Ambition speaks volumes
Incheon International Airport is to ramp up its efforts to enhance its logistics operations in a bid to become the leading logistics hub in Northeast Asia, writes Joe Bates.
New CEO, Hag-jae Lee, has wasted no time in outlining plans to take logistics services at Incheon International Airport (ICN) to new heights, with the ultimate goal being the creation of “a smart logistics cluster” at and around the gateway.
The new focus on logistics is seen as an essential move towards the creation of a fully integrated megahub.
The initiative will prioritise several key areas, such as the development of a smart cargo terminal, a Joint Distribution Centre for Small and Medium-sized Enterprises (SMEs), expansion of the global network, and the attraction of air cargo and logistics specialists, including e-commerce and 3PL companies.
It is hoped that the move will help the airport craft new strategies to boost customer satisfaction and encourage collaborative growth with business partners that include logistics companies and the airlines.
The ever evolving landscape of the logistics sector, characterised by an increase in the value of logistics services, the integration of advanced technologies and growth of borderless e-commerce, are said to be some of the key reasons behind the new strategy.
According to operator, Incheon International Airport Corporation (IIAC), Lee’s leadership “promises to infuse fresh vitality into the airport’s logistics operations” that will fulfil his vision of establishing Incheon as a global logistics hub.”
PAVING THE WAY FOR THE SMART CARGO TERMINAL PROJECT
Incheon International Airport states that it is steadfast in its commitment to the development of a smart cargo terminal based on future-forward technology, aiming to boost its competitive stance in air cargo and logistics.
Through Business Process Reengineering (BPR), the airport is partnering with experts from Korean Air and Asiana Airlines to formulate future operating processes for the smart cargo terminal.
These new procedures, it says, will integrate Fourth Industrial Revolution technologies, such as unmanned robots, artificial intelligence, big data, and autonomous driving.
A pilot project set to be operational by 2027 will assess the suitability of IT technology for cargo terminal operations and steer the development of a smart cargo terminal.
ENHANCING CUSTOMER CONVENIENCE THROUGH DIVERSE INFRASTRUCTURE
The Incheon International Airport Free Trade Zone encompasses an airport logistics complex and cargo terminal area that ensure a competitive environment for tenants through efficient customs procedures, duty-free benefits, and a range of incentives.
Companies situated in this zone enjoy the freedom to conduct manufacturing, logistics, and trade activities without hindrance, alongside perks such as reduced rental fees and deferred customs duties.
The existing freight terminal houses eight cargo buildings, three air freight warehouses, four specialised processing facilities, and two customs bonded areas, establishing a solid foundation for a logistics hub.
ICN is said to be advancing towards the development of future-oriented cargo terminals and is pioneering autonomous cargo towing technology to enhance its operational efficiency and sophistication. The latter initiative is expected to significantly upgrade the logistics services available to customers.
The airport is also looking at expanding the current transport options available to staff, such as laying on additional bus services, to ensure easier access to and from its existing logistics complex.
EXPANDING COLLABORATIVE MARKETING WITH CLIENTS
Incheon International Airport notes that it is also investing considerable efforts on amplifying the marketing activities of its client companies. Recently, the airport partnered with Jeju Air to host a ‘Joint Information Session to Boost Air Cargo Volume in the Vietnam Region’. The two-day event, held in Hanoi and Ho Chi Minh City, Vietnam, targeted logistics stakeholders in the region.
“As a vital component of the airport’s ongoing ‘Air Cargo Incentive Program’ aimed at increasing air cargo volumes, this initiative successfully attracted around 150 representatives from 61 Vietnamese forwarding and logistics firms,” noted IIAC.
Looking ahead, ICN plans to hold joint information sessions with FedEx later this year and initiate online marketing campaigns in collaboration with China Airlines and UPS.
Through these “continuous discussions”, the airport plans to broaden its collaborative marketing efforts with an increasing number of clients in the near future.
STIMULATING GROWTH IN NEW CARGO SECTORS
As part of its mission to increase cargo volumes, the airport says that it will “focus on extending substantial support to emerging growth sectors in the cargo industry”.
