Hactl: Faces the new normal with vigor & optimism

Every day, more than 100,000 flights roam around the global air space, carrying nearly 12 million passengers and about US$18 billion worth of goods in aircraft belly.

But that’s history now and no one knows when the global aviation industry will return to normal although some countries have resumed flights despite the Coronavirus pandemic.

It was just in March of 2020 when the lethal invisible Covid-19 virus struck yet its impact will be felt for many years to come and it will go down in history as one of the worsts with deaths of nearly 700,000 and worldwide infections rising to over 18 million with still no vaccine found.

The months of forced lockdowns worldwide to prevent the spread of the virus inevitably resulted to loss of business activities and jobs. It forced many companies to shut down operations, including the aviation industry which prompted airlines to ground their fleets of planes amid the global travel ban.

The Coronavirus pandemic crisis continues to keep everyone on edge but the onus of delivering essential services to sustain people, businesses and economies despite the situation, is greater on certain industries like healthcare, air cargo, logistics, among others.

Resilient & flexible

The air cargo industry has proven once more its flexibility and resiliency in times of disaster and extraordinary circumstances to support the world’s need for essential supplies.

Wilson Kwong, Chief Executive of the Hong Kong Air Cargo Terminal Limited (HACTL), one of the world’s largest and busiest cargo terminals which also owns and operates SuperTerminal1, the single largest multilevel air cargo terminal in the world, told Air Cargo Update in an exclusive interview the pandemic has changed the dynamics of the industry and that the new normal presents both challenges and opportunities.

At the height of the pandemic, the air cargo industry kept the global supply chains functioning, delivering much-needed medical supplies and equipment as well as other essential goods. Cargo carriers kept their freighter operations while airlines helped by having their passenger aircraft converted to freighters to meet the growing demand for essentials in the fight against the virus.

Hactl immediately adopted precautionary measures to protect its staff while performing their duties more than the usual with the demand for medical supplies all over the world heightened.

“The impact of the pandemic has shown itself both in how we work, and for whom we work. We took very early action to protect our staff and visitors to our terminal, and also to help ensure business continuity,” Kwong shared.

“Our many measures included temperature scanning of all arriving personnel, moving as many staff as possible to homeworking, rearranging shift patterns to minimize the number of people on the premises at any one time, issuing masks and sanitizer to all staff, distancing arrangements in our large catering facilities, and a ban on business meetings and business travel.

“Thankfully we have had no cases of COVID-19 among our staff at the time of writing, but we are not complacent and are retaining and constantly reviewing our protective measures.”

Hactl is capable of handling 3.5 million tons of cargo every year and more than 1 million data transactions on a daily basis yet its capacity and capabilities were put to the test during the height of the pandemic with the extraordinary movement of freights.

“The pandemic has also changed the profile of our business. At its peak, 95% of the global passenger fleet was grounded, and that lost cargo capacity had to be replaced. The result was significant growth in freighter movements and, as Hactl and Hong Kong are noted for their proficiency and capabilities in handling cargo aircraft, we received a lot of those flights,” said Kwong.

“Although the needle is gradually moving back towards the passenger belly, freighters are uplifting a bigger share of global air cargo than they have done in the past,” he continued.

‘More like a family than a business’

Founded in 1971, Hactl began its air cargo logistics operations at the Kai Tak International Airport in Kowloon Peninsula in 1976, becoming the only air cargo terminal operator in Hong Kong.
In 1998, Hactl moved to SuperTerminal1 which it built at Hong Kong International Airport with an investment of $1 billion. A significant number of its employees have been with the company for many years, some even for decades, mainly because they are treated with fairness and enjoy good fringe benefits.
“Hactl is more like a family than a business. Our workforce is very stable and dedicated, and we have many long-service employees; and our staff know we care very much about them,” said Kwong.

“When everyone saw how this global crisis was developing, and the key role we needed to play in getting PPE and other urgent supplies to destinations around the world, there was not a single moment’s hesitation on the part of anyone – they just got on and got the job done. I can’t tell you how proud I am of them; the patience, determination and sheer hard work which our team put in over the past few months have left me in awe,” he added.

As of press time, not a single staff of Hactl got infected with COVID-19. The company’s health protocols remain in strict implementation.

Kwong said apart from the staff’s dedication, it helped that Hactl invested so much in technology and automation to speed up the process of handling cargo in large volumes.

“The high degree of automation within our SuperTerminal1 facility, and our plentiful space and capacity meant that we were able to cope with the influx of freighter aircraft and the frequent spikes in demand. And as we have our own integrated ramp handling operation, this made adapting to sudden changes in traffic patterns and demand a much simpler matter,” he said.

Kwong believes the volatile situation is likely to continue and the important thing is for the industry to quickly adopt and deliver its tasks.

“We believe there is too much concentration on whether tonnages and flights are up or down, as if this is something over which any of us has any influence. The truth is, there are many factors at play which are totally beyond the industry’s control, and that’s going to continue for some time,” he said.

“What matters most right now is our ability to move whatever cargo is presented to us, and we are doing that despite all the challenges. We are all in this together and we need as much of our sector as possible to survive – or we will emerge with a weakened global industry that will negatively impact us all.”

A new era

The pandemic has ushered in a new era that requires combining creativity and innovation in different fronts and industries to survive the harsh realities.

According to the International Air Transport Association (IATA), the global passenger traffic will not return to pre-COVID-19 levels until 2024.

This year, global passenger numbers are projected to decline by 55% compared to 2019 despite easing up travel restrictions. That meant billions of losses for the aviation industry and lesser belly-hold capacity for the air cargo for the long-haul.

