Far East round-up

posted on 14th June 2018

Some of the world’s biggest and busiest airports are in the Far East, no surprise given the booming aviation business in that part of the world. The handlers there – and the gateways at which they are based – face huge challenges, some of them fairly specific to the region

Three of the biggest gateways in the Far East, Bangkok Suvarnabhumi, Shanghai Pudong and Hong Kong International Airport, each process vast numbers of passengers and huge volumes of cargo each year. The handlers at these various gateways have adopted

various strategies for coping with this throughput – and Airside International has talked to some of them about how they go about their daily work, as well as speaking with Swissport, which handles at some of Japan’s big gateways.

Japanese presence

Swissport carries out both on the ramp, line maintenance and cargo handling at Japan’s Tokyo Narita and Osaka International Airports, while also undertaking full ground handling at Nagoya and line maintenance at Fukuoka. It has, therefore, a significant insight into the role and responsibilities of handling in one of Asia’s busiest aviation markets.

The importance of employing the latest equipment is vital in this market, confirms Peter Speck, vice president, head of corporate supply & GSE maintenance management. “The application of technology is essential in order to achieve cost leadership and to offer our customers reliable, quality services,” he explains.

That means making improvements where necessary. Michael Kilchherr, Swissport’s country manager Japan, adds: “We started to handle new low-cost carrier business in Japan (this product didn’t exist in the Japanese market previously) and we now use more technologies such as check-in kiosks, hand-helds and other simple boarding devices in order to keep costs down and to maximise efficiency.”

Given that Swissport claims to be the biggest handler of low-cost carriers in the world, the fact that Swissport Japan is the major player in this type of handling in Japan is especially pleasing, he considers.

Furthermore, Kilchherr says: “In cargo, we use Cargospot which delivers C2K (Cargo 2000) KPIs (key performance indicators), which is heavily required by airlines and forwarders in order to measure performance.”

The addition of low-cost carriers has also led to some change in Swissport’s use of GSE in Japan. Used to handling wide-bodies there, Swissport recently acquired more GSE capable of handling the narrow-body aircraft of Jetstar.

Swissport’s normal procurement strategy, which looks to GSE standardisation, is also applied in the Far East. Standardising on equipment and supplier helps to minimise costs associated with procurement, operation and maintenance, Speck notes, while also permitting a high level of flexibility in the redeployment of GSE across the global Swissport network. “This flexibility is vital in today’s dynamic market environment that results in challengingly short start-up times,” he highlights.

Diversification and the arrival of the giant A380 aircraft in the region have also meant changes. “We have started to purchase de-icing rigs in order to offer this service to our customers,” observes Kilchherr. “Most notably, we have purchased the only A380 rig in Japan and have now contracted with all the A380 operating airlines at Narita,” he says.

Bangkok Flight Services keeps growing

Stewart Sinclair is the managing director of Bangkok Flight Services (BFS), a handler at Bangkok’s Suvarnabhumi International Airport. BFS is a joint venture of global handler Worldwide Flight Services (WFS) and regional carrier Bangkok Airways, and Sinclair observes: “The nature of BFS has enabled us to benefit from the global purchasing power of WFS whilst at the same time we take advantage of local skills for GSE maintenance as we operate our own GSE maintenance facility.”

Asked about the changing technology being adopted by many handlers in the Far East and elsewhere, Sinclair remarks that, in recent times: “We have not experienced any greater dependency on high-tech GSE in Bangkok”. Currently, WFS boasts “a mixture of conventional and towbarless tractors for pushback and there are pros and cons for both. Towbarless ones are quicker to connect and disconnect but traditional tractors give you more flexibility if equipment breaks down.”

Plus: “As labour costs in Bangkok are relatively low, we don’t see any value in new devices such as ramp snakes, whereas in Europe the cost benefit would be significant,” he adds.

That is not to say that BFS has not invested, however. Sinclair points out: “We have developed our own in-house IT support systems, especially in terms of Enterprise Resource Management, (optimising) real-time resource allocation of both equipment and staff. Our systems are interfaced with our Automated Time and Attendance, training and accounting systems.”

BFS processes a wide range of aircraft types at Suvarnabhumi and needs the equipment to do it. “All of our GSE was purchased from a single provider eight years ago and covers all equipment required to handle all types of aircraft including the A380 at one end of the scale and ATRs at the other,” he notes.

