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CARGO Last modified on March 18, 2013

Six of the best

Steven Thompson reviews the 2012 performance of the world’s busiest cargo gateways and discovers that it has been a difficult 12 months for airfreight.

On the face of it, the latest cargo figures do not make for pleasant reading. It was a rollercoaster year to say the least – there were highs and lows, but ultimately, global airfreight finished exactly where it started – with zero growth.

There were regional differences in cargo performance, with Middle Eastern and African gateways generally faring better than those in Asia-Pacific and the more mature markets of Europe and the US.

Of the world’s top six gateways, Dubai, Memphis and Hong Kong all reported increases in throughput while Shanghai Pudong, Incheon and Anchorage experienced declines.

“There were mixed results throughout 2012, with some months posting modest gains while other months posted declines,” says ACI World’s economics director, Rafael Echevarne. 

“Amid the significant downside risks in the Euro area and the fiscal deadlock in the United States throughout the year, growth in air freight came to an overall halt in 2012. However, as the global economy and international trade picks up steam, we are optimistic to see higher growth rates for both passenger and freight traffic in 2013.”

 

Hong Kong International Airport

Hong Kong remained the world’s busiest gateway airport in 2012, regional economic growth proving the catalyst for a 2.2% rise in cargo volumes and its continued stay at the top of the pile despite what the airport called “a challenging global economic environment”.

It actually handled over four million tonnes of cargo for the first time last year, achieving a significant milestone at a time when so many of its fiercest rivals saw a cargo decrease.

Although financial woes in Europe and the US show few signs of improvement, GDP growth forecasts for the Chinese Mainland and South East Asia are 8.1% and 5.2%, respectively, and for this reason, the airport says it is “cautiously optimistic” about registering another increase in cargo this year.

Europe, North America and South East Asia are HKIA’s three biggest cargo markets, accounting for more than 50% of its annual cargo volumes.

The gateway’s cargo facilities will be further boosted this year by the opening of Cathay Pacific new cargo terminal. Due to open in late February, the $761 million (HK$5.9 billion) facility will have an annual cargo handling capacity of 2.6 million tonnes, increasing the total cargo handling capacity of HKIA by 50% to 7.4 million tonnes a year.

Operator, Airport Authority Hong Kong, claims that HKIA’s greatest asset is that it is the “preferred gateway to the Chinese Mainland” for international shippers.

“Over the years, many cargo operators have been attracted to HKIA. Examples are DHL’s Central Asia Hub – which is the first large-scale automated express hub in Asia-Pacific – and Hong Kong Air Cargo Terminals’ SuperTerminal 1, which is equipped with state-of-the-art automated cargo handling system and other special cargo facilities,” says a spokesman.

“We are less than five flying hours from half of the world’s population and HKIA is now connected to about 170 destinations, including about 50 mainland cities through about 1,000 flights daily served by over 100 operating airlines.”

Hong Kong Air Cargo Terminals Limited (Hactl) – the major air cargo handler at HKIA – reported the second best year in the company’s history in 2012 when 2.7 million tonnes of freight passed through its facilities.

The fourth quarter in 2012 saw total traffic up 6.2% on 2011, at 754,226 tonnes, the best total tonnage and best annual growth in any quarter since the first quarter of 2011. 

The fourth quarter was also the best for exports in 2012 – November’s figure of 142,632 tonnes made it the most outstanding month of the year, while December’s was the third best. 

December’s imports figure of 61,659 tonnes meanwhile, made it 2012’s top month for inbound shipments.

Five new customers (Air Astana, Globus Airlines, SF Airlines, Uni-top Airlines and Vladivostok Air) in the later part of 2012 certainly helped play a part in Hactl’s upturn in fortunes and ensure that Hong Kong International Airport remained the world’s biggest cargo gateway by handling just 8,000 tonnes more than Memphis International Airport.

 

Memphis International Airport 

FedEx hub, Memphis, was the top performing cargo airport for many years, until finally being overtaken by Hong Kong in 2010.

It came back strongly in 2012, however, regaining its number one position six months into the new year, and only narrowly missed out on top spot at the year’s end despite annual growth of 2.5%.

While cargo has dipped internationally from a global perspective, Memphis bucked the trend, primarily due to FedEx, which continues to lead the way at the Tennessee gateway, handling in excess of 1.5 million packages daily.

“As the economy has shrunk here, especially in terms of traffic, it has made it more economic for FedEx to put more aircraft into Memphis, and over the year, that’s what they have done,” explains John Greaud, vice president of operations, at Memphis International Airport.

“They have not seen growth – in fact, it’s been fairly flat – so they are trying to come up with ways to become more efficient. And it is more efficient for them to operate from here with larger aircraft.

