yong hwa park
TRANSCRIPT
1
Prof. YONGHWA PARK
Does Incheon Airport DevelopAir Logis tics Hub in Northeas t As ia?
13-14 October 2004
ASIA PACIFIC SCHOOL OF LOGISTICS
INHA UNIVERSITYINCHEON KOREA
International Seminar on
Strategies to Deve lop Incheon as a Logis tic s Hub in Northeas t As ia
2
1. Introduc tion
The potential & real throughputs had shown enormous for the last yearsHigh pop. density, strong economic growth, improving political stability, gradual free
market environment through open-skies etc.China has been fastest growth rate in the world for last decade
Air cargo demand in Asia had the highest growth rate for the last 5 yrs, even if some negative factors; economic crisis and SARS
In Northeast Asia, the most salient trend is the emergence of regional airfreight hub serving neighboring countries and other continentsWell-functioning air cargo hub will be brought a positive economic impact on the
entire region + on the host country by enhancing economic performances
Korea’s initiatives air cargo hub at ICN in the NEA regionStrong potential circumstance geographically & economicallyBut, its success depends on capability of attracting a critical mass of global logistics
service providers
3
2. Changes & Importanc e of Air Cargo
Air cargo has been significant interests, due to a change in int’l trade patterns + customer needsExpanding mass markets for uniform, common, standardization of products ⇒ int’l
trade ↑ ⇒ creating alternative transport demandOpen trade regime + global integrated networks have made Air Cargo Services in
general and Air Express in particular
Int’l air cargo demand will be gradually expanded to much efficient int’l linksAir cargo tariff ↓, global production system ↑, e-commerce ↑
The role of Int’l Distribution Center + Global Logistics Company have become important to enable speedy and economical delivery of goods to customers
The enlargement of the cargo handling capabilities is currently on progress for providing comprehensive value added logistics services by the global logistics affiliates
4
2.1 Changes of Air Cargo Indus try
Strategic Alliances in Air Cargo Services
Likewise air passenger services, air cargo carriers are co-operating
SkyTeam Cargo: launched in Sep. 2000, AeroMexico, AF, Delta, KE ( + Czech, Alitalia )
WOW: launched in April 2000 (LH, SQ, SAS) + JL (Oct. 2002)
Innovation Technology
Discussions on paperless trade and global e-business focus as important agenda in WTO and APEC
IT based air cargo community systems need to be developed to tracing cargo and providing detailed information to integrators in real time
Emerging Integrators
Providing seamless logistics, cut-down time and costs, just-in-time services, etc ⇒ Air Cargo Integrators
5
2.2 Importanc e of Air Cargo Indus try
In general, yield of air cargo services is higher than pax. due to cargo transport does not require complicated process; in-flight, ground and transfer services
High values versus WeightHKG (2000): air cargo accounted for only 1% by weight, but its value share was 23%ROK (2000): air cargo accounted for about 0.34% by weight, but its value share was
32%, 26% (2001)USA (1998): air cargo accounted for over 32% of the value of intercontinental trade
26.1739,2730.35374Air
73.83110,81499.65106,290Sea2001
Share (%)Million $Share (%)Thousand Ton
ValueWeightModeYear
Table 1. Compare Air & Sea Cargo in Korea (2001)
6
3. Trends of Air Cargo in NEA
Air Cargo Volumes (Country)Japan was shown the highest traffic volume in the NEA regionChina and Taiwan have been achieved rapid growth in air cargo services for last
decade
19.31,82029.0 66Taiwan
4.01,872 0.7431Korea
6.61,710-N/AChina
7.42,267-N/AHong Kong
5.62,927 4.1930Japan
Growth rate (%)Volume
(000 tons)Growth rate
(%)Volume
(000 tons)
International TrafficDomestic Traffic
Nation
Table 2. Air Cargo Volume in Northeast Asia (2001)
7
Air Cargo Traffic (Airport)HKG recorded the highest air cargo volumeAlmost airports in the region has highly increased in the first half of 2002 compared to
year 2001.
3 9.91,0345 13.01,6814 4.91,933NRT
1313.2 76716 1.61,1901614.51,209TPE
218.71,3603 7.42,100213.42,268HKG
26 6.8 3472824.3 5872567.5 774PEK
6 9.9 97915-1,197513.21,874ICN
World Rank
Rate(%)
Volume(000 ton)
World Rank
Rate(%)
Volume(000 ton)
World Rank
Rate(%)
Volume(000 ton)
2002 (January ~ July)20012000
Airport
Table 3. Air Cargo Volume of Major Airports in Northeast Asia (2001)
8
4. Deve lopment of the NEA Logi- Hub
Air transport and logistics hub + int’l business hub would inevitably require;
Offering Infrastructure to the excellent inter-connectivity of transport modes and
integrated logistics facilities
Eliminating institutional and legal barriers
Serving systematic and customer-oriented administration to stimulate FDI
Requiring database for extensive logistics and trade-related information
Allowing the minimum or none of charge for usage of land and facilities
Balancing O-D cargo volume & high rate of transfer cargo volume
Creating co-operation among neighboring countries to integrated air transport market
in the region
4.1 Co n c e p tu a l F ra m e wo rk o f th e HUB
9
Airport:Air cargo hub
InternationalBusiness
TourismLeisure
LogisticsDistribution center
Free trade zoneCustom free zone High-tech
R&D
SeaportSea-and-Air
NarrowConcept
Airport City as Hub
4.2 Deve lopment Strateg ie s for Air Logi- hub
It is assumed that the air logistics hub can be achieved by “Airport City”.
