Singapore is maintaining and continuing to build upon its status as one of the leading air cargo hubs in Asia.
Air freight appeared to experience some dramatic fluctuations in the first quarter of 2015. Throughput at Singapore’s Changi Airport for February was up 7.3% year-on-year, while in March it dropped 4.2% year-on-year.
“After a relatively good 2014, the global air freight industry seems to be experiencing renewed volatility and deteriorating cargo yields,” says James Fong, assistant vice president of cargo and logistics development at Changi Airport Group. “The fluctuations in volumes earlier this year were largely due to the US West Coast ports congestion, which changed cargo flows and patterns in the first quarter. This trend was also observed at other key Asian air cargo hubs.”
The situation subsequently appeared to stabilize somewhat. In April, cargo throughput registered an increase of 1.6% compared to a year ago and an overall year-to-date growth of 1.0%, according to CAG. Total throughput in May fell just 0.3% compared to last year.
“Singapore’s major trade partners – Australia, China, Hong Kong, Indonesia and the United States – continue to represent Changi’s top five country markets, accounting for almost half of the total cargo tonnage handled at Changi Airport,” says Fong. “In terms of commodity types, there was strong double-digit growth in the live animals and pharmaceuticals cargo segments, growing 24% and 11% year-on-year respectively in the first four months of 2015.”
Qantas, which reintroduced a daily flight between Perth and Singapore towards the end of June 2015, now flies to Brisbane, Melbourne, Perth and Sydney.
“Our performance out of Singapore has been strong in the first half of the year,” says Nick McGlynn, CEO of Qantas Freight. “With our connectivity to and from all the key Australian gateways and an unrivalled domestic Australian network, we are the airline of choice for freight to and from the Australia-Pacific region.”
Qantas used to use Singapore as an intermediate stop for its flights to London and Frankfurt. In 2013, Qantas and Emirates entered into a partnership, under which Qantas would terminate the Frankfurt flight, shift the stopover for its London flights to Dubai, and codeshare with Emirates on flights to more than 65 destinations from Dubai.
But this arrangement has actually opened up greater capacity and benefited the Singapore market, which continues to be an important freight hub for Qantas, according to McGlynn.
“Three of our networks – Qantas, Jetstar and Jetstar Asia – all operate in Singapore,” he says. “In particular, the Jetstar Asia network connects freight from Vietnam, Hong Kong, Cambodia, Indonesia and other Asian locations to Australia and the US using the Qantas and Jetstar networks. We also work closely with our partner Emirates in transhipping freight through Singapore.”
Changi is continuing to attract new airlines. Passenger services established in the past year provide substantial bellyhold cargo capacity between Singapore and new city links such as Tashkent in Uzbekistan, says Fong. Most recently, My Indo Airlines, an Indonesian all-cargo carrier based at Halim Perdanakusuma International Airport in Jakarta, started operating a four-times weekly Balikpapan-Singapore service in April 2015 with its single Boeing 737-300F.
In the area of express cargo, Fong says that Changi Airport is working with integrators and express logistics partners to provide adequate support for this emerging segment.
“DHL Express recently unveiled plans to invest S$140 million (US$103 million) to develop its South Asia Hub, a 24-hour express facility located within the Changi Airfreight Centre, to stimulate trade and commerce growth across Southeast Asia. This will strengthen Singapore’s position as a leading air logistics hub and a practice-leader in express cargo automation,” he says. “This development puts Singapore in a leading position as the region’s air express hub with three of the four global integrators setting up their hubs at Changi Airport.”
But express mail might be doing slightly better than DHL’s other divisions. “Market volumes were weak at the beginning of the year,” says Stephen Ly, managing director of DHL Global Forwarding Singapore. “However, we have seen improvements in June and remain positive for our performance for the rest of the year.”
The road ahead won’t necessarily be easy, though. “Cost continues to be an issue in our market and we believe that a hybrid of technology and process re-engineering will help to sustain operations,” says Ly.
As a sign of support for the air cargo sector, CAG announced in late April 2015 that the 50% landing fee rebate for scheduled freighter operations – which was due to expire on March 31, 2015 – would be extended to September 30, 2015. After that, the landing fee rebate is to be lowered to 30% until March 31, 2016. Cargo tenants leasing CAG’s cargo facilities at the Changi Airfreight Centre will also continue to enjoy rebates based on handled cargo tonnage and rental rebates of up to 20% until March 31, 2016, according to a statement from CAG.
Looking forward, DHL is optimistic as to the success of Singapore.
“As technology advances, cargo size will shrink which means tonnage will be lower in the market,” says Ly. “We believe Singapore will continue to be a transhipment point for Southeast Asia to supplement volumes out of Singapore.”
Qantas Freight shares a similar view. “In the short term, the market will remain competitive, especially with lower cost carriers becoming more prominent,” says McGlynn. “Longer term, we expect Singapore will increase its significance as a cargo hub with more freight hubbing from other parts of Asia, particularly as the ASEAN agreement kicks in.”
Changi Airport is also confident about the future.
“With economic development and the opening up of trade within Asia, CAG expects stronger growth in air cargo traffic in the years ahead,” says Fong. “For instance, progressive economic integration within ASEAN would potentially spur air freight demand in the region.”
To cope with the extra demand, Singapore has planned a mega development called Changi East which is expected to be complete by the mid-2020s.
“Led by a multi-agency task force, development of this site has commenced with land preparation works in progress. Changi East will include a brand new Terminal 5, facilities to support air freight and air express services, as well as MRO activities,” says Fong. “It will secure the long-term growth of these sectors, and strengthen Changi Airport’s position as a major air hub.”
By Jeffrey Lee
Staff Writer | Hong Kong
