New cargo facilities to be constructed at Incheon International Airport

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Incheon International Airport is adding more cargo facilities to its already impressive roster so it can meet rising local demand and increasing competition.

Korea’s main cargo gateway is to extend its offering for the airfreight community in the next few years as growth continues at a fairly rapid pace.

“We are currently developing additional space in second phase (to be provided in 2018) and also plan to develop the third phase of LogisPark by the year 2019,” explains Incheon International Airport Corporation vice president of the hub strategy division, Byung-Kee Lim.

“In order to cope with growth of fresh goods cargo, we plan to build a Cool Cargo Terminal by the first half of 2019,” Lim adds.

Incheon International Airport is responsible for attracting investment in the Incheon Airport Free Trade Zone, which consists of the Cargo Terminal Area and the LogisPark and it needs it. In the past year, the occupancy rate of LogisPark has grown considerably to record 100 per cent in first phase of LogisPark and 93 per cent in second phase as freight traffic expands.

This it should be pointed out is happening in the world’s fourth busiest cargo airport in 2016 by tonnage, according to the Airports Council International.

Incheon is Asia’s third busiest and handled 2.71 million tonnes last year, up 4.6 per cent on 2016, and was only behind Shanghai Pudong International Airport in third at 3.44 million tonnes, Memphis Airport at 4.32 million tonnes (FedEx’s hub) and Hong Kong International Airport at 4.61 million tonnes.

Incheon though does not seem to concerned on taking the number one slot as it already enjoys a good working relationship with China.

“In the past five years, cargo to and from China has increased from around 430,000 tonnes in 2012 to 530,000 tonnes in 2016. We expect continuous growth on routes to China, and conduct regular joint marketing activities with airlines to attract more cargo volume in the region,” notes Lim.

China, with its 36 connected cities is not Incheon’s largest market – that is the Americas, generating 21.3 per cent of the throughput with links to 28 cities, including four in the Southern continent. China by contrast generates 19.4 per cent. The third largest market is Europe with 18.2 per cent for 22 cities.

Another part of this is consulting. Incheon has a consulting to business to help airports by selling them its expertise. “We have not had any formal consulting contract with Chinese airports but are willing to make efforts to make a contractual agreement with Chinese airports,” explains Lim.

That said Incheon is clear about the challenges it faces and points out the competition to be the North East Asian hub is intense and development has a long way to go. “Aggressive expansion of Chinese airports looms as the biggest threat to Incheon Airport,” Lim says.

The background to this and indeed the broader picture is South Korea is the world’s 11th largest economy one with a great deal of industrial capacity and a good number of upper end consumers to cater to. True there is a political problem on the Korean Peninsula but South Korea is a big-time spender and international trader.

Incheon Airport reflects this having an extensive network connecting 182 cities in 54 countries, via 88 airlines. Although most of what is moved through the facility is carried by local carriers.

What is moved it befits a major trading economy with a clear emphasis is on industrial things such as semiconductors, electronic devices and parts, machinery and clothing.

“Around two-thirds of all cargo at Incheon Airport is handled by our national carriers; Korean Air and Asiana Airlines. The remainder is carried by foreign airlines,” Lim explains.

Incheon itself also helps matter by having facilities and incentives to get them used.

“We have eight cargo terminals in operation in the Cargo Terminal Area and 31 entrants in the LogisPark, including forwarders and manufacturers” says Lim. “We do have a variety of incentives for new airlines, new routes, frequency increase, and etc. Total incentive for cargo paid in 2016 amounted to around $3.4 million.”

Political issues aside, and it must be pointed out South Korea built its own economic miracle under the shadow of an armed and dangerous North Korea it is something they are used to, the general outlook for this year is best described as optimistic.

“We expect a modest growth of around 10 per cent for air cargo at Incheon Airport,” says Lim. You read that right: ‘modest’ growth of 10 per cent despite a maybe faltering world economy and lots of harsh political talk. You are entitled to think if only.

This will be done by a multipronged strategy that is led by those incentives but has a serious underpinning both in terms of the hardware but as importantly the software.

“We will continue to offer incentives to induce our customers to expand their business at Incheon, build related infrastructure to cope with new business models and work closely with the government to enhance business conditions for our customers,” Lim adds.

Where there is less bounce although it might be discretion rather than coyness is Incheon did not discuss new routes saying only, “we will cooperate closely with airlines to develop routes to where more cargo volume is likely to flow”.