“For example, they may have a B727 that came here and a B727 that goes elsewhere. But it is better for them to use a B757 that just comes here – a larger aircraft, carrying more freight to a single location.”

Electronic items, such as the latest tablet or smartphone, are now replacing paper as one of the main products going through Memphis, reveals Greaud.

“High value small packages are the biggest thing,” adds Greaud. “We’re in the electronic age. People are a little less anxious to get paper documents as they were 10 or 20 years ago. PDFs, scans and email have become acceptable official documents.

“The overnight paper industry has lessened, but people now have to have that new iPhone or iPad or another new gadget.”

UPS also have a facility at the airport capable of simultaneously accommodating up to four aircraft, and Memphis operator, Memphis Shelby County Airport Authority, has its own air cargo building and the ramp capacity to handle 12 B747s at the same time.

In comparison to the two, FedEx’s ramp is a massive 2.2 miles and takes up “a huge portion of the airfield”, notes Greaud, who also observed that it handled 135 aircraft in one night during the recent Christmas peak. 

Greaud lists Hong Kong as the airport’s main cargo rival. “They finally toppled us here two years ago as the number one airport for cargo,” he notes. “Now we’re coming back at them, although that’s solely as a result of FedEx.

“Because of our size, and FedEx, we can’t do anything more to attract others, other than keep our rates in line.

“International is where the growth is long term. With FedEx’s B777 switch, they can now make that journey in one hop, and because it’s more fuel-efficient and faster, they can operate them direct to international markets. That’s where FedEx sees its growth.”

 

Shanghai Pudong International Airport

Shanghai Pudong’s volume fell slightly to 2.9 million tonnes, showing that even the top performing cargo airports are not immune to the global economic slowdown.

The gateway, one of the most successful in China in recent years, boasts indepdendent cargo terminals operated by PACTL (Shanghai Pudong International Airport Cargo Terminal Co Ltd) and Shanghai Eastern Logistics, while UPS and China Cargo Airlines use their own dedicated cargo facilities.

Without doubt, capacity at the combination of facilities makes Shanghai Pudong one of the ‘big beasts’ of the cargo world.

PACTL – a joint venture between Shanghai Airport Group, Lufthansa Cargo, and JHJ Logistics Management – started operations in 1999 with four customers, handling 2,000 tonnes a month. 

Fourteen years later it has around 50 customers, some 2,200 employees and handles in excess of 110,000 tonnes of cargo a month. The 365,100sqm PACTL West facility opened in December 2008 with a capacity of 1.2 million tonnes a year. 

“We aim to give our customer the competitive advantage and our ambition is to be known as one of the best cargo terminals in the world,” the company explains in its promotional material. 

“Understanding and knowing the special requirements of handling different cargo [shipments] will guarantee a vital partnership with all customers and secure the future of the cargo terminal.”

Keeping customers happy is clearly key, as are PACTL’s partnerships with operators such as Pudong Trucking and HERMES, which use their sizeable trucking networks and fleets to transport consignments between the airport and a host of Chinese cities.

“It is our aim to establish and safeguard long-term customer relationships, with determination to serve customer needs,” states PACTL. “Our customer relationship management stresses constant communication, permanent information services, as well as regular customer feedback.”

 

Incheon International Airport

South Korea’s Incheon International Airport is quite simply a cargo giant, handling around 2.45 million tonnes of freight per annum.

Although cargo volumes at the airport have dipped a little since its 2010 high of 2.68 million tonnes, it is so confident of future growth that a new cargo and logistics facility is planned as part of its master plan. 

It has also signed an MoU with STATS ChipPAC Korea to build an integrated facility for manufacturing and research facilities on a 95,000sqm site in the airport’s Free Trade Zone. Construction will begin during the second half of 2013 in readiness for a 2015 opening. 

The new additions will raise the airport’s cargo capacity from 4.5 millon tonnes to 5.8 million by 2017. In the long term, Incheon says that, by 2020, it will have a seven million tonnes per annum capacity and eventually up to 10 million tonnes.

The airport currently has three runways, 36 cargo-only aprons and six cargo terminals, and electronics takes up a large part of its business.

Korea’s export strength is in semi-conductors, mobile phones and vehicles, with South Korea enjoying has about a 55% share of the world semi-conductor market, says Minyang Kang, from Incheon’s cargo marketing department.

Semi-conductors account for 41% of “export value” from Incheon; after this, comes wireless communication, such as smartphones. A large proportion of imports are also associated with semi-conductors.

“Our strategic geographical location as a bridge connecting the big economic areas of China and Japan to the Americas and Europe is our key asset,” says Kang.

“We have a good cargo mix, but the market is changing and we are determined to move with the times by developing new strategies to appeal to new sectors and stimulate growth. We believe that there is great future potential at Incheon for handlng goods such as perishables, pharmaceuticals garments and clothing.”

