Sun Hung Kai Properties, Hong Kong's largest developer by market capitalization, plans to bid for the proposed third air cargo terminal in Hong Kong, according to a source.

Peter Lui, a former general manager of Hong Kong Air Cargo Terminals Limited, has been invited to be consultant at the company's subsidiary, Airport Freight Forwarding Centre, as it prepares to bid for the facility planned by the Airport Authority. The company has not ruled out forming a consortium for the bid, according to the source.

HACTL and Singapore-based Asia Airfreight Terminal control about 90 percent of air cargo movements at Hong Kong International Airport.

AFFC, wholly owned by Sun Hung Kai, acts as a second-tier air freight handler at Chek Lap Kok, mainly collecting cargo and sending it to the two air cargo terminals as well as the DHL-owned Express Cargo Terminal.

"AFFC has operated for a long time but it is still loss-making. It is only a second-tier cargo terminal, and Sun Hung Kai plans to consolidate its logistics business," the source said.

Given the high terminal fees, Sun Hung Kai plans to capture the strong growth in cargo aiming to turn its logistics business around.

HACTL now charges logistics companies HK$1.47 per kilogram, while Guangzhou Baiyun Airport levies 30 HK cents to 50 HK cents per kilogram.

Ron Mathison, Cathay Pacific Airways director for cargo, said in May the airline paid HACTL nearly three times what it pays at comparable locations such as Singapore. In July, the Airport Authority decided to consult existing cargo facility operators after Cathay announced plans to build its own air cargo terminal at Chek Lap Kok with the first stage scheduled for opening 2009.

Cathay said it will be the world's biggest, and capable of handling four to five million tonnes of freight a year.

The authority is expected to end consultations in mid-October and then proceed to the next stage.

Cathay 's controlling shareholder, Swire Group, directly owns 20 percent of HACTL and holds 10 percent through Cathay. Jardine Pacific owns 25 percent. Wharf and Hutchison Whampoa each owns 12.5 percent of HACTL, and China National Aviation and CITIC Pacific each holds 10 percent.

HACTL said in July it handled 1.19 million tonnes in the first six months, up 5.8 percent from the same period a year ago. Corporate development director Warren Bishop said the compound annual growth is estimated at 5.3 percent from 2008 to 2015.

However, Mathison disagreed, saying HACTL will be at full capacity by 2009. He said Cathay carried nearly 1.12 million tonnes of cargo last year, and experienced 10.5 percent growth in the first six months of this year.

He has projected that Cathay's annual growth in cargo will be between 8 and 9 percent in the next few years.

The authority's "Master Plan 2020," forecasts a compound annual growth rate for cargo of 5.8 percent for the next 14 years, by which time volume is expected to reach 6.9 million tonnes.