VZCZCXRO3252
RR RUEHCN RUEHGH RUEHVC
DE RUEHHK #0158/01 0230727
ZNR UUUUU ZZH
R 230727Z JAN 09
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6747
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 HONG KONG 000158 
 
SIPDIS 
 
STATE FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD HK
SUBJECT: HONG KONG AIR CARGO AND SEA FREIGHT VOLUMES POST 
STEEP DECLINES 
 
¶1. Summary: Slowing international trade has reduced both air 
and sea freight volumes in Hong Kong.  Hong Kong air cargo 
shipments declined 20 percent in the fourth quarter of 2008, 
compared with the prior year period, including a drop of 28 
percent in December.  The largest local air freight carrier, 
Cathay Pacific, announced on January 15 that it would 
postpone completion of its new air cargo terminal until 2013. 
 Container throughput at Hong Kong sea ports declined 13 
percent and 24 percent year-over-year, respectively, in 
November and December 2008.  The HKG has not yet reported the 
number of Hong Kong tourist arrivals in 2008, but a five 
percent increase to 29.5 million is expected.  Macau's 
tourist bureau reported over 30 million arrivals by foreign 
visitors in 2008, seemingly surpassing Hong Kong's tourist 
total.  However, Macau's foreign visitor number is inflated 
by counting migrant worker arrivals.  A local Hong Kong 
newspaper estimated Macau 2008 true tourist arrivals at 
approximately 22 million.  MSARG officials will begin in 
February 2009 to provide separate totals for arrivals by 
tourists and foreign workers. End Summary. 
 
Air Cargo Hitting Turbulence 
---------------------------- 
 
¶2.  Hong Kong Air Cargo Terminals Limited (HACTL) announced 
January 11 that its total air cargo throughput in December 
2008 (includes exports, imports and transshipments) declined 
almost 30 percent from a year ago to 167,845 tons.  For the 
fourth quarter of 2008, year-over-year air cargo volume fell 
19 percent, with imports from the United States declining 
eleven percent.  HACTL General Manager Lilian Chan told local 
media that the global air cargo industry "is undergoing an 
extremely challenging ice age" related to worldwide economic 
weakness.  HACTL hopes the market will recover in the latter 
half of 2009, said Chan.  HACTL handles 80 percent of Hong 
Kong's air cargo.  Hong Kong Airport Authority (HKAA) 
statistics indicate Hong Kong's air cargo and passenger 
traffic in December 2008 declined 28 percent and five 
percent, respectively, compared with the prior year period. 
 
¶3.  Cathay Pacific confirmed January 15 that it reached 
agreement with the HKAA to postpone the completion date of 
its new cargo terminal by 24 months to-mid 2013, in response 
to difficult market conditions.  Cathay Pacific reportedly 
had second thoughts about the project in October 2008, just 
one month after construction work on the new cargo terminal 
began, and requested the HKAA to approve deferral of the 
project.  An HKAA spokesman told the Sing Tao Daly newspaper 
that Hong Kong's air hub status would not be weakened by 
Cathay Pacific's delay.  Cathay Pacific's spokesman declined 
to disclose the amount of compensation paid to the HKAA, 
noting only that it was "fair and reasonable." 
 
Sea Freight Facing Storms 
------------------------- 
 
¶4.  The sea freight business appears to be no better off. 
Container terminals in Hong Kong also reported significant 
declines in container throughput.  Kwai Tsing Container 
Terminals (home of Hong Kong's major terminal operators and 
primary intercontinental capacity) saw total container 
throughput decline 19 percent in December 2008, 
year-over-year, while the container terminals outside Kwai 
Tsing (used mainly by feeder vessels and regional carriers) 
reported a 38 percent drop for the same period.  Total 
container throughput in all of Hong Kong's ports declined 24 
percent in December 2008 (preliminary year-over-year 
estimate), compared with a 13 percent drop in November. 
 
Increased Tourist Arrivals in Hong Kong and Macau 
--------------------------------------------- ---- 
 
¶5.  Hong Kong has not yet released its final figures on total 
tourist arrivals in 2008, but preliminary figures reported by 
the local Chinese press state Hong Kong received 29.5 million 
tourists in 2008, an increase of 5 percent from a year ago. 
On January 14, the Macau Government Tourist Office reported 
that foreign visitor arrivals in Macau totaled over 30 
million in 2008 (up 11 percent over 2007), despite a fourth 
quarter slowdown in arrivals related to the deteriorating 
economic climate and tightened PRC visa restrictions on 
Mainland residents wishing to visit Macau.  The Hong Kong 
Economic Times challenged Macau's figures, stating the MSARG 
foreign visitor total includes foreign workers entering 
Macau.  The Economic Times said Macau can only claim 
approximately 22 million tourists in 2008.  The MSARG intends 
to carve out foreign migrant workers from their foreign 
visitor calculations, beginning in February 2009, in order to 
distinguish between foreign tourists and work-related 
 
HONG KONG 00000158  002 OF 002 
 
 
arrivals. 
 
More Layoffs After Chinese New Year 
----------------------------------- 
 
¶6.  Hong Kong Chief Executive Donald Tsang recently told 
Legislative Council members that Hong Kong's export trade 
volume might decline by "double digits" in December 2008, on 
a year-over-year basis, following a five percent drop in 
November.  Tsang said he expected more layoffs and business 
failures after the Chinese New Year period ends on January 28. 
DONOVAN