Continuous improvement

posted on 10th February 2020
Continuous improvement

In the second part of a two-part interview, Hactl CEO Wilson Kwong explains, among other things, how the Hong Kong cargo handler’s dedicated ‘performance enhancement’ team has helped its SuperTerminal 1 facility remain one of the highest-capacity and technically sophisticated in the world

Despite the political challenges of recent months, Hong Kong International Airport remains the world’s busiest international cargo airporthandling around 4.8 million tonnes of cargo in 2019 – and continues to offer a compelling set of advantages to its cargo customers and carriers.

Key among these is the impressive capacity and efficiency of its cargo handlers, exemplified by its largest handling independent, Hong Kong Air Cargo Terminals Ltd (Hactl). Although its main handling facility was built more than 20 years ago, continuous improvements mean it remains one of the highest-capacity and most technically sophisticated air freight facilities in the world.

Among the cargo handler’s 2,400 staff, Hactl CEO Wilson Kwong gives particular praise to a small number of individuals whose mission is to improve the efficiency of the terminal’s operations.

“We’re quite blessed in Hactl,” explains Kwong. “We have a dedicated team of colleagues, grouped under what we call PE – performance enhancement – where their sole purpose is to look at our existing processes, and to make recommendations, either on modifying the current processes or our infrastructure.” That’s something Hactl has been doing for several years.

PE team

Kwong describes the PE team as “like an innovation lab – a team of seven people, with a senior manager, whose job is, basically, to look for problems – to go out and talk to the people in the facility, talk to the customers, walk around the facility, look for bottlenecks, look for ways of doing things smarter. They’ve come up with a whole host of different projects which go through a proof of concept and then eventually go through design and then implementation.”

One example of this, three or four years ago, was the switch to mobile computing throughout the whole of the facility.

“So, instead of people going to what were then fixed computer units with displays for information, all the information and instructions were issued on their mobile devices,” Kwong says. “You then have the tug driver logging what they just collected from the aircraft’s side, which goes into the system and then he would get information back; he’d get instructions about where to take that cargo. So, computing on the move now, rather than static computing, which is what it used to be.”

He continues: “It doesn’t sound dramatic, but it has absolutely revolutionised the whole process. It means that Hactl is much better able in dealing with the night-time peaks of freighter operations – because occasionally we end up with 15 freighters, side by side, all being handled at the same time.”

Indeed, in November, Hactl twice broke its all-time record for the number of freighters handled in a 24-hour period, handling 104 freighters on 3 November – beating the previous record of 102 set on 5 November 2017 – and then two weeks later setting a new record of 106 aircraft.

“So, it enables you, for example, to prioritize the mail in the equipment, to deal with things in the order they need to be loaded and unloaded for flight times, and so on. It’s just a smarter way of working. And it’s even cut down emissions; it’s cut down maintenance costs on the tractors to tow the dollies; it’s cut down the towing distances involved – it has absolutely revolutionized everything.”

That – and the ‘Floor Goods Locating System’ described in Part 1 of the interview – are just two examples of the team’s many projects. The PE team is still evaluating a lot of things, where we can optimise our resources and utilisation,” Kwong enthuses. “Ultimately, as a cargo terminal operator, it is about getting goods in and out of the terminal as quickly, as effectively, and as safely, securely, as possible.”

 

Rationalised truck flows

Another thing the PE team worked on a couple of years ago was to completely rationalise truck flows around the facility. Hactl receives hundreds of trucks every day, which could sometimes lead to truck jams back out on to the airport roads. “So, they came up with a complete set of new measures and equipment, which meant that for example, trucks could be pre-booked,” Kwong notes.

These are solutions that some European airports have only just started bringing in, he notes, but which Hactl began doing three or four years ago. “So, pre-booking of the arrival of the truck, allocating a door or a dock where it can be handled. If they give enough of the right kind of information, they are allowed to proceed into the truck park through a priority lane and bypass the truck queue.” That gives them better facilities for the drivers to go and log in, and then input details of the cargo they will carry – which then marries up with what’s already pre-booked in the system.

“Again, it’s just a smarter way of working,” Kwong says. It has stopped ‘fly parking’ at the car parks, because it is now all barrier parking and arranged, admission to the car park and truck park. “There are no more queues out on to the airport roads; everything runs smoothly.”

Areas for improvement

Kwong says one of the next areas for improvement the PE team is considering is further optimising the handling of e-commerce requirements, “because that’s a growing trend. In the case of Pharma or Fresh, we have the capability of handling them. But it’s e-commerce and the expected growth which we have to prepare ourselves for.”

Highlighting the current pinch points, Kwong notes: “E-commerce basically involves a lot more bulk parcels, bulk shipments. It’s about how you get the shipments within the terminal moving quicker. There are technologies to do that – whether it is automated vehicles or other means of transporting goods within the terminal itself – but ultimately how to handle things better and quicker.”

Another thing Hactl has been looking to optimise is the building up and the breaking down of cargo, which involves a lot of people and time. “The challenge is, will there be a pragmatic, automated, robotic solution which will help us do that”” Kwong questions. “That’s something we’ve been looking at for quite some time.”

Oher airlines have tried this out and couldn’t make it work. It’s an exciting challenge,” acknowledges Kwong.

Integrator model

The automation models used by the integrators are of interest, but air freight is “a bit different. You don’t get the same uniformity of shipments within air freight.”

