Hong Kong's Freight Industry Essay

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Hong Kong Freight Industry

Hong Kong, located in the People's Republic of China, maintains one of the busiest freight industries in the world, largely in terms of air, rail and sea freight transporting services. While the area maintains significant cargo transport via rail and road, the two significant areas of freight movement in which Hong Kong continues to excel are its air freight industry and its sea freight industry. The city-state of Hong Kong, located in a prime position on China's south coast enclosed by the Pearl River Delta and South China Sea, allows extensive sea freight to pass through the waters of the its naturally-deep harbor, maintaining China's busy sea freight industry. Additionally, in 2010, Hong Kong International Airport became the world's busiest air cargo terminal and is expected to continue its growth in freight transport in the years to come (PRLOG, 2011, p.1). As seen in these two facets alone, the prospects for the continued prosperity of the Chinese economy from freight industry services offered in Hong Kong alone continue to appear exceedingly high. However, as economic prosperity resulting from the freight industry within Hong Kong continues to make headlines, competition for space and significance within these areas remains high.

Hong Kong, and therefore China, continues to profit extensively from the country's natural attributes which aid its sea market and the status of world air travel which aids its air freight industry. In Hong Kong alone, 1,016 air cargo forwarding companies exist as well as 2,269 sea cargo forwarding companies (HKTDC, 2011, p.1). Comparably, with such a viable area for profit comes the issue of competition and overcrowding within the industry, which could prove detrimental to the industry and therefore the economy. In assessing the current standing of Hong Kong's air and sea freight industries, one can better gauge the issues that face the freight industry itself in terms of barriers to continued success. With success often comes greed and competition, which can lead to diminished resources and company standings should businesses and employees refrain from handling an expansion in the right manner. The beginnings of such competition can be seen in viewing Hong Kong's ever-expanding seaport and competition for featured space within the air freight industry. In viewing this issue and by heeding the advice of experts on economic and industry growth, the industry will continue to boom successfully rather than collapse on itself before its time.

Sea Freight

The sea freight industry has long been significant to the Chinese economy, and much of this freight passes through the boundaries of Hong Kong, which allows the city-state to operate a sea freight industry that is unparalleled throughout the rest of Asia and much of the world. Hong Kong's existence in such a prime geographical location within the Pearl Delta Region allows it the opportunity to benefit significantly in terms of economic gains within the region. The city-state's deep water, natural harbors, and prime location within the Pearl Delta allows easy access for sea vessels transporting cargo throughout the country and throughout the world. Freight transported via Hong Kong facilities and seaport terminals has the ability to move easily throughout the country's own river channels, or internationally through passage beyond the South China Sea into the Pacific Ocean.

As the South China Sea is extremely important to world freight travel -- acquiring one-third of the world's shipping transiting through its waters -- the capacity for China to benefit from the freight industry within Hong Kong has long been noted throughout the world (McDowell, 2011, p.1). The Port of Hong Kong has been a key factor to the economic development of Hong Kong as the natural shelter and deep waters of Victoria Harbor provide ideal conditions for berthing and handling of all types of vessels, including a massive influx in freight ships. The Port of Hong Kong is one of the busiest ports in the world, and its freight handling plays a significant role in maintaining this status.

Air Freight

As previously noted, Hong Kong International Airport became the world's busiest air cargo terminal and is expected to continue its growth in freight transport in the years to come (PRLOG, 2011, p.1). Air cargoes passing through and out of Hong Kong are largely electronic products containing overwhelmingly Asian-produced products being exported internationally throughout the world. Its status as such a prominent air terminal within the world market has yielded significant competition from neighboring areas, but Hong Kong has continued to expand its cargo limits and enhance its competitive advantages over the past several years in order to maintain its standing on the world stage in terms of the global freight industry.

Such status in the industry has brought significant more freight into the airport due to the quality and quick turnover that the Hong Kong International Airport has continued to maintain. Additionally, overwhelming amounts of competitors who have yet to find their footing within the industry continue to allow HKIA to continuously depict its standards of excellence within the industry, garnering more utilization from shipping companies within the world market.

Risks and Recommendations

Many researchers who have studied the freight industry within China and more specifically Hong Kong, have noted that the major risks to continued prosperity within the industry and the desired outlook of the industry stem from competition from two giant Asian economies: China and Japan. Despite Hong Kong's industrial presence within China, Chinese ports and airports, hoping to continue seeing such influxes in freight passage through the country, continue to expand and move outside of the area. As Chinese trade moves inland, and the mainland develops its own transshipment hubs, Hong Kong may stand to lose significant business to new Chinese ports and airports in other areas of the country (BMI, 2011, p. 23). Additionally, Japan, upon seeing successes such as thought embodied within the Hong Kong market, will continue to compete.

Despite the massive growth of the sea and air freight industries in Hong Kong and therefore the equally significant economic influx the industry has brought into the city-state, the rapid development of the sea ports in more densely populated cities have in turn caused competition for freight business to rise significantly. Newly-built terminals advertising higher-capacity loading carriers have begun to see higher levels of patronage in recent years, and competitors are continuing the struggle to both upkeep and upgrade in this newly-heightened area of industry.

In addition to struggles within its own country, economic woes felt throughout the rest of the world have played a significant role in a drop in products demanded from Asia and China in particular, which has causes a lapse in international freight shipping. However, domestic shipping within China and shipping within much of Asia has remained largely intact due to China's booming economic standing.

Despite these struggles, Hong Kong has long proven its determination to carve a niche for itself in terms of its freight industry, and despite economic setbacks within the country, Hong Kong's business has been largely unaffected due to its ability to maintain such strong a strong industrial presence. For example, according to the Hong Kong Trade and Development Council, Hong Kong has displayed great resilience and fortitude throughout the recent world financial crisis, noting that GDP only fell by 2.8% in comparison to much larger percentages throughout the rest of the country, which is largely due to the presence of the freight industry (Business Wire, 2011, p.1).

Additionally, measures have consistently been taken in the air and sea freight industries within Hong Kong to continuously expand the cargo capacities of freight systems and raise the bar in terms of standards of excellence in order to maintain each industries respective top position within the global economy.

Conclusion

Hong Kong has long fostered significantly dominant freight industries in the areas of air and sea travel in order…[continue]

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