Hong Kong has halted a HK$4.6 billion (US$592 million) redevelopment plan for an air mail centre designed to turn the city into a postal and logistics hub, after authorities cited a 67 per cent reduction in postage volume over five years due to geopolitical tensions.

In a paper to the Legislative Council on Friday, the Commerce and Economic Development Bureau said it was no longer cost effective to redevelop the centre at the airport as the latest projected air mail volume at the site would drop significantly by almost 70 per cent from its original forecast.

“The tariff and trade war … eliminating the duty-free policy for small parcels delivered through the postal channel, has further exacerbated geopolitical risks, sending the global economy to significant uncertainty,” it said.

“The unprecedented challenges facing the global economic environment have also dealt a blow to the business prospects of Hongkong Post.”

It said the escalating geopolitics, including the Russia-Ukraine war, had severely impacted the city’s e-commerce, resulting in a significant drop of 67 per cent in mail volume handled by the centre, from 36,900 tonnes in 2019-20 to 12,000 tonnes in 2024-25.