Nevertheless, a lot of the traffic that goes through Hong Kong is delivered as pre-built units, which are already handled mechanically at Hactl. “They go into the system straight up into the racking. Then they’re pulled out for the flight,” Kwong notes.

However, a lot of the e-commerce traffic leaves China as individual mail packets.

“Because it contains electronics goods, that introduces challenges in terms of scanning and so on,” Kwong notes. “And this is one of the reasons why Hacis (Hactl’s logistics and road freight subsidiary) has got proactively involved in that part of market, and worked with postal authorities to come up with a viable solution. The Hacis facility is handling around 3,000 mailbags in a day, putting them in containers.

“They arrive as mailbags already with all the little packages in, so there’s no requirements to actually sort the packages or anything like that. They’re already sorted by the mail system. It’s a matter of containerising that traffic and getting it out. But that’s a fantastic boost for the Hactl customer carriers because, off the back of this Hacis business, they’re getting a traffic bonus that wasn’t there before.”

Cainiao development

The growth potential of e-commerce traffic at Hong Kong and other airports is underlined by new planned development at Hong Kong led by Cainiao, the logistics subsidiary of China’s Alibaba.

“We are very positive about that development,” says Kwong. “It’s not just a Cainiao development on its own; they’re partnering with CNAC – China National Aviation Corporation; our Hactl shareholder – and YTO Express, which is a Hactl customer. That development, which is two blocks away from Hactl, will be built in 2023, and once up and running it’s expected to bring in an additional 1.7 million tonnes of cargo throughput.”

He continues: “It is not a cargo terminal (with ramp-side access), so these 1.7 million tonnes of cargo will have to go via one of the cargo terminals. So, it’s an opportunity for us, as Hactl or as Hacis, to see how we can facilitate those goods, provided that they are going on to our customer airlines; how the built-up units, which we anticipate will be done at the facility, can be processed through our terminal as quickly as possible. The Cainiao development will comprise a lot of e-commerce products, as well as other high-value cargo, which could include, pharmaceuticals. So, we are in regular dialogue with the Cainiao development team to look at opportunities available – even though there’s still some time away.”

He is confident that the airport and its handling agents have the capacity for this extra traffic – especially with the airport’s three-runway system expected to be fully operational by 2024.

“The third runway will be complete in 2022, but the airport authority has plans to then shut down the existing two runways, consecutively, for repairs. So, the three runways will be fully operational together in 2024,” Kwong explains.

“So, if you look at the timing, Cainiao opens in 2023, the three runways system opens in 2024. So, we’re quite excited about the development opportunities going forward in Hong Kong.

Kwong says it is “a massive endorsement of the airport and everything the airport represents” that Cainiao has decided to put this operation – one of only a handful worldwide – in Hong Kong, adding: “As usual, it’s the Hong Kong package: the location, the number of carriers that serve it, the frequencies, the choice, the handling facilities, the modern customs facilities; everything stacks up for Hong Kong, and that’s why they’ve chosen it.”

And the third runway is thought to have been a factor in Cainiao choosing Hong Kong, where there is pent up demand from freighter operators who have wanted to serve Hong, because of the current constraints on extra flights.

“At the moment, Hong Kong is pretty congested, as an airport, with 68 movements per hour,” acknowledges Kwong. “Once the third runway fully operates, it can take the system to 102 flight movements per hour. With that, it can handle additional freighters and other flights, which at the moment the two-runway system cannot handle.”

He says the airport authority has done everything it can within the constraints at the moment to use the air space and to use the slot availability to the optimum.

“But I think it’s fair to say that it’s got to the point now where there is no more elasticity left. That’s why we’re really supportive of the three-runway system.”

Plans for that third runway are now fully agreed. Construction is happening. The area is being reclaimed now as we speak,” says Kwong.

Politics aside

The recent high-profile political demonstrations in Hong Kong have reportedly led to some limited loss of freight volumes to airports such as PVG. But Kwong is optimistic there will be no long-term impact on Hong Kong’s reputation as a place to conduct and locate air freight business. Longer term, Hong Kong continues to present very strong advantages as an air cargo hub, notably “its strategic location, its infrastructure, the scale of its global connections, the choice of carriers and frequencies, main-deck options, and modern customs procedures”, he highlights. “Hong Kong’s success in recent years is a clear indication of how we are regarded on a local, regional and global basis by the logistics community.”

Kwong concludes: “With ever-improving road connections to the Greater Bay area and the whole of mainland China, plus the extra slot capacity that will be released when our third runway opens, Hong Kong’s offering will become even stronger in the future. I feel all of those factors more than outweigh any short-term problems or concerns.”

SuperTerminal 1

Built in 1998, Hactl’s SuperTerminal 1 is still one of the largest and most technically sophisticated air cargo handling terminals in the world. With an initial investment of US$1 billion, its capacity of 3.5 million tonnes per annum is supported by two main mechanical systems: the 3,500-bay, multi-level container storage system is served by 40 fully automated driverless ATVs (automated transfer vehicles or container cranes), which receive commands from the CCS Logistics Control System – which determines which station they should park ULDs in, and then remembers this for retrieval. This is complemented by a 10,000-bay automated box (stillage) storage and retrieval system for loose cargo.

The terminal features 395,000 sqm of floor, 466 pallet workstations, and 313 truck docks, with specialist facilities for livestock, perishables, valuables – including a dedicated zone for handling nine armoured vehicles simultaneously – hazardous and radioactive cargo. Staffed by around 2,400 employees, security features include over 1,000 CCTV cameras, card-controlled access, and various personnel-free cargo storage zones.