“Aviation faces a new reality in which passenger numbers are likely to remain depressed for a long time to come. Cargo has meanwhile carried on providing revenue opportunities for airlines when there were no others. It doesn’t take a genius to predict that cargo is going to receive a lot more attention in the future,” said Kwong.

This new reality could force many airlines to continue utilizing passenger planes for cargo to survive.

“This could manifest itself in a move to re-introduce the quick-change aircraft concept, it could lead to more P2F conversions using redundant passenger airframes, and it could result in growth in the freighter wet-leasing sector. What’s clear is that cargo demand has survived better than passenger demand, rates are stronger at present and likely to remain so, and that this spells opportunity,” explained Kwong.

Technology will drive the future

Our day-to-day lives have been completely changed with the evolution of technology from the time computers were invented, the internet, to the smart mobile phones. It has made the world smaller with connectivity made simpler and faster, giving us unparalleled access to people and businesses anywhere in the world.

We’re now in the era of the Fourth Industrial Revolution, or Industry 4.0, which takes digital technology to a whole new level of making interconnectivity stronger through the power of the Internet of Things (IoT), artificial intelligence (AI), big data, analytics, new cyber-physical systems and access to real-time data. These things will completely change how services are done and customer experiences different from bygone eras.

Hactl has long recognized the power of technology to speed up the process in cargo and logistics. Its own business model is focused on automation and sophisticated IT capabilities, both proved very resilient during the pandemic.

And Kwong said the company will continue to invest on technology to further enhance its capacities and capabilities.

“We continue to drive ever greater efficiency in our business daily, led by our Performance Enhancement unit, which proactively seeks out and destroys all inefficiencies. Some of its ideas may seem trivial and unexciting to outsiders – like our new system for inspecting our ETV system power rails and automatically reporting potential faults – but they add up to better business continuity, cost savings and even a reduced carbon footprint,” said Kwong.

“Apart from the possible future deployment of driverless vehicles and GSE (which is an ongoing project), we are probably now beyond any massive new developments – nowadays, it’s more about finessing what we already do well,” he added.

And while political instability continues to besiege Hong Kong with China asserting its power over the former British colony which was handed over to it in 1997 under the one country, two systems agreement, Kwong is convinced Hactl will continue to grow and even Hong Kong for that matter.

“Business has been challenging in 2020, and that will continue for some time to come. But we remain optimistic and confident in the future for Hong Kong and for Hactl. As an airport, we offer an unparalleled combination of strategic location, destinations, frequencies, main-deck capacity, large-scale freighter handling capabilities, modern Customs regime, bilingual workforce and legendary efficiency and work ethos,” said Kwong.

“It’s no accident that Hong Kong has been the world’s top international cargo hub for 10 years, and I don’t see that changing.”

Wilson Kwong: The conscientious leader

Wilson Kwong became the Chief Executive of Hactl in March 2018. Prior to joining the company, he was the Chief Executive of Jardine Engineering Corporation.

He began his career with Jardine Matheson Group in 1998 with Jardine Aviation Services before moving to the head office to work as Executive Assistant to the Group Managing Director.  Following this, he held senior management positions in real estate development, property management and engineering services.

Passionate in serving his community, Wilson also holds key positions in various organizations—Vice Chairman of the Employers’ Federations of Hong Kong, Vice Chairman of the Environment and Sustainability Committee under the Hong Kong General Chamber of Commerce, and was a Director of the Business Environment Council.

He is also active in Advisory/Statutory Boards & Committees for the HKSAR Government. He is a Member of the Energy Advisory Committee, a member of the Advisory Committee on Agriculture and Fisheries, a Co-opted Member of the Hospital Governing Committee of Queen Mary Hospital and Tsan Yuk Hospital, and a Council Member of the Hong Kong International Arbitration Centre.

A graduate of the London School of Business and Political Science, Wilson also has two Master’s Degrees—business administration and real estate. He also holds a degree in law from the Chinese University of Hong Kong.

Read on some of his industry insights on this unprecedented time in our lifetime.

The logistics industry’s significance has become more visible in this era of pandemic and e-Commerce. How do you see it evolving as a vital component in sustaining global trade? What about its challenges?

Kwong: Logistics as a whole has learned some valuable lessons from the pandemic, and has already begun to change and adapt. Companies globally are developing new ways of working with distributed workforces. And industry is building in new supply chain resilience by diversifying its suppliers.

I think our industry and our markets are also learning that the days of rock-bottom rates—both ocean and air—are over, if we are to have an industry that can respond quickly and effectively to any future crisis. This has been a necessary re-set: the logistics industry could not have continued as it was for much longer.

Air cargo will remain the elasticity in supply chains, rather than greatly growing its share of global trade. As such, it will continue to command a premium. And, now that the man in the street has seen the air cargo industry’s heroes at work on his own TV screen, helping to save lives by keeping vital supplies moving, I think logistics will enjoy a new respect and be more valued in the future.

Please share some lessons we could all learn from this pandemic crisis.

Kwong: Information Technology really is the key to future resilience for this industry. We must accept the painful idea that COVID-19 may not be a one-off event, and so we need to ensure that our industry can continue to perform while staff levels are depleted, and while workers must work remotely. The better we become at passing information without paper or contact, the less we will be impacted by any future crisis.

It’s a safety issue, too. There is nothing more precious than human life, and good health. As well as being the right thing to do, it makes sound business sense to look after your workers, so they can take care of your business. That’s why Hactl will retain all its protective measures until any threat is totally removed.

And, as I said before, we need to take air cargo more seriously as a function of the aviation sector: aircraft fleets need to be more flexible, airports need better infrastructure for cargo, and we need to value our product more highly. Imagine what a COVID-19 world would have been like without the air cargo industry.