Hong Kong's terminal-handling charges for airfreight are three times that of Guangzhou, a major reason for the territory's higher air-transport costs, a study revealed recently.

A five-ton shipment through Hong Kong is charged an average HK$8,750 (US$1,122) for terminal handling, compared to HK$2,750 (US$353) through Guangzhou's Baiyun airport, according to the study conducted by the Chinese University of Hong Kong and commissioned by DHL, the world's leading express delivery and logistics group.

As a result, the overall costs of getting a consignment to overseas markets are 11-26 percent higher through Hong Kong. Terminal charges account for 10.1 percent of total transport cost to the Asia-Pacific region via Hong Kong, compared to only 4 percent via Guangzhou.

The situation with sea freight is similar.

The cost of getting a consignment from factory gate to a destination market varied from 13 to 18 percent higher through Hong Kong than Shenzhen's Yantian port.

Trucking accounts for most of the cost difference - an average of HK$3,200 (US$410), or a quarter of total transport costs, through Hong Kong; and HK$1,200 (US$154), or 11.7 percent of total costs, through Yantian.

Expensive as it is, Hong Kong does have its strengths as a competitive hub, including unmatched connectivity, high levels of transparency and efficiency in customs and excise procedures, the study points out.

"The study shows that much needs to be done to build the confidence of customers to capture the advantages that can be obtained from better use of specialized and value-adding logistics services," said Kelly Yu, general manager of DHL Express Hong Kong.

"The study also highlights the need for investment in specialized logistics centers in Hong Kong, in particular for material handling and component distribution."

Yu noted that a logistics center should be built to fit Hong Kong's own character to show the city's unique advantages.

It should first focus on spare parts storage, repair and return and other specialized services, and, secondly, on driving highly efficient "cross docking" services for cargoes transiting Hong Kong, Yu said.

And he also suggested that the Hong Kong government consider the need for new logistics centers at Chek Lap Kok airport or any location in Tsing Yi, which is close to the airport.

Yu said that DHL would be examining the findings to underpin plans for future investment in logistics facilities.

(China Daily November 18, 2004)