Does Hong Kong Airport Closure Signal Troubled Days Ahead For Air Cargo?
Hong Kong International Airport canceled all passenger flights slated for Monday, August 12 after a growing number of protestors flooded the building. The airport is the busiest air cargo terminal in the world, and the cancellations could have a marked impact on cargo.
The cancellations came after a weekend of peaceful demonstrations at the airport and more violent protests throughout the city.
"Hong Kong is the world's largest airport for cargo based on tonnage throughput," explained FreightWaves Air Cargo Market Expert Jesse Cohen. "Any closure there has a large impact on air cargo moving in and out of China, but most airports and air carriers can recover from occasional closures for a day here or there. Anything more prolonged would be very difficult for the world's supply chains."
Cargo-exclusive flights were not affected by the closure, but cargo-carrying passenger flights took a hit.
Hong Kong-based Cathay Pacific Airways said in a statement that closures are expected to extend into Tuesday, August 13. While flights seems to be scheduled to pick back up soon, it is clear that ongoing unrest in Hong Kong presents an ongoing issue for airlines.
During Cathay Pacific's earnings call last week, company leaders told investors that the airline took a hit on the passenger side during July because of political unrest in the city. Company leaders also said they expected the protests to continue hurting the company's numbers moving forward, at least in the short-term future.
"The protests in Hong Kong reduced inbound passenger traffic in July and are adversely impacting forward bookings," the earnings release stated.
The company's earnings call took place before protests began at the airport. The airport closure raises concerns about how the city's political instability could impact not only the passenger segment moving forward but also the cargo segment.
"We are still in low season so demand is not as strong, and Monday is one of the lightest days for air cargo exports, so we anticipate a limited impact for a one-day event, if it is that," Cohen said. "However, continued uncertainty due to civil unrest and expected air cargo demand ahead of the upcoming U.S. tariffs on Chinese imports planned for September 1 make supply chain planning a harder task than before."
If the airport closure is indeed lifted Tuesday, the impact of this single event will be easy to overcome. The more worrisome aspect of the closure is what it means for the state of air cargo in China moving forward.
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