Though the demand for air cargo remains soft, major Asian airport, Singapore Changi Airport and its cargo community is investing to enhance current facilities for specific cargo segments such as pharmaceuticals, perishables and e-Commerce to meet the spike in demand expected in the coming years.
There were times in the 90s when the four Asian tigers were much talked about. Those times are back again. Asian economies are once again grabbing attention on the world’s economic headlines. The four Asian tigers are the highly free-market and developed economies of Hong Kong, Singapore, South Korea, and Taiwan.
Amongst these, Singapore seems to roar now as one of the world’s busiest airports in the country, Singapore Changi Airport is seeing developments in order to remain on par with the world’s air cargo market. Singapore Changi Airport handles over 1.8 million tonnes annually. Air cargo volume at the airport registered a year-on-year growth of 4.3 percent, contributed mainly by strong growth in transshipments in the period January-April 2016.
Faced with a period of softer growth, the air cargo industry in general has been looking at tapping growth in commodities that require special handling such as pharmaceuticals, perishables and e-Commerce. The same trend has been observed in Asia Pacific as the region is expected to drive demand for these cargo segments going forward.
“Changi Airport has been actively engaging our air cargo community to improve their readiness and capability to handle such cargo. In the past few years, our partners have invested in cold chain handling facilities such as the SATS Coolport and the dnata Coolchain, as well as other facilities including the upcoming SATS e-Commerce Hub, and the express facilities of FedEx and DHL,” states Phau Hui Hoon, senior manager, Cargo & Logistics Development Division, Changi Airport Group.
Perishables are an important cargo segment for Changi Airport, contributing to 13 percent of total cargo throughput. In 2015, the volume of perishables handled at Changi grew 8.4 percent year-on-year, driven by strong growth in imports and transshipments. Pharmaceutical cargo is also one of the best performing segments at Changi, growing 45 percent year-on-year, albeit on a small base.
“Australia, China and Hong Kong are the top three cargo markets for Changi Airport,” informs Hoon.
Technology has always been there in the air cargo industry. However, now with technology becoming a ‘hot topic’ in the industry, airports are investing in technology to upgrade their existing systems and make processes faster and efficient.
“Our cargo industry partners are exploring and implementing various productivity enhancement initiatives to automate processes, aggregate resources and equipment, as well as to improve capabilities to track-and-trace cargo. These will help to save cargo processing time, reduce reliance on manpower, and improve efficiency,” adds Hoon.
SATS, one of the ground handling partners, also pioneered and implemented the one-stop e-Acceptance initiative in 2015. The project has transformed the administrative process for accepting export cargo at its airfreight terminals, reinforcing Changi’s position as a leading international air cargo hub. The initiative not only makes processing each transaction faster and reduces the possibility of human error, it also offers cargo agents live tracking of shipments, and enhances cargo security via the system’s ability to authenticate users. This e-Acceptance project is expected to yield about a 30 percent improvement in productivity, as well as reduce the industry’s carbon footprint by saving an estimated 600,000 sheets of paper annually.
Some of the initiatives undertaken at the airport include the upgrading of RFID systems to track cargo within the warehouses, upgrading of material handling systems for storage and retrieval of Unit Load Devices (ULDs), and the use of mobile devices to track the status of cargo in real-time. What remains equally important is the know-how of technology implemented.
E-Commerce’s impressive growth has caught the attention of air cargo community at Singapore Changi Airport. Ergo, they are investing in infrastructure to make e-Commerce logistics more efficient.
SATS is investing in an e-Commerce Hub at Changi Airport with Singapore Post (SingPost) as its anchor customer. The new facility will improve efficiency and space utilisation, and enhance the consignment handling capabilities for both SATS and SingPost. SATS will be the first ground handler in the world to own such an airside facility. The expected completion date is end of 2016.
DHL Express’ 24-hour express facility at the Changi Airfreight Centre will be completed later this year to support the express cargo segment. This new facility will increase DHL’s throughput by three times and processing speed by six times, and will further anchor Changi Airport’s position as a key cargo and logistics hub in the region.
Amidst the opportunities, lie several challenges which cannot be ignored. The air cargo industry continues to face challenges from over-capacity amidst a period of slower growth and rising consumer expectations. “One of the key challenges faced by the industry is the management of cargo capacity. In recent times, we have observed an injection of more passenger flights by airlines in response to growth in travel demand, leading to the addition of significant belly capacity. This has in turn led to an oversupply of cargo capacity on certain trade lanes,” says Hoon.
Nevertheless, there are still growth opportunities, for instance in the segments of pharmaceuticals and express/e-Commerce. Further, the economic integration of the 10 ASEAN Member States is expected to stimulate trade and investment in the region, making it easier to do business. As the leading air cargo hub in the region, Changi Airport and its air cargo community are well-placed to tap the growth in intra-Asia airfreight demand with efficient operations.