Thursday, May 23, 2024
Sights set on Southeast Asia’s long-term growth

Sights set on Southeast Asia’s long-term growth

Changi Airport (Changi) is keeping its focus on long-term growth for Singapore’s air cargo hub. In 2022, the country was ranked 10th globally based on international cargo traffic, handling 1.85 million tonnes of airfreight. Against the current global economic slowdown and amid inflationary pressures, Changi’s airfreight throughput totalled 835,000 tonnes in 1H 2023, a drop of 10% compared to the same period last year.  For the period, Changi’s top five air cargo markets comprised Australia, China, Hong Kong, India and United States of America. Since the start of 2023, India has emerged to be among the top five air cargo markets for two consecutive quarters. 

Notwithstanding the near-term macro challenges Changi remains steadfast in its mission to facilitate global trade and support the flow of essential goods, into Singapore and onward to the surrounding region. To this end, expanding air cargo connectivity and pursuing new opportunities remain critical areas of focus as Changi strives to anchor its position as a leading air cargo hub. This is evidenced by the full recovery of Changi’s overall cargo capacity to pre-pandemic levels, fuelled by the return of passenger flights. Cargo airlines have also contributed significantly to its cargo capacity. The sustained uptick in overall cargo capacity indicates the industry’s optimism about long-term growth. To further boost its competitiveness in the region, Changi will continue to bolster its efforts to pursue partnerships, raise service quality in cargo handling, and leverage automation and digitalisation to unlock greater capacity. 

Mr Lim Ching Kiat, Executive Vice President, Air Hub and Cargo Development of Changi Airport Group (CAG) said, “While global air cargo demand has weakened, Changi Airport remains optimistic on long-term growth, especially in Southeast Asia. Despite the recent economic headwinds, Southeast Asia’s air trades with the rest of the world continued to expand over the past four years. Given the expectation of strong long-term progress with urbanisation and industrialisation, Southeast Asia is primed for growth in manufacturing, trade and logistics. Singapore, being in the heart of Southeast Asia, will have a critical role to play in global supply chains, contributing to the flow of international goods.”   

Forging new links 

Pursuing air cargo connectivity and capacity, as well as building long-term competitive advantages, are key goals for the Changi air cargo hub, and CAG is determined to continue its efforts to work closely with airline partners to expand its freighter operations and passenger freighter flights. 

In 2022, Changi welcomed the partnership of DHL Express and Singapore Airlines to deploy five Boeing 777 freighters out of Changi Airport, which will operate on routes between the United States and Singapore via points in North Asia and Australia. As of July 2023, the third of the five freighters has been inducted into operation. 

In July 2023, Changi also welcomed the signing of a Memorandum of Understanding (MOU) between SATS and SingPost to explore the establishment of a state-of the-art e-commerce transhipment hub in Singapore, leveraging both parties’ combined strengths and expertise to shorten delivery times and reduce operating costs, and manpower. SATS is one of two key ground handlers in Changi Airport, while SingPost is Singapore’s national postal agency. Against a booming Southeast Asian e-commerce market, which is forecasted by McKinsey to grow at a CAGR of 22%1, this collaboration will ensure Singapore is in a good position to capture this growth. 

READ: China rises to be among Changi Airport’s top five markets

Strengthening Changi through innovation 

The pandemic showed the world that global supply chains are vulnerable to devastating disruption. Singapore was not exempt from these challenges, underscoring the impetus for change and building resilience. 

There is a clear pressing need for the air cargo sector to move forward with digitalisation and automation, in order to improve efficiency of otherwise manual processes. Digitalisation will also enable a more interconnected air cargo ecosystem and empower data sharing. Through this, airports, such as Changi, can achieve improved supply chain visibility for better planning and operational excellence. 

“To raise service quality in cargo handling, we firmly believe in taking a collaborative approach by working closely with our partners in the air cargo community,” said Mr Lim. 

In 2020, the hub introduced a community data sharing platform Changi Air Cargo Community System (ACCS), which is an open ecosystem of collaborative and community-based applications underpinned by an information sharing platform that aggregates data from all parties involved in the cargo handling process. 

Among the first and community-prioritised use case is the Truck Dock Slot Booking application, which aims to even out cargo lodgement and collection at its cargo handler’s airfreight terminals, thereby reducing waiting time, optimising resources and providing greater insights to airport landside activities. 

“We believe that such collaborative and community-based applications will augment the Changi air cargo community’s digitalisation journey,” said Mr Lim. 

In the area of automation, CAG and its partners have been investing in resources to trial autonomous solutions like autonomous tractors to reduce the manpower resources required for point-to-point transportation of baggage and cargo. Ongoing trials have been promising and Changi expects to trial fully driverless operations for baggage delivery by 2024. 

“On the digital front, CAG is also developing solutions to track all motorised ground support equipment, and working closely with cargo handlers in Changi on warehouse automation and digitalisation. All these will help optimise equipment deployment, boost productivity and efficiency, increase capacity, as well as improve the quality of cargo handling capabilities,” added Mr Lim. 

READ: Streamlining systems with digital innovation

Advancing sustainability 

Sustainability is another important focus area for CAG and it is intensifying efforts alongside the airport community towards building a more sustainable air hub. 

“Over the past years, sustainability has evolved into a licence to grow for many businesses and industries. Although airports account for only about 2% of global aviation emissions, we form the common platform upon which a multitude of aviation partners operate. As such, it is a priority for us to work hand in hand with the airport community to achieve responsible and sustainable growth,” said Mr Lim. 

CAG is adopting a broad-based approach to improving sustainable practices across all scopes of emissions. In the area of Scope 3 emissions specifically, CAG is working closely with airline partners and ground handling agents. One recent notable development has been the push for Sustainable Aviation Fuel (SAF). In May 2023, Neste completed its refinery expansion, which will enable up to one million tonnes of annual SAF production capacity in Singapore. Domestic SAF production will enable Changi Airport’s airline partners to achieve their sustainability objectives with lower carbon footprint compared to importing SAF from other production locations. In July 2022, Singapore Airlines Group started a year-long trial to uplift a blend of regular jet fuel and SAF for its departing flights out of Changi Airport. 

Moving forward, as announced by the Ministry of Transport (MOT), all new airside light vehicles, tractors and forklifts will have to be electric from 2025. By 2040, all airside vehicles should be fuelled by cleaner energy. On the ground, Changi has been working closely with our ground handling agents in their decarbonisation journey. To date, Changi has installed a network of more than 100 EV charging points that supports a 100% electric baggage tractor fleet at Changi Airport. To enable this next phase of airside fleet electrification, Changi will expand its charging network to more than 300 points over the next few years, in tandem with the needs of its airport partners. 

Picture of Edward Hardy

Edward Hardy

Having become a journalist after university, Edward Hardy has been a reporter and editor at some of the world's leading publications and news sites. In 2022, he became Air Cargo Week's Editor. Got news to share? Contact me on Edward.Hardy@AirCargoWeek.com

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