Air cargo rivalry heats up - Brief Article

Business Asia, May 19, 2000 by Jonathan Sharp

Taipei and Shanghai are long-term challengers to Hong Kong as the pre-eminent air cargo hub in Asia, according to a new study.

The report, compiled by consultant David Dodwell of Forrest International and Professor Zhang Anming of the special administrative region's City University, said Hong Kong had shown stronger air cargo growth in the past two decades than any other Asian economy.

This strength was underpinned by its location adjacent to the fast-expanding economy in China's Pearl River Delta region.

"As China's export economy grows and insofar as it grows strongly, Hong Kong is almost certainly going to be strongly driven by that growth," Dodwell said.

However, the potential for Taipei to divert business from Hong Kong was gathering momentum, the study said.

"Taipei provides ready access from Asia to North America, and is at the heart of Taiwan's powerful electronics manufacturing industry, which is strongly linked with the US market," it said.

A ban on direct flights between China and Taiwan, which Beijing regards as a renegade province, forced many Taiwan companies based in China to move their components through Hong Kong.

Many of the factories were close to Hong Kong and would still use the territory even after the introduction of air links between Taiwan and China.

Shanghai's potential as an air cargo hub was relatively under-developed, the study said, as little domestic Chinese cargo was currently carried by air. But the city had key advantages, including that it was closer to North America on trans-Pacific routes than competitors such as Hong Kong or Taipei.

"Development of China's domestic cargo infrastructure could rapidly build Shanghai as a key cargo hub for the economy," the study said.

Dodwell said the hoped for early entry of China and Taiwan into the World Trade Organisation (WTO) would be a plus for Hong Kong.

He said such moves would lead to a quantum increase in trade in the greater China region, and while a proportion of that trade would bypass Hong Kong, the net result of an expansion in economic ties would benefit the territory as well.

-- Reuters