Turning up the volume

AGS    With all the tonnage figures looking remarkably healthy by the end of the summer 2010, is the situation in Autumn 2010 very different to that of two years ago?
 
LC    Freight volume and international trade was hit hard by the global recession in 2008, the slowdown had then lurched into 2009. The situation now is rather different from that of two years ago as we have experienced a strong bounce back since the fourth quarter of 2009. Growth has continued until now – although we saw milder growth in the third quarter of this year due to the higher base in the second half of 2009 and the completion of the recent restocking cycle. We expect growth to continue as demand for air freight remains strong. With fears that some European economies might be heading into a double-dip recession due to the European debt crisis, we will stay focused on the global economy’s growth prospects and strive to uphold our consistent quality service provision, sustaining Hong Kong’s status as the world’s No. 1 air cargo hub.

AGS    Have you spent the months during the period of lower cargo volumes undertaking strategic investment; or do quieter periods cause other activities to slow down too?

LC    To ensure we always play a pioneering role in the industry’s development, Hactl continues to upgrade SuperTerminal 1’s infrastructure despite the downturn. We keep offering quality customer service and terminal facilities to enhance Hactl’s competitiveness during the quieter periods. The strategies below were implemented as planned and they helped make sure we were fully geared up to maintain our highest level of services during the recovery:
Adherence to industry standards. Hactl is committed to reviewing our service quality and making sure that we are in compliance with industry standards. Recently, Hactl successfully renewed its IATA Safety Audit for Ground Operations (ISAGO) registration with The International Air Transport Association (IATA), reaffirming Hactl's commitment to providing customers with world-class cargo handling services, which allows our airline customers to focus on their core businesses.
Strengthening and managing our talent. Training is always essential to our provision of quality services. The downturn gave us ample time to reflect on our existing operations schedule to optimise staffing resources. As a result, we managed to slot in more training courses during the downturn, which allowed our staff to get fully prepared for the recovery. A total of 1,114 training courses – ranging from basic cargo handling, special cargo handling, safety, security, customer service, communications and management skills – were conducted in 2009, amounting to 14,000 person-time. To handle the high tonnage volume brought by robust business growth in 2010, we speeded up our recruitment of various positions, such as part-time and full-time warehousemen, tractor drivers, customer service and ramp service coordinators, IT specialists and others, since early 2010 to ensure smooth operations on all fronts. In line with our business plan, our workforce has increased by more than 8.3% since December 2009 to cater to increasing manpower needs.
Facilities enhancement. We strive to provide more comprehensive service, streamline work processes and invest in upgrading facilities as well as adding new hardware and equipment to cope with increasing service needs. For instance, we brought in additional x-ray machines to cope with new US-bound belly-hold cargo screening requirements. We also strived to perfect our infrastructure to constantly enhance our business continuity preparedness, etc.
Expansion of service scope. Hactl has been striving to expand service scope to create value for the customers. Besides the core businesses (physical cargo handling, cargo documentation service, ramp handling), some of our customers are starting to use our new crew transportation service. This provides a real total solution complementing our service solutions for our airline customers.

AGS    What quality procedures and customer satisfaction practices have you put in place?

LC    To ensure consistent service quality, efficiency and safety, Hactl has clearly defined and well documented company operating procedures that emphasise precision, clear work flow and service processes. Given the huge volume and high value of cargo Hactl handles every day, the systematic checking and maintenance of all our cargo handling systems and equipment is always a top key priority, ensuring the highest possible service reliability.
In addition, to pre-empt possible service interruptions from happening, Hactl has a Risk Management Working Group comprising different departmental managers to identity key risks on all service areas and to activate respective controls to mitigate the occurrences. Regular drills and business continuity planning exercises are conducted to test the preparedness of the organisation in all unforeseen circumstances.
Hactl embraces the essence of customer care – understanding customers’ needs, offering solutions and surpassing their expectations, ultimately contributing to mutual business success. To ensure total customer satisfaction, a series of customer-focused programmes are in place:
?    a well-established key account management system;
?    a customer satisfaction management system for efficient monitoring and tracking of comments from customers;
?    annual customer forums run by Hactl senior management to facilitate discussions and idea exchange with customers on all aspects of Hactl services and future development; and
?    an on-going customer satisfaction survey conducted by an independent external research consultancy on Hactl’s behalf.
Customer feedback is circulated to top management as a useful source of reference for mapping out the company’s development blueprints, ensuring all comments received are gauged for continuous improvement.

AGS    Is there anything you can say about the acquisition of Hactl’s shares previously owned by Cathay Pacific related companies following Cathay Pacific’s decision to proceed with the development of its own air cargo terminal at Hong Kong International Airport (HKIA)? Is it all about being the best provider when competition is stepped up to include both AAT and Cathay as well as Hactl?

