ingapore Changi Airport has again extended a range of financial incentives as part of its decade long drive to try and boost its cargo throughput and hold on to its existing business.

Fire Sale Rebates

     Under the Changi Airport Growth Initiative for the financial year ending March 31, 2015, all scheduled freighter flights using Singapore will be eligible for a 50 percent landing fee rebate.
Cargo tenants leasing CAG cargo facilities at the Changi Airfreight Centre will also enjoy rebates, in this case based on cargo tonnage handled and worth up to 20 percent of their rentals.
     “Together with other growth incentives available to freighter airlines, CAG’s support package for the cargo industry will amount to S$18 million for FY14/15,” said a CAG statement.
The package follows similar rebates offered in FY2012/13 and FY 2013/14 to freighter service providers and cargo tenants.

When Awards Are Not Enough

     The strategy is part of CAG’s acknowledgement that as one of the world’s major business centers, and as the Asian headquarters of many leading 3PLs and logistics giants, Singapore needs to maintain—and, indeed, expand—its role as a cargo hub, and not simply concentrate on consolidating its position as the globe’s most passenger-friendly airport, a view reflected in the plethora of awards received by Changi in 2013.

Cargo Stalls As Costs Rise

     Although one of Asia’s biggest hubs, with passenger numbers of 53.7 million last year, Changi’s cargo fortunes have stalled for much of the last decade as it has tried to cope with higher land and/or labor costs than regional rivals such as Hong Kong, Kuala Lumpur, and Bangkok, as well as the declining competitiveness of its domestic manufacturing sector, which used to drive export growth.

Lags Behind Hong Kong Incheon & Tokyo

     In 2012, Changi was the world’s 12th busiest cargo airport and the fifth largest in Asia after Hong Kong, Shanghai, Incheon, and Tokyo, according to figures from ACI. But volumes have barely increased in a decade.
     Final year figures for 2013 released this week revealed marginal 0.8 percent year-on-year growth, taking total throughput to 1.85 million tons, which could see Changi lose a place to Beijing in the rankings of Asia’s biggest cargo airports by throughput.

Missed The Boom

     Indeed, as long ago as 2004 the airport’s freight throughput totaled 1.78 million tons, only marginally less than is currently handled. In short, unlike Singapore’s booming maritime terminals, which have grown exponentially, Changi has missed out on much of the boom in intra-Asia and global trade over the last decade as globalization has seen the length and complexity of supply chains increase exponentially.
     CAG said its 2013 cargo highlights included perishables and pharma growth but overall, slower export and transshipment volumes were only just outweighed by stronger imports.
     Looking forward to 2014, CAG is far more downbeat than most others in Asia’s air cargo sector, as FlyingTypers has reported. While major airlines, airports and handlers are expecting improved conditions this year, following on from a healthy end to 2013 and the better outlook in European and U.S. consumer markets, CAG takes a rather different view.
     “The recovery of the global airfreight industry remains fragile and potential growth in cargo volumes, if any, will be amidst a challenging environment as global consumer demand and cargo yields continue to remain depressed,” said a statement.

Where Do We Go From Here?

     The real question as airports and airlines in Asia gear up for higher volumes in 2014 is whether Changi will be able to secure a sizeable share of improving cargo markets; or whether throughput will continue to stagnate as it has for the last ten years, irrespective of wider market conditions.
SkyKing