The logistics park at Seoul’s Incheon International Airport is bursting at the seams. The first two phases of the Incheon Airport Logispark, which is located in the airport’s free trade zone, have occupancy rates of 98% and 93.1%, respectively, and nearly all the land in the area is fully utilized. With new tenants about to move in before the end of the year, the airport operator, Incheon International Airport Corp, expects the land to be fully leased before 2017, according to Kang Minyang, senior manager, cargo marketing team.

The company is now planning the third phase of the logistics park. This is expected to add some 320,000 sq m of land and should be ready to come on stream in 2019, Kang says.

The latest entrants to the logistics park are two logistics providers and one semiconductor firm, reflecting the mix of manufacturing and logistics tenants that the airport has targeted. Attracting global manufacturers and high-value-added businesses to the FTZ is one of the airport’s major drives to build up future growth, Kang noted.

A second plank of this strategy, which has altogether four major components, is the development of incentives to encourage investment and to attract cargo airlines, she added.

Incheon is also honing its capabilities to handle fast-growing segments of the air cargo business, as well as some that require special treatment. This includes the expansion of custom-made facilities in the cargo terminal and the logistics park “to respond to demand for express cargo and perishable cargo and developing a new customer-focused cargo terminal,” Kang said.

With average growth rates of 10% and 15%, respectively, in the last three years – well ahead of the airport’s growth in total volume – e-commerce and perishable traffic have been powerhouses for Incheon. The former advanced 49.9% from 2011 to 2015, while fresh goods soared 73.4% between 2012 and 2015.

The airport intends to build on this momentum and has signed an MoU with national agencies related to fresh agricultural products and Korean Air which aims to simplify the supply chain and lower freight charges for shippers.

This may lead to the establishment of a dedicated facility. “We are reviewing a plan to build a perishable centre in the free trade zone in order to ensure their quality,” Kang said.

To improve the efficiency of the cold chain, the airport also has a special initiative for belly cargo. Reflecting the growing portion of its throughput that moves on passenger aircraft (it has risen continuously in recent years from a 34.4% share of total volume in 2013 to 37.6% in the first half of 2016), the airport has set up cargo transit area facilities near the passenger terminal for transit freight. Now management is planning to build such facilities with constant temperature and humidity control, reflecting the rising share of perishable freight on passenger planes.

Another special facility on the drawing board targets the surge in e-commerce, which has been strong both inbound and outbound, Kang noted. In cooperation with logistics companies, Incheon Airport intends to build an e-commerce distribution centre in the FTZ to cover Northeast Asia.

“We expect this centre to attract more transit cargo to Incheon,” Kang said.

The fourth pillar of Incheon’s growth strategy targets international markets. It comprises two major drives – the first aiming at routes to points in the Middle East and Asia that can create steady volumes, the second looking at niche markets in nearby countries, notably China, Russia and Japan, Kang revealed.

Over the first nine months of 2016, the airport clocked up 2 million tonnes, an increase of 2.4% over the same period the year before. Trade with Europe, China and Southeast Asia were the main drivers.

Kang stressed that airports have to take a proactive stance in today’s volatile conditions.

“Uncertainty is increasing in the current overall airport market as the global economic recession continues. At this stage we think it is important to create more air cargo volume and diversify cargo items, not just meet current needs,” she said.

By Ian Putzger

Air Freight Correspondent | Toronto