Roller-coaster ride

posted on 27th May 2020
Roller-coaster ride

Every day brings a different scenario, says Wilson Kwong, chief executive of Hong Kong handler Hactl, which expects much of this year to continue in this unpredictable fashion

What have been the biggest challenges – as a business and operationally?
Because Hactl was relatively close to the epicentre of the first outbreak, we became quickly aware of the threat, and acted very quickly to protect our staff. Some of the measures we have had to introduce have complicated operations, but nothing has had a major impact on our ability to function as normal. This is the dividend of running a highly automated, and heavily digitised business.

The major impact has been commercially, and this year has been a roller-coaster ride where there has been little predictability. When lockdowns in certain cities in the mainland of China were instigated, and New Year holiday extensions were announced, many passenger airlines responded with cutbacks to schedules, and shipping lines blanked sailings. So, when Chinese manufacturing began to open up, there was a critical shortage of air freight capacity, and svhips were in the wrong places. This stimulated a significant increase in freighter operations, and we started to see signs of modal shift and cargo from the mainland using Hong Kong as its exit route.

Then, just as this was becoming the new normal, the USA, Europe and other regions began their own lockdowns, which has flattened demand for many non-essentials. At the same time, shipments of medical supplies (PPE etc) have grown dramatically both into and out of China – and this has prompted some passenger carriers to return to the market, but using their aircraft as ‘mini freighters’ – sometimes just with the cargo holds in use, but also with ‘loose’ cargo on and under seats.

Every day brings a different scenario, and we expect much of this year to behave in this unpredictable fashion.

How have you responded to these challenges?
Like all large businesses, we maintain highly detailed contingency plans that are designed to cope with every conceivable emergency. Ours has worked very well, but it will still be refined after this crisis, in the light of what we have learned. The thing that has caught everyone by surprise is how contagious COVID-19 has proven, and how dramatically every country in the world has therefore been forced to react.

At the heart of our response has been the safety of our staff and terminal users. That’s both because we care about the welfare of our own people and other terminal users, and also because we can‘t run our business if a large proportion of our workforce is off sick. So we immediately implemented temperature screening before anyone was allowed onto our premises, we issued face masks and sanitiser to staff, we stopped all business travel, we started home working for as many of our office staff as possible, and we re-rostered warehouse and ramp staff duties to minimise the number of staff on site at any one time. More recently, we have installed thermal cameras throughout the premises to spot anyone with a high temperature, and we have reduced the seating in our canteen facilities to maintain distancing. These measures seem to have worked; we have not yet had a single case of confirmed infection – although we remain on high alert.

The ratio of passenger and cargo flights has changed significantly, but overall tonnages we are handling are still below 2019, so we are coping at present.

Has there been any significant cooperation between stakeholders?
We are fortunate in that the various stakeholders in Hong Kong do work closely, and this cooperation is more important than ever in the current situation. Our goal is simple – to ensure that the air cargo supply chain remains operational; and this has so far worked well. I thank all the stakeholders including the Government, the Airport Authority, the airlines, the airport cargo community, the freight forwarders and truckers for collaborating to make this possible.

What challenges have been presented by the introduction of cargo-only passenger aircraft services, and/or increased numbers of freighter aircraft?

Hactl provides ramp handling only for freighters. For passenger flights, we receive and unitise cargo, but it’s loaded by the airline’s ramp handler. Where cargo is only travelling in bellies, there is no change to what we do. But, if cargo is to be loaded onto and under seats, we will load it into containers, but these will be unloaded by the ramp handler. This has only just started to happen in Hong Kong, so it’s not fully clear yet how it is working – it could be a challenge for tight turnarounds as it’s a slow and manually-intensive process.

Has the increased number of healthcare-related shipments, for example testing kits or personal protective equipment, presented any particular challenges or opportunities?
Most of the cargo is effectively normal general cargo, and does not require special handling. That said, we can and do expedite unloading of imports, and they can be channelled through our fast-track system for earlier release to customers.

Have you had to let go of or furlough significant numbers of staff? To what extent have the various national government support initiatives helped this situation or reduce this need?
We have not reduced workforce numbers. The Hong Kong SAR Government understand that the aviation sector has been hard hit, and I welcome the government’s latest measures to safeguard employment in Hong Kong. Human resources are key for the industry to recover from the pandemic, and we should preserve as much skilled labour as possible during this challenging period.

To what extent has it been possible to maintain normal levels of service or handling times in recent weeks?

This has not been a problem at Hactl so far. We have managed to maintain our usual handling standards. The only problem in this area has been some backlogs caused by cutbacks in airline services. But if the flight is there, we are ready for it.
Has the changed environment meant you have had to change your charging structure – for example via cargo handling surcharges?

We have not made any changes to our charging structure. While we clearly cannot maintain current resources if revenues are seriously reduced, and we are suffering equally from the pandemic, we are sympathetic to the plight of many of our customers, so we have decided not to make any changes to our charging structure.

What new opportunities have arisen, if any, amid the undoubted challenges of the last few weeks?
As mentioned, our freighter handling business has seen positive demand recently. Our subsidiary Hacis is experiencing growing demand for its RFS services to and from China, supporting Hong Kong’s currently expanded role as a gateway to the world.

How well do you feel the air cargo handling sector has responded to the various challenges?
The logistics sector in general, and air cargo in particular, have shown innovation, determination and courage in keeping vital supply lines open in the face of unimaginable problems and even dangers. I hope the world will learn from this crisis, that logistics is a vital and life-saving industry, and one that is currently under-valued. I’m proud to be a part of it.

How do you see the situation evolving over the coming weeks and months?
Everything will depend on how long we have lockdowns, where the lockdowns occur, and how much damage is done to the global economy. Recovery will come, but how long it will take is the big question. We are not masters of our own destiny; we must hope for the best but plan for the worst.

What preparations do you have in place for volumes returning to more normal levels as restrictions are eased?
We are ready at a moment’s notice to handle a return to historic tonnages. Nothing would make us happier!