LC    As we continue to witness strong cargo growth in Hong Kong and in the region, Hong Kong will for sure remain the world’s No. 1 air cargo hub in term of international air cargo volume. Given Hactl’s on-going strategies in quality services and customer retention, we believe we’ll be able to retain most of our existing customers, while continuing to attract new airlines joining the Hactl family.
Together with the strong support by Hactl’s continuing shareholders led by Jardines, Hactl will continue to demonstrate very impressive financial results and deliver good returns to shareholders. We have every confidence that Hactl will continue as the leader in air cargo industry in Hong Kong.

AGS    What ancillary services do you provide other than cargo and ramp handling? Are you moving increasingly towards offering a basket of services or is your strategy to remain close to your core business? Are there logistics support services increasingly in place?

LC    We provide not only cargo and ramp handling services but also cargo documentation handling and crew transportation services. These are the one-stop-shop services that we offer to each of our airline customers, ensuring that we provide tailor-made, reliable and hassle-free cargo handling services to satisfy customers’ changing needs.
Apart from all these general operations, Hactl also provides a series of value-added services:
?    pre-arrival customs clearance;
?    e-Pickup service;
?    cargo security screening (for export cargoes);
?    innovative logistics support service provided by Hacis, our wholly-owned subsidiary company), eg Airport Direct, Superlink China Direct; and
?    IATA accredited training.
Logistics support services are increasingly important as growth speeds up in China, especially the Pearl River Delta (PRD) region. Operated by Hactl’s wholly owned subsidiary Hong Kong Air Cargo Industry Services Limited (Hacis), we strive to enhance our air-road intermodal services between HKIA and the PRD region. We keep expanding the inland cargo depot network in the PRD region to provide more efficient cargo delivery services. It also strengthens Hong Kong’s position as the gateway to China.

AGS    When Hactl signs a cargo handling agreement with a new customer airline, are there areas of the contract or any service level agreement annexed to the contract that are very specific to the way in which Hactl likes to do business? Or are your contracts very industry standard?

LC    It is our mission to fully support our customers’ development plan in the region. While we understand that airline customers are facing increasing business challenges amidst increasing competition in the region, we offer the best terms possible as well as the most flexible quality services that best suit our customers’ specific needs.
In broad terms, Hactl adopts the industry accepted ground handling agreements and, upon request by carriers, we also implement service level agreements that are mutually acceptable to the airlines.

AGS    What is Hactl’s relationship with freight forwarders? Do they have a role to play in the safe and secure handling of freight?

LC    Freight forwarders have always been our closest business partners. They surely have an important role to play which ensures we offer the smoothest cargo handling services to our airline customers.
Hactl conducts an annual customer satisfaction survey to collect the feedback of our customers. We conduct the survey with airline customers as well as freight forwarders and truckers in alternate years. The survey collects aggregate views on multiple dimensions of Hactl service performance from all users, and is then compared with the previous year’s findings. In addition, we organise a customer forum on an annual basis to facilitate discussions and exchange ideas amongst industry practitioners on Hactl’s services and future development.
We always work very closely with freight forwarders so that we, as the terminal operator, offer the best support to provide smooth, safe and secure cargo handling operations.

AGS    What does being ISAGO accredited mean to you?

LC    Hactl keeps identifying room for further improvement on service standards to meet our customers’ business needs, and help to promote and ensure high-levels of security and safety throughout the whole air cargo handling process. We spare no effort in reviewing our service standards to make sure that we are in compliance with industry standards.
We are very pleased to be the world’s first cargo terminal operator to be registered on the ISAGO Registry, helping to set worldwide industry benchmarks. Hactl’s commitment and efforts in pursuing rigorous quality and safety standards over the years are again being recognised. The ISAGO accreditation reaffirms Hactl's commitment to providing customers with world-class cargo handling services, which allows our airline customers to focus on their core businesses.

AGS    Does Hactl provide handling services outside Hong Kong? What is your strategy in relation to the Chinese market for handling services?

LC    Apart from our continued investment in upgrading our terminal infrastructure and provision of quality service, we further strengthen HKIA’s connectivity with the PRD region, a very important market to both our airline customers and HKIA amidst the ever-growing air freight demands in the region via Hacis.
Hacis provides a real tailor-made, one-stop-shop, point-to-point, hassle-free total logistics solution for our customers, including airline companies, freight forwarding agents and third-party logistics companies. Hacis’ services not just reduce cargo transit time and simplify customs clearance procedures between Hong Kong International Airport, Hong Kong-Mainland boundary as well as the final destinations, but also help lower airlines’ operational costs.
Ensuring a comprehensive support along the logistics supply chain, Hacis also extends domestic logistics support to the end consignees/shippers of the airline companies/freight forwarding agents in Mainland China. The services include customs clearance, local delivery and pick-up, as well as logistics operations.
In addition, Hacis joins hands with Hactl’s airline customers to establish an export cargo consolidation hub in Guangzhou Aairport, providing a fast link for the export shipments to be transported via HKIA to overseas