This is a best prospect industry sector for this country. Includes a market overview and trade data.
Hong Kong is the regional logistics hub for Asia Pacific. Its well-connected and world-class aviation and maritime transport infrastructure provide extensive connections to major destinations globally. According to Fitch Solutions’ Country Risk and Industry Research on Hong Kong, the city scores a 95.1 out of 100 and ranks second in the region after Singapore for its transport network efficiency.
The logistics sector contributes 3 percent of Hong Kong’s GDP annually. Its status as a free port, efficiency in customs clearance, geographic location, and proximity to half of the world’s population within a five-hour flight time are critical factors contributing to Hong Kong’s pivotal role in logistics. The importance of air transport to Hong Kong’s status as a logistics hub has grown significantly in recent decades. In 1980, 26 percent of Hong Kong’s total exports and 19 percent of its imports were flown in by air. By 2020, that number increased to 37 percent of total exports and 48 percent of total imports.
The Hong Kong International Airport (HKIA) is the second busiest cargo facility in the region with five air cargo handling facilities. According to a report by Airport Authority, air cargo volumes went up by 12.5 percent in 2021 to 5 million tons, exceeding the 4.8m tons recorded in 2019 ( https://www.aircargonews.net/cargo-airport/hong-kong-air-cargo-volumes-up-12-5-in-2021/) This capacity will increase to 8.9 million tons when Hong Kong’s third runway is completed by 2024.
The Hong Kong container port is currently the 8th busiest in the world. With nine container terminals and 24 berthing facilities spread between Kwai Chung and Tsing Yi Island, the facility has a combined annual capacity of 20 million twenty-foot equivalent units (TEUS).
In addition to its strategic location and freeport status, logistics companies have increased efficiency by adopting new technologies to predict accurate cargo arrival times and automation of processes to help streamline operations. Since 2011, one of the operators, Hong Kong International Terminals (HIT), increased its productivity by 40 percent when they introduced a remote-controlled yard crane and automated stacking system.
Cross-border e-commerce: The exponential growth of cross border e-commerce has presented Hong Kong with a unique opportunity to develop its logistics sector and improve its supply chain offerings in warehousing, distribution, and fulfillment facilities. In 2021, the global e-commerce market was worth $3.3 billion, and this is forecast to grow to $4.2 billion by 2025.
The rise of live-streaming and use of key opinion leaders (KOL) has also necessitated a more responsive logistics system which are able to cope with a high volume of orders within a small-time frame. Unlike traditional retailers, a successful e-commerce business means having the right warehouse and fulfillment centers. In the last few years, global real estate funds have been buying up old industrial buildings and converting them into warehouse and storage facilities to meet growing demand. Whether is it used as a reexport market or transshipment center for retailers with Chinese manufacturing, Hong Kong offers companies access to world-class providers.
Greater Bay Area (GBA): Hong Kong will be an important part of the Greater Bay Area Initiative, as it continuously integrates its logistics network from cargo, air, and ground transportation. Since its completion in 2018, the Hong Kong-Zhuhai-Macau Bridge has linked Hong Kong with China and Macau, which has reduced travel time while enabling truck drivers to make multiple trips per day.
Hong Kong’s Transport and Housing Bureau and the Civil Aviation Administration of China have come to an agreement to extend its current air services arrangement to allow designated airlines from all GBA cities to enter code-sharing arrangements with all land and sea transport operators. This agreement is expected to make commuting between GBA cities easier and simpler.
Technology Trends: New technologies are poised to create efficiencies in the logistics industry by introducing applications that allow customers better track and manage their shipments in real time. Using the 5G network, Hong Kongers enjoy faster internet access and will have access to next generation Internet of Things (IOT) applications and solutions. Some U.S. and other logistics companies are rewriting industry expectations in Hong Kong by implementing cloud-based freight forwarding and brokerage platforms. End-to-end logistics management systems allow users to keep track of purchase orders to fulfillment and final delivery. The leaders in these technologies are steadily winning market share in Hong Kong and in the Asia Pacific region from less technologically advanced companies.
Sustainability: The logistics industry contributes about three percent of total global greenhouse gas emissions as ships primarily still run-on fossil fuels. Although there is broad agreement to reach carbon emissions reduction goals by 2050, progress in the shipping sector has been slow because of the lack of commercially viable alternative fuels to diesel. The switch to a more sustainable fuel presents exciting opportunities to the industry because of the heavy investment that will be needed on the redevelopment of existing infrastructure such as port facilities and fuel bunkers.
Other than the problem of developing alternative fuel sources, logistics companies are now being viewed as important players to help companies meet sustainability goals. More and more, shareholders and boards are asking companies to report and disclose the ESG impact of the movement of their goods, putting pressure on logistics companies to reinvent supply chain practices. U.S. companies that can help identify sustainable sourcing, manufacturing, and shipping for a product’s entire lifecycle will find potential in Hong Kong.
Other areas of interest in Hong Kong are redesigning product packaging to using eco-friendly materials and participation in carbon trading programs.
Asian Logistics, Maritime, and Aviation Conference (AMLAC): https://almac.hktdc.com/conference/almac/en
AMLAC brings together logistics, maritime, air freight and supply chain management services providers and users, including manufacturers, traders, and distributors, to exchange market intelligence and explore business opportunities in the region.
Hong Kong Government Agencies
Transport Department: https://www.td.gov.hk/en/home/index.html
Hong Kong International Airport: https://www.hongkongairport.com/
Hong Kong Maritime and Port Board: https://www.hkmpb.gov.hk/en/port.html
Hong Kong Logistics Association: https://www.hkla.org.hk/en/about-us/hkla/
Hong Kong Shipowners Association: http://www.hksoa.org/introduction/
Hong Kong Air Cargo Terminals: https://www.hactl.com/en-US/Home.aspx
For more information about the logistics industry sector, please contact:
U.S. Commercial Service, Hong Kong