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Hong Kong has long been the world’s busiest air cargo hub, handling more than 4.3mn tonnes of cargo last year. The city’s airport plays a critical role in the global supply chain, connecting China’s industrial base with the rest of the world. But its strategic position also makes it increasingly vulnerable to escalating geopolitical tensions between the US and China, as well as the impact of US President Donald Trump-era tariffs.
Multinational companies rely on Hong Kong for warehousing and distribution, while global logistics providers such as UPS and all-cargo airlines like Air Hong Kong use the city as a key trans-shipment hub. Cathay Pacific, the city’s flagship carrier, has been one of the biggest beneficiaries of this cargo volume, with cargo services accounting for more than a quarter of its total revenue.
Cathay’s cargo revenue has been growing steadily, driven by higher freight rates and strong demand from ecommerce and expanding trade, particularly in electronics. Overall, the group’s cargo tonnage increased 11 per cent last year. Between Europe and Asia, pharmaceutical products and perishables — including China-bound shipments from markets like the UK, France and Belgium — are driving growth in its special cargo business.
Escalating tariffs levied by Trump’s administration and renewed scrutiny on Chinese exports leave Hong Kong’s air cargo sector increasingly vulnerable to external shocks. Tariffs drive up the cost of cross-border trade, squeezing company margins and making air freight less affordable. Businesses looking to protect their bottom lines may begin shifting cargo to cheaper, albeit slower, alternatives such as maritime or land transport.
If multinational corporations diversify their supply chains in response to geopolitical risks, such as relocating production to the US or south-east Asia, supply chains will become more fragmented, reducing cargo volumes through Hong Kong as demand for alternative re-export hubs grows.
The long-term impact extends beyond freight. Economic uncertainty can also weaken demand for business travel, a key revenue driver for carriers operating US-China routes.
Hong Kong remains indispensable to global logistics, and Cathay Pacific continues to reap the rewards. Its revenues rose more than a tenth last year to HK$104.4bn ($13.3bn) while its shares are up a third in the past six months, reflecting strong growth.
But the forces at play now are larger than any single airline or airport. The resilience of Hong Kong’s cargo sector depends not just on freight demand, but also on broader geopolitical dynamics. On that front, the most important air traffic controller is the one who sits in the Oval Office.
june.yoon@ft.com
