Local air traders in Hong Kong are expecting that the market will remain soft in the fourth quarter of 2023 as import performance remains muted and B2C e-commerce sales decline, according to the latest DHL Hong Kong Air Trade Leading Index (DTI) findings.
The report — commissioned by DHL Express Hong Kong and compiled by the Hong Kong Productivity Council — said the air trade market remained soft in the traditional peak season. Yet, the market outlook is better than the same period last year, with a more positive view towards the festive season this year.
"The air trade market will remain soft in Q4 2023 with further decline on the overall index, mainly due to the decrease in import performance and B2C e-commerce sales volume," the DTI said.
"As the year-end peak season of Thanksgiving and Christmas approaches, local air traders expect a 'better' peak than last year, reaching the index level in Q4 2018," it added.
Meanwhile, Asian markets are set to shine in 2024, according to the report.
It added that air traders found Southeast Asia — especially Vietnam, Malaysia, and Thailand — and China to be the top potential markets in the coming year.
This is unlike last year when US and EU markets were on top of the list.
Looking further into 2024, the DTI said nearly half of the local air traders will increase their prices next year, which is 16 percentage points more than the survey result in Q1 2023.
After a drastic drop last quarter, Americas' index saw a slight increase, ranking top among all markets, while Europe's index dipped from its recent high.
Asia Pacific’s index further declined, where both China and Japan started retreating after the rise seen in the last two quarters.
Food and Beverage ranked top among all airfreight commodities, recording a significant rebound this quarter.
The downward trend for Apparel and Clothing Accessories and Electronic Products and Parts has halted with a slight recovery.
"The decline in the Overall Air Trade Index has narrowed down this quarter, falling only by 1.2 points to 39.4 points. The overall air trade market remains soft as air traders are still facing various challenges, such as continuous inflation and increasing fuel costs," said Edmond Lai, chief digital officer of HKPC.
He that the Census and Statistics Department has also expected that the weak external demand for goods is expected to continue for a certain period, pressurising Hong Kong's export performance.
"In view of this, half of the surveyed air traders have already planned for 2024 to cope with such challenges. On top of looking out for opportunities from markets in China and other Asian regions (especially Vietnam, Malaysia, Thailand and India), air traders are also advised to review their cost structure and pricing strategies, as well as to formulate strategies to deal with the increasing fuel costs and logistic costs," Lai added.
The latest DTI report found a stable two-thirds of air traders are interested in "Go-Green" products or services, and over nine in ten of them are willing to pay an additional of up to 10% to reduce carbon emission.
The DTI analyzes the key attributes of business demands based on a survey of more than 600 Hong Kong companies that focus on in- or outbound air trading.
An index value above 50 indicates an overall positive outlook, while a reading below 50 represents an overall negative outlook for the surveyed quarter. The further the reading is from 50, the more positive or negative the outlook is.
