their arrival slot but also, through a digital barcode, ensure the terminal and forwarder has all the necessary data, including e-payment details.
“The links in the chain can be impediments to speed,” says Owen. “Air cargo is premised on efficient customs, screening, and processing. Data has to flow quickly and accurately and that is what we are committed to achieve.”
Cathay Cargo is also experimenting with artificial intelligence (AI). Using Large Language Models, the initial aim is to check the cargo manifest for compliance with all necessary regulations. “There is no shortcut,” Owen advises. “A lot of testing is involved because you must have confidence in the answers. But as the AI’s knowledge base increases, you eventually get to something you do trust. When that happens, the acceptance process will be considerably accelerated.”
People and places
Owen accepts that air cargo is still a people-first business, however, and puts skilled, trained people high on his list of requirements for industry success. Automation is coming but cargo operations will likely rely on a human workforce for some time to come.
“You will always need people who know cargo and can understand its complexities,” he notes. “That is why we have a graduate program that accelerates career development.”
For air cargo, the challenge is changing the perception of the sector from dusty warehouses and paper-based bureaucracy to a vibrant industry in the midst of a rapid, innovative transformation.
“Our company’s purpose is to carry cargo that matters to the world, and we want to get young talent to be excited by that,” says Owen. “That should be their motivation. Air cargo and logistics is at the cutting-edge of technology and is a complicated and fascinating industry that requires a whole range of skills and disciplines and can provide a really satisfying career.”
Alongside skilled staff, modern cargo infrastructure is a must. The days of dusty old warehouses are becoming a thing of the past. A safe, secure, accessible, well-lit warehouse, ideally with the requisite special handling facilities and a sustainability roadmap, goes a long way to ensuring air cargo’s value proposition.
Flying greener
Success in air cargo will also depend on addressing the sustainability challenge. Cathay is committed to using 10% sustainable aviation fuels (SAF) by 2030, which will require a mammoth increase in its current uplift. Owen believes, however, that the target is a realistic one as long as sources and costs are factored in at the earliest possible opportunity.
SAF represent the biggest opportunity for carbon emission reduction, but Cathay Cargo has also invested in new fleet with six Airbus A350 freighters to be delivered from 2027 and rights to acquire an additional 20 more. Initially, these will complement the 20 Boeing 747 freighters, but Cathay is still evaluating its cargo fleet needs for the future. Owen reveals one eye is being kept on hydrogen power development but agrees that this is a longer-term solution.
A host of other initiatives are playing their part in the quest for net zero. The carrier offers a corporate SAF purchase program, the first of its kind in Asia, for example, and shippers can buy Fly Greener carbon offsets through the Click and Ship portal when booking their freight.
Moreover, Cathay Cargo has reached 50% recycling on its plastic sheeting and is also dealing with physical waste involving pallets and other packing materials. A Hong Kong charge on waste is driving rapid development in this area. Solar power, improved air conditioning, and other new technologies will also be part of Cathay Cargo’s sustainability program.
“There are a still a lot of unknowns, but we do know that we have to get to net zero,” says Owen. “The low hanging fruit is starting to disappear and now we really need to focus on SAF and ensure the industry gets the supply it is clearly demanding.”
A different perspective
Owen concludes that the Cathay Cargo business model has taken years to build. After all, the airline started out carrying cargo and logistical expertise—accompanied by the necessary investment—is part of its DNA.
“We have always had a different perspective on cargo and know it matters to the Cathay Group performance,” he says. “But I think the profile of the overall cargo industry has risen following the pandemic. Air cargo is being recognized as a vital part of humanitarian aid and we would like to expand our support for companies such as Airlink in this area.”
Owen now wants to see the recognition of air cargo as a key player in the world economy reflected in policy and investment. Free moving global trade is a positive for economic growth, he says, and trade restrictions, burdensome tariffs or ill-thought-out security measures push that ideal further from the world’s grasp.
“Digitalization, operational excellence and sustainability are our priorities, and they are at the top of the industry agenda too,” he sums up. “We are moving in the right direction and if we can all get our partners in the supply chain to move with us, our journey—and the journey of our shipments—will be faster, safer, and environmentally friendly.”