“We have a mixture of conventional and towbarless tractors, electric tugs for the bag room and diesel tugs for freight running, GPUs (ground power units), ACUs (air-conditioning units), ASUs (air starter units), ambulift, passenger steps, lower deck and maindeck loaders, transporters, lav(atory) trucks, water trucks, passenger buses, dollies, carts, tailstands, golf carts, pick ups.”

As well as the many different aircraft types that all have to be handled, there are other challenges somewhat particular to the BFS operation in the Thai capital, Sinclair believes. For example, no de-icing is ever required but there is heavy use of ACU. Higher ambient temperatures drive the requirement for more brake cooling.

Moreover, very heavy electric storms during the summer months can close the ramp for up to an hour several times per week. Salaries are generally lower so automation is less cost-effective, he also explains. Cultural differences and particularly the lack of personal safety awareness mean that BFS spends a lot of time teaching safety.

Whatever the challenges, BFS is having a good deal of success. “We have grown by an average of 16% per annum over the last six years as we have grown our market share,” Sinclair enthuses. “We now have around 50% of available market share, so future growth is likely to be based on increased frequencies from existing clients and new airlines choosing to serve Bangkok – however, this is still expected to reflect growth of about 5% per annum.”

Modernisation at Shanghai

Shanghai Pudong International Airport is one of the busiest in the world. It is Mainland China’s busiest air cargo gateway as well as counting among its three busiest passenger airports (not including the Special Administrative Region of Hong Kong).

At this enormous air hub – and it is one that is going to grow even larger in the near future – Shanghai Pudong International Airport Cargo Terminal Co Ltd (PACTL) handles the freight of 43 different airlines and provides 24/7 services including cargo and mail handling, document handling, ULD handling, consolidation breakdown and Customs clearance.

It is active in three huge terminals – PACTL T1 has an annual handling capacity of a million tons, PACTL T2 can process 550,000 tons and PACTL West 2,500,000 tons.  It is not operating on the ramp, but its warehouse handling equipment includes large numbers of forklifts, tugs for moving dollies within the terminals and ETVs (elevated transport vehicles) to serve its multi-storey warehouses.

That equipment is changing, informs Lutz Grzegorz, PACTL vice president. Perhaps most notably, the handler is switching from diesel forklifts to electrically powered equipment, a major transition given the amount of cargo PACTL handles each day and the equipment needed to move it all. And one particular characteristic of operating in China is that the country has no ‘known shipper’ policy, so all Pudong freight must be x-rayed and palletised at one of the cargo terminals, he points out.

Furthermore, PACTL is investing in advanced computer systems, its IT being upgraded this year to allow better data management and improved planning. Furthermore, PACTL’s cool-chain facilities are being improved, Grzegorz observes, in order to cope with the increasing number of shipments of perishable – especially pharmaceutical – goods passing through Shanghai.

PACTL is also experimenting with volume scanners, which would automatically measure volumes of accepted goods shipments and free up manpower for other tasks.

All these changes will help PACTL to offer “reliable, best-in-class cargo handling”, he believes. And, while there are no plans to grow beyond the environs of Pudong, PACTL’s aim is certainly to grow there. “This is difficult enough in today’s environment,” Grzegorz notes, “but we strongly believe in the location”.

Hong Kong’s challenges

As well as being an extremely busy passenger gateway, Hong Kong International Airport (HKIA) is the busiest international air cargo hub in the world; in 2011 it handled 3.9 million tonnes of freight and last year this rose by 2.2 percent to reach 4 million tons.

Processing a large proportion of this freight throughput is Hong Kong Air Cargo Terminals Ltd (HACTL), and this particular handler has over its working life faced a number of challenges that are peculiar to the airport and consequently to its own business. In terms of operating at HKIA the sheer scale of the operation obviously represents its own challenges; last year, HACTL was handling approximately 100 carriers and about 80 percent of all commercial cargo moving through the gateway.

Another characteristic of HKIA’s freight throughput is how that cargo is presented to the handler – much of it is moved on large freighters, and more than half of it comes in the form of pre-build, palletised cargo. Hence there is a need for mechanised equipment and systems able to handle this sort of logistics.

Another – in this case unwanted – characteristic of operating at HKIA is the weather. Most notably, the South China Sea is