Which is a comprehensive and complex concept through airport’s vicinity development including several functions
10
4.3 Competitive Fac tors
The competitive advantage of an airport depends on the following factors;
Spatial factor
• Refers to the level of regional development of the surrounding the airport cite, e. g. int’l trade zone, logistics & convention centers, aviation-related complexes, etc.
Facility factor
• Related to the level of airport facilities and their expandability
Demand factor
• Level of O-D demand and sufficient transit & transfer traffic volumes for hub-and-spoke network
Service factor
• Mainly consists of level of service to users, type of airport operations, and level of airport charges
Managerial factor
• Refers to economical considerations, such as airport operating costs, productivity, revenue structure, revenue scales per provision space, etc.
11
5. Overview of ICN
During 1990s, average annual growth rate had reached app. 9.6%, which was much higher than pax.The leading export commodities via air;
• Electronics & semi-conductor, Machinery, Jewelry, optical & instrumental machinery, and garments & accessory
• There are 56% share in weight, but 91% in value in 2001
The leading import commodities via air;• Electronics, machinery, jewelry, optical & instrumental machinery, chemical
products• There are 41% share in weight, but 86% in value term
Air Cargo NetworksKorea-US air routes were the highest (499,000 tons), followed on Korea-Japan
(406,000 tons), and China (281,000 tons)64% of total volume served by Korean flag carrier; KE and OZ
5.1 Ca rg o Tra ff ic a t ICN
12
5.2 Airport Fac ilitie s
-20 years12 years12 years20 years20 yearsTerms
-Incheon Air Cargo. Ltd.
Asiana Air Cargo
Incheon Airport Foreign cargo Co.
Asiana Airlines
Korean AirOwner
2,260--5207101,030Cap. (000 ton)
185,14311,5962,13363,80141,70265,911Total
237----237Other
22,235--6,4597,9667,810Agent
162,67111,5962,13357,34233,73657,864Ter
Floor space
30--101010Land
55--151525AirCanopy(m)
204,95321.840(10%)-44,10028,35037,800Sub-total (m2)
420105Total
30105UPS
60105FDX
120102AAS1,050105(A, B, C in
total)
392802 buildings
3 buildings
210105KAS
270105360105Area (m)
TotalInter-modal
StorageTerminal DTerminal CTer BTer AClassifications
13
6. Pers pec tives of ICN as Logi- Hub
“The Winged City”
This concept is the image of new ICN, reflecting its ambition and flight into the future – the whole ICN complex flying ahead of the competition in the global airport industry
6.1 P h ys ic a l Co n d itio n s
Location at the geographical limits of long-range transport a/cEast-coat of the US and Trans Siberian routes for Europe boundICN can be linkage the intercontinental routes and major markets like China and Japan
Over 40 neighboring cities within 2 hours itinerary from/to ICNOver one million populationThe region has 197 million population and with a GDP of $1.7 trillion
14
6.2 Hub- and- Spoke Network
This positive conditions have been stimulated push to ahead the portion transfer freight handled at ICN
ICN is likely t designated as a hub in terms of airfreight handling
100
50%
30
20
40
Tran
sfer rate
150 200 250Volume(000 Ton)
LHR
FRAAMS
SIN
HKG
NRTKIX
ICN
15
6.4 F a c ility F a c to r
ICN serves Seoul metro area
Which accounts for app. 40% of Korean GDP and 90% of its int’l flight demand
It means solid induced air demand can be generated by economy strengthen of airport hinterland
ICN has the greatest capability for expansion among the airports in the region; NRT, KIX, TPE
It has fully developed airport space of over 40Km2
Target number of flight is 530,000 operations per annum
• Pudong 28Km2 and 320,000 a/c operations
6.3 Demand Fac tor
16
6.5 Spatial Fac tor
It has multi-use development plans as Airport City or the Winged City
Incheon Metro City has been established an ambitious project, so-called Penta-port;• Airport, Seaport, Businessport, Leisureport, Teleport
The CFZ will be completion in 2005 for business specializing in loading and unloading, warehousing, sales, and simple processing
• The CFZ is intended to help the airport serve as a logistics hub
KE & OZ are world leaders in terms of air cargo handling
KE was ranked 2nd position to LH in terms of int’l air cargo in 2001
Both Korean flag carriers continue to expand air cargo network through ICN as the hub airport
6.6 Ma jo r Ca rrie r’s Co m p e titive n e s s
17
Korea’s aviation policy regime is widely open policy rather than Japan and China
The proactive int’l aviation policy will be helpful to stimulate inducing air cargo traffic to handle at ICN by expanding 5th and 7th freedom rights
ICN would need to create sufficient O-D and transshipment freight by
positioning itself as a global trade center and for int’l logistics
The Winged City as a long-term strategy of ICN require prior to air cargo
logistics hub itself, and then airport vicinity development to integrate various
functions; int’l business center, IT services, Telecom, R&D, manufacturing,
leisure, and logistics-related functions
6.7 Int’l Aviation Polic y
Ma jo r Is s ue s
18
7. Conc lus ion
In the NEA region, air cargo market will be much higher rate than the other regions’.
China has numerous potential with scale of population, geopolitical importance of the location in Asia, the fastest economic growth, leading high-tech innovation, and other positive externality
The Chinese potential power will likely play a key role in air transport market
The nations in the region have to co-operate build up integration air transport market for taking win-win strategy
For ascending as a competitive major int’l hub, the co-operation and co-ordination with the NEA air transport entities are essential to figure the solution to carry on altogether prior to uncertainty in aviation industry
ICN ought to plan for the seamless procedures to incorporate with government, authorities, air carriers, other air transport affiliates to provide upscale envision for the future