Computer Problems Delay Cargo at New Hong Kong Airport

Express carriers like FedEx have been largely unaffected by the new airport's problems.

By Staff -- Logistics Management, 8/1/1998

It was supposed to be a symbol of the New Hong Kong, showing the world that even after its return to the People's Republic of China, Hong Kong would continue to support business with the most modern, state-of-the-art facilities and information systems. But the very day the new Hong Kong International Airport at Chek Lap Kok opened to commercial flights, a computer-system failure sent most cargo operations into a tailspin.

On July 6, the day the new facility opened, terminal operator Hong Kong Air Cargo Terminals Ltd. (HACTL), which handles 80 percent of Hong Kong's air cargo, suffered a massive computer system breakdown at its brand-new Super Terminal 1. That left HACTL and the airlines it serves unable to exchange information about inbound or outbound shipments. Internal communications and automated freight-handling systems also were affected.

As cargo piled up awaiting processing, HACTL on July 10 imposed a moratorium on all but urgent shipments, including perishables, express and mail shipments, extremely high-value items, newspapers, live animals, and emergency medical supplies. A series of emergency measures implemented by HACTL with assistance from the Hong Kong government and the Airport Authority allowed some export cargo to move via freighter aircraft. Some cargo was transferred to the Air Freight Forwarding Centre, and HACTL moved most of its operations back to its former home at Kai Tak Airport's Terminal 2. A few airlines have been moving freight via nearby Macau and Shenzhen.

The government allowed freight forwarders to store backlogged cargo rent-free at Terminal 2--ironic, say local forwarders, since the government had insisted against their advice that the facility no longer was needed and had planned to shut it down after the new airport opened. Meanwhile, many forwarders are seeking alternative routes to keep their customers' shipments moving. BAX Global, for example, has made available a sea-air routing that flies freight into Singapore and then moves it via ship to Hong Kong. Other forwarders, such as Fritz Air Freight, say they are having little trouble because their large freight volumes and strong relationships with airlines give their shipments priority on available flights.

Not everyone has been adversely affected by the problems at SuperTerminal 1, however. Unlike Kai Tak, where HACTL had a monopoly, there is limited competition at Chek Lap Kok. Carriers using the competing Asia Airfreight Terminal, including FedEx, have reported operations proceeding as usual. United Parcel Service, DHL Worldwide Express, and TNT Express Worldwide have their own independent terminal operations and thus have been unaffected. They have been granted temporary authority to add capacity during the crisis.

The moratorium was lifted at midnight on July 18, but it will take more than a month for the backlog to clear. HACTL's recovery plan, which will use both SuperTerminal 1 and Kai Tak Terminal 2, calls for the gradual addition of different types of import and export cargo, with SuperTerminal 1 at full capacity by the end of August.

The pressure will be on to meet that schedule: The Hong Kong government estimates financial losses resulting from the shutdown will amount to nearly US$600 million. The airfreight industry counters that the government's insistence on opening Chek Lap Kok before it was ready is partly to blame for HACTL's problems. Although the government has yet to accept any responsibility, it has appointed a commission of inquiry to investigate a number of issues, including the decision to open on July 6.