Making plans for Changi

03 / 09 / 2012

IT IS a sign of how little cheer there is out there in the air cargo world that a negligible 0.1 per cent year-on-year rise in cargo tonnage in June looked like good news for Singapore’s Changi airport.

It still left volumes for the first half of the year down one per cent, but at least indicated an end to three months of year-on-year declines that saw tonnage shrink 1.8 per cent in March, 4.9 per cent in April and 2.8 per cent in May.

James Fong, assistant vice-president, cargo and logistics development for Changi Airport Group, is too cautious to read optimism into any one monthly figure, however. “It is fluctuating from month-to-month,” he says.

The US is still sluggish, the eurozone is still unable to escape its sovereign debt crisis, and China and India have stuttering economies. Hopes of a traditional peak are now fast diminishing among the air-lines and forwarders we have spoken to. They are not as optimistic as they were a few months back.”

The fact that China is in that list is particularly worrying. In 2011 it overtook the USA as the airport’s top cargo market and delivered five per cent tonnage growth to Singapore.

That increased overall volumes for Changi by 2.8 per cent to 1,870,000 tonnes dur-ing the year. But in 2012, China traffic has only seen a marginal one per cent growth.

Despite this, there was encouraging news at the start of June when Yangtze River Express started eight weekly services from Shanghai to Singapore, via Bangkok and Chongqing, utilising its new 65-tonne A330-200 freighters.

It joined China Cargo Airlines which, in September last year, started freighter services from Chengdu, and Singapore Airlines which added Chongqing to its roster in November.

That meant Changi now had freighter links to seven Chinese cities – Guangzhou, Shenzhen, Xia- men, Nanjing and Chengdu being the other five – as well as 26 passenger links.

Not surprisingly, Fong is keen to get more. “We are in close contact with airline partners for other freighter operations, and are optimistic we can get at least a couple in the next 12 months,” he says.

“The entrance of Yangtze River Express shows the importance that Chinese carriers attach to Changi as a hub.” 

The two Chinese carriers are not the only new freighter links the airport has won in the past year.

In September Emirates started a weekly B777F service on the way from Dubai to Sydney and, in November, Lufthansa started two weekly MD-11 services from Frankfurt to Singapore via Jeddah and Sharjah, continuing to Bangkok.

Fong also highlights a new weekly freighter link to Såo Paulo’s Viracopos airport, which was launched by Singapore Airlines on 16 August, with stops at Dallas out-bound and in Europe on the return leg.

“We are very excited to see that, and hopefully it will be the start of a growing flow of cargo bet-ween Latin America and Singapore,” he says.

On top of that, the airport has attracted two different B747-8 services, started by Cargolux and Cathay Pacific earlier this year.

It was well equipped to cope with these, having already got used to handling the super-sized A380s of Singapore Airlines, Qantas and Lufthansa on the passenger side.

All of this suggests that Changi has not lost any of its attraction for freighter operators, but it also has to be admitted that, in common with other major hubs worldwide, it has seen largely static cargo figures in recent years.

While there was steady growth up until 2006, when the airport handled 1,931,881 tonnes, figures have hovered between 1.8 and 1.9 million ever since, with one foray down to 1.6m in 2009.

In order to boost freighter traffic the airport announced a S$15m (US$12m) cargo sup-port package for the fiscal year starting in April 2012, including a 20 per cent landing fee rebate for all freighter flights, 20 per cent rental reb-ates for tenants leasing facilities at the Changi Airfreight Cen- tre, and other incentives to support both new and existing services.

Fong is somewhat coy about what imp-act this has had to- date, however, say-ing that it is “still in the early stages”, but he says that Changi is happy to engage in joint marketing exercises with carriers, to help them with traffic development, and to overcome regulatory hurdles.

While China is obviously a key market for Changi, it is certainly not the only game in town. Fong reports good growth in other intra-Asian traffic, particularly to neighbouring ASEAN countries such as Indonesia and Thailand.

There are increasing amo-unts of belly capacity to sup-port this traffic, as Asians take to the air in ever-larger numbers. It is notable that while cargo volumes at Changi have stagnated since 2006, passenger numbers have gone from 35 to 45.6 million.

Low-cost airlines operating narrow-bodies are a part of that, and to some extent these are probably replacing the more cargo-friendly wide-bodies that many Asian carriers used to operate on intra-Asian routes.

But Fong says many of the low-cost operators are also now interested in cargo, and that there are still plenty of wide-body air-craft being deployed on intra-Asian routes.

“Low cost and full service have made equal contributions to our growth in the last few years, and both contribute to cargo flows,” he says. 

“In general, the more frequency and connectivity  we offer, the more opportunities the shipper has to ship cargo, and that can only help Singapore as a cargo hub.”

The airport also has increasing success in perishables traffic, which has grown in double digits in the last few years and is now 10 per cent of cargo throughput. 

This sector was boosted by the opening of coolport@changi at the end of 2010, the airport’s first on-airport perishables handling centre, operated by handler SATS and having an annual capacity of approximately 25,000 tonnes.

Fong says the airport has worked with airlines at several key trade shows to market Chan-gi’s capabilities in this area.

High end logistics is another Singaporean strength, with companies in areas such as critical spare parts, healthcare and clinical trials, and complex production logistics all located within the airport freezone.

“In Singapore there is a general mindset that supports the logistics industry, all the way from the  government right down to small- and medium-sized companies, and as an airport we are also part of that,” says Fong.

This is traffic that is particularly interesting for express operators, and Changi also has its new express hub due to be formally opened in October – though in fact it has been operating since June.

“It is the first express facility at the airport to have direct access to the ramp, so that freighters can park right in front of it, and FedEx is the first user,” reveals Fong. 

“With this facility we expect to grow our express traffic quite substantially in the next few years.”

Another aspect of Singapore’s success has always been its leadership in process and technological change in air cargo, and it is continuing that tradition as one of the leading lights in the IATA e-freight project. 

Along with the Netherlands and Korea, it has set itself up as a pioneer in the area, with a we-freight@Singapore project that has the full support of the civil aviation authority, Customs and other government agencies, as well as airlines, freight for-warders and the airport.

Fong says three different consortia of shippers, airlines, and technology companies are already preparing solutions under the scheme, which are due for unveiling next year and then implementation in 2014.

“We are going for three different solutions because, in consultations, it was realised that there is no one-size-fits-all solution,” he says.

“So we decided to have three different solutions that freight forwarders can choose between though, of course, we have also worked with IATA to ensure that all three are compatible with each other and with other e-freight solutions.”