Incheon counts airports on the Chinese mainland as its main competitors, and uses airports such as Taiwan Taoyuan, Singapore Changi, Shanghai Pudong and Tokyo Narita, as “benchmarking targets”.

“Incheon experienced some tough times in this global economical slump,” Kang adds. “The economic crisis is affecting the European region and may cause a shrinkage in the Chinese industry. 

“However, we think there could also be positive signs in Korea. Automotive parts, mobile phones, and flat panel displays are expected to become the driving forces again in the air cargo market. The expectation of slow economic recovery in 2013 is encouraging, too.”

 

Ted Stevens Anchorage International Airport

North America’s second biggest cargo gateway, Alaska’s Ted Stevens Anchorage International Airport (ANC), suffered a near 7% drop in volumes last year.

The 2012 decline in traffic saw the gateway handle 2.44 million tonnes of cargo – a 6.6% decrease on the 2.6 million tonnes accomodated in the previous year. 

The airport traditionally handles around 2.5 million tonnes of cargo per annum, although it is worth noting that ANC’s data includes transit freight.

Airport manager, John Parrott, told KTUU-TV in November 2012 that the downturn was “significant”, but claimed that he was not particularly troubled by it as the majority of cargo planes stop in Anchorage to refuel and aren’t unloading freight.

And, he noted that he didn’t think that cargo carriers would stop coming to ANC to refuel, as they had recently paid to expand the gateway’s fuel system.

Anchorage’s location certanly makes it a natural stop-off point for cargo heading from the Far East to the western half of the United States. FedEx Express and UPS both operate major hubs there. 

Indeed, according to a recent economic impact study, 71% of all Asia bound cargo from the US, and 82% of all US bound cargo from Asia transits through the airport.

The study, carried out by the Anchorage Economic Development Corporation (AEDC) in conjunction with McDowell Group on behalf of the airport, also reveals that cargo flights make 86,000 landings at ANC each year.

“Overall, there are no surprises in this report, but now we have up-to-date data on the current impact that ANC has on our local economy. As an international airport heavily weighted in cargo activity, ANC is a barometer of the national and global economy,” stated airport manager, John Parrott. 

In the airport’s Airtimes newsletter, Parrot, notes: “We do face challenges in the coming year. The global economy, which impacts our cargo carriers strongly, has not yet recovered. 

“Traffic is markedly down from our peak. Consumers are purchasing less and manufacturers are looking for less expensive methods to get their goods to market. The airport also strives to improve our efficiency and be a high-value airport for our carriers, passengers, and businesses.”

 

Dubai International Airport

Dubai cemented its top six cargo airport status by handling 2.27 million tonnes of freight in 2012 – a rise of 3.9% on the previous year.

Operator, Dubai Airports, attributes the increase to a strong rebound in cargo volumes towards the end of the year, the year ending on a high with tonnage figures in December 2012 climbing by 6.5% to over 200,000 tonnes for the month.

The rebound points to another potentially good year ahead for the gateway, although Dubai Airports’ vice president of cargo, Ali Angizeh, is refusing to make any predictions.

“Cargo volumes at Dubai International have rebounded in recent months, but it is too early to say to what extent this will be sustained in the short term, given the fact that economic growth around the world remains patchy and uneven,” says Angizeh.

“That said, in the longer-term, the fundamentals are in place to ensure strong growth at both Dubai Airports’ airports. Freight volumes at Dubai International will continue to benefit from the growth of Emirates airline’s global network. This includes additional bellyhold cargo from passenger flights as well as new dedicated freight services.”

Emirates and Emirates Skycargo is by far the largest operator at Dubai International Airport (DXB), while other key clients include Eithad, Qatar Airways, Cathay Pacific, British Airways and Egypt Air.

DXB has more than 140 airlines serving 263 destinations, of which 28 are dedicated freight services. Dubai World Central has also seen a dramatic rise in the number of airlines operating from the airport, with 37 freight airlines represented at the airport.  

Dubai Airports’ two gateways handle a wide range of commodities, some destined for Dubai while others are shipped through Dubai to destinations further afield. 

“The primary products shipped to Europe from the Middle East are garments and perishables,” explains Angizeh. “While leading commodities shipped from Europe include telecommunication equipment, machinery and finished goods.”

Dubai World Central, which opened in 2010, will “continue to grow strongly”, Angizeh says, as freight airlines take advantage of the airport’s “greater operational flexibility” due to the greater availability of arrival and departure slots.

And by 2015, combined cargo at the two Dubai airports is projected to top three million. Reasons, then, to be positive.

This news, combined with the cautious optimism of IATA and ACI – both of which predict modest rises in global cargo this year – ensure that 2013 looks like being a better one for the world’s airports, with hopefuly more ups than downs on the cargo rollercoaster.

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