Recently, ICN achieved a world-first by obtaining CEIV certification in three key growth areas: perishable goods, pharmaceuticals, and lithium batteries. The achievement recognises the airport’s commitment to engaging with companies in these fields, understanding their customer requirements and offering tailored support.
In the perishable goods sector, for example, the airport is actively collaborating with organisations such as the Korea Agro-Fisheries & Food Trade Corporation (aT) and the Korea Trade-Investment Promotion Agency (KOTRA). Likewise, in the pharmaceutical sector, it is in discussions with leading companies such as Celltrion and Samsung Biologics to optimise logistics and transportation processes.
Plans are also said to be in the works to initiate a collaboration with the Korea Biomedicine Industry Association (KoBIA).
COLLABORATING WITH LEADING GLOBAL LOGISTICS COMPANIES
To foster mutual growth with its clients, Incheon International Airport is enhancing its infrastructure in collaboration with prominent global logistics firms.
For instance, the airport has established a partnership with FedEx to further develop the air cargo logistics sector. In addition, the airport is intensifying its business relationship with DHL, following the recent expansion of its cargo terminal.
Opened in October 2022, the FedEx terminal emerged as a landmark project constructed using the Build-to-Suit (BTS) model and subsequently leased.
This significant collaborative project involved investments of 53.5 billion KRW from Incheon International Airport and 40.5 billion KRW from FedEx. This approach entails the construction of the cargo terminal by Incheon International Airport, with operations overseen by the user.
DHL has operated a cargo terminal at Incheon International Airport since 2007 and recently trebled the size of its facility (see box story) from 19,900sqm to 59,000sqm, boosting its handling capacity from 8,100 to nearly 30,000 items per hour.
Lee said: “Incheon International Airport will continue its collaborations with international logistics companies to enhance their infrastructure at the airport, laying a strong foundation for growth and becoming the leading logistics hub in Northeast Asia.”
DHL’S GREEN AND EFFICIENT NEW COMPLEX
DHL Express has commenced full operations from its Incheon Gateway facility following the completion of a €131 million (KRW 175 billion) expansion project.
The investment is DHL Express’s largest in South Korea to date, making Incheon its largest Gateway complex in the Asia-Pacific region.
The enhanced Incheon Gateway now boasts a gross floor area of 59,248 square metres – three times the size of the previous Gateway at 19,946 square metres – and, as a result, its handling capacity has more than trebled to reach 28,400 pieces per hour.
In terms of facilities, the complex houses a 5.5 kilometre-long conveyor belt and 19 automated X-ray inspection machines to ensure shipment contents are safe and compliant.
To minimise greenhouse gas emissions, the facility is partly powered by solar energy. A one-megawatt solar power generator, spanning the entire rooftop area (5,700 square metres) of the complex, can produce enough power to meet 30% of the facility’s energy needs, potentially reducing its carbon emissions by 650 tons annually. DHL notes that it is the first cargo terminal at Incheon International Airport to use solar energy.
Sean Wall, DHL’s executive vice president of network operations and aviation for Asia Pacific, said: “The opening of the expanded Incheon Gateway arrives at the right time as it plays an important role in facilitating regional and intra-Asia trade, particularly for the Northeast Asian region, including Dalian, Qingdao, Wuxi, Ulaanbaatar, and Guam. We are handling more cargo in South Korea in recent years, and we expect the demand to continue on its upward trajectory.”
LOCATION AND KEY CARGO ASSETS
Incheon’s strategic location and route network connecting to most major cities across China, Japan and Southeast Asia, is considered to be one of its key advantages when it comes to attracting cargo operators and logistics companies.
INC’s cargo-only routes connect 107 cities in 43 countries through 25 airlines. The destinations include 20 in China, six in Japan, 10 in Southeast Asia, 27 in North America, five in Central and South America, and 18 in Europe.
The airport’s Free Trade Zone boasts a newly built $28 million Global Distribition Center (GDC) that is predominantly used by e-commerce businesses. It provides storage for global shippers’ products and manages their classification, repackaging, and shipping as per individual order requirements.
“By continuously investing in the development of logistics infrastructure and networks, Incheon International Airport aims to adapt to evolving air cargo market conditions and establish itself as the world’s leading air cargo hub,” enthused Lee.