Hawaii says Aloha to more inbound cargo than outbound freight

29 November, 2017

Hawaii has experienced massive changes in its air cargo business thanks to the online retailing behemoth Amazon changing its shipping policies for the US state over a decade ago.

That’s one of the conclusions drawn by a recent analysis conducted by Hawaii’s Department of Business, Economic Development and Tourism (DBEDT).

The Department concluded the shift was most pronounced in 2002, when air cargo destined for Hawaii from out-of-state locations increased by 55%. “This was not a one-time change, but a sustained new trend, with inbound cargo overtaking outbound cargo”, DBEDT concluded.

One of the biggest drivers for the shift was internet-based retailers offering bundled products with free or deeply discounted shipping. Inbound freight began its sharp climb in 2002 when online retail giant Amazon began offering free shipping to Hawaii for orders that exceeded a certain dollar amount.

Inbound air cargo to Hawaii increased by 63.4% year-on-year. The shift in Amazon’s shipping policies not only increased the quantity of online shoppers, but also increased the dollar amount per order in order to meet the minimum threshold.

“Given the continued growth of e-commerce, it is likely that Hawaii’s inbound air cargo volumes will remain high”, said DBEDT.

Japan plays a dominant role in Hawaii’s international inbound cargo market – three of the top five airports for inbound tonnage to Honolulu are located in the country.

TABLE - Japan plays a dominant role in Hawaii’s international inbound cargo market, while Sydney is the top outbound cargo marketSource: Hawaii’s Department of Business, Economic Development and Tourism (DBEDT)

Domestically, many of the top inbound cargo airports to Hawaii are cargo hubs themselves, including Ontario, California, Memphis, Tennessee (home to FedEx), and Louisville, Kentucky (a hub for UPS).

Sydney is the top outbound cargo market for Hawaii followed by Auckland. However, DBEDT pointed to conclusions drawn by Australia’s flag carrier Qantas that very little air cargo originates in Hawaii. “Therefore, Honolulu airport itself acts as an air cargo hub for the goods being trans- shipped from the mainland to Australia and other locations in the Pacific”, DBEDT stated.

Hawaii’s favourable geographic position allows the state to capitalise on cargo growth in Asia. DBEDT concluded air cargo markets linked to Asia, especially the Pacific Rim, will lead all other international markets in average annual growth between 2015 and 2035.

Citing data compiled by airframer Boeing, DBEDT stated China’s domestic growth rate will reach 6.2% annually and the forecasted growth rate for the intra-Asia market is 5.5%. The agency emphasised Hawaii “benefits from being a link between North America and Asia Pacific”.