Untitled - Civic Exchange

Chapter 6:
Hong Kong's Freight Transport
More than half of airfreight is carried in the holds of passenger aircraft. Thus, without massive and
expensive expansion of dedicated cargo fleets, projections of passenger and cargo volumes are interlinked.
There were declines in the volume of both passengers and freight in 2001 (especially cargo), in part
because of economic conditions and in part because of the events in the United States on September 11,
2001. Both passenger and cargo volumes increased during the first quarter of 2002 over the first quarter of
2001 - passengers by 0.4% and cargo by 15.6% - perhaps putting the volume of cargo handled annually
back on its previous trajectory. 210
Fuel prices may be of greater importance for longer-term projections of airfreight volumes than security
factors or economic considerations. There is considerable debate among geologists, economists, and others
as to when production of conventional oil will peak, 211 and the possibility that oil prices will rise
dramatically during the next few decades should not be discounted.
Because aircraft are fuel intensive and there are no taxes on the fuel used for international flights, airlines
costs are extremely sensitive to crude oil prices. Historically, fuel costs comprise 15-30% of aviation's total
expenses, a much higher proportion of total costs than for other modes of transport. It is hard to predict
how much real crude oil prices will rise after the production peak, but a factor of five over current prices
by 2015 may be plausible. Such an increase would make the movement of people and freight as we know
it impracticable.
The projections for air cargo make no reference to their potentially acute sensitivity to oil prices. This
would seem unwise given the uncertainties about oil production and the large amounts of investment
involved. It could be argued that airfreight may be so insensitive to price that a fivefold or greater increase
in fuel prices may be of little consequence, but the little available evidence suggests that airfreight is quite
sensitive to economic conditions, and perhaps more so than air travel (for example, the experience during
2001 noted above).
Projections of growth in the goods vehicle fleet and in cross-border traffic are set out in Table 6.2, which
presents scenarios that have been adopted by the
Table 6.2 Projections of numbers of licensed goods
Hong Kong government. 212 The preferred scenario vehicles and daily cross-border traffic in 2016
seems to be the one listed here as "2016 high (1)."
Under this scenario, the number of goods vehicles on
the road will more than double between 1997 and
2016 and cross-border traffic will increase four-fold.
Scenario
Licensed goods
vehicles
(growth)
Daily crossboundary
tra ffic
(growth)
The projection of the number of goods vehicles on
the road is extraordinary in view of recent trends.
The number of goods vehicles on the road in Hong
Kong has hardly changed during the last decade,
although there have been changes in fleet
composition, as illustrated in Figure 6.1. Thus, for
reasons that are not mentioned in the projection
report, the Hong Kong government expects that a
decade during which there was essentially no change
in the number of goods vehicles will be followed by
1997 baseline 117,000 30,000
2016 low
2016 medium
2016 high (1)
2016 high (2)
141,000
(21%)
185,000
(58%)
262,000
(124%)
262,000
(124%)
85,000
(183%)
120 ,000
(300%)
120 ,000
(300%)
164 ,000
(447%)
210 Information about the first quarter of 2002 is from Hong Kong iMail, April 12, 2002.
211 See Bentley, R.W. (2002), "Global oil & gas depletion: an overview," Energy Policy, Vol.30, pp.189-205;
Gilbert, R. (2002), Electrifying Hong Kong: Making Transport Sustainable, Hong Kong: Civic Exchange & the
Asia Foundation, Section 5.1; and other sources referenced there.
212 The projections in Table 6.2 are those in Transport Department (1999), Third Comprehensive Transport Study,
Hong Kong: HKSAR Government.
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