As police patrol the airport express central train station in downtown Hong Kong, Saturday, Sept. 7, 2019, protesters were untrammeled in their continued actions against Mainland China’s pressure on the former Crown Colony. Authorities were limiting airport transport services and controlling access to terminals Saturday during a second straight weekend of disruption following overnight demonstrations that turned violent.

This is all new territory for the world. I don’t think in recent memory, we have ever seen such volatility in the marketplace. This is not the traditional economic cycle, so it is getting almost impossible to make any sane predictions! Most of the issues today have a very strong political connotation and, I would say, are self-inflicted in the world’s major economies causing far-reaching effects world over. The U.S.-China trade war, the Brexit uncertainty, and the current unrest in Hong Kong are all going to have a long-term effect on the world economy.
     Typically, the stock markets should have tanked by now, however, they have not!! It is becoming extremely difficult to understand the sentiments on which the world stock market is tracking the highs and lows. One thing for sure is that there is a lot of wealth creation in progress!
     Now that the U.S. tariff on a lot of the electronics and other consumer goods has been postponed till mid-December, we should see some higher demand for air capacity on the TransPac sector during November and December in last minute inventory top up before the imminent tariff implementation.
     The demand for capacity on the U.S. to China is likely to be very low as China looks for its imports from elsewhere. We are likely to see larger demand to China from Latin American countries, especially for perishable commodities.
     In the European arena, again the Brexit situation has become very unpredictable. As of today, it looks like they will be kicking the can further down the road, creating more uncertainty.
     Inventory management is likely to be a bit of a challenge. The original stocks are now being drawn down, and the replenishment process will result in some air cargo volumes, however, the level of demand for air capacity will depend on whether the UK will leave EU on October 31, 2019 or some time in 2020. Brexit is likely to boost demand for direct capacity inbound to UK from the Trans-Atlantic, Africa and Far-Eastern regions. The losers in this deal will be surface carriers (trucks and ferries), who rely on the internal EU/UK volumes. There is likely to be lack of outbound volumes ex UK which will create challenges for pure freighter operators, as UK exports are unlikely to find new markets in a hurry.
     The long-term effects of Hong Kong’s political situation, where violence has crept into what were peaceful protests, will be interesting to watch as this has really shaken the market confidence in its role as a very stable major world hub.
     Luckily, cargo movements were not directly affected, other than reduction in available belly capacity. Regular freighters and extra sections have kept the cargo flow moving.      However, given the unpredictability that the political situation is creating and, the fact that the mainland is creating its own cargo hubs, could mean lesser cargo being routed via the Hong Kong hub. The best Hong Kong can hope for is that memories will be short, and it can get back to normal operations soon, provided there is a resolution to the current turmoil.
     Post turmoil and in return to normalcy, there is likely to be higher demand in the short term for inbound cargo, especially for renovation of all the destruction caused by the rioters.
     Whatever the situation, 2020 will be a challenging year for the world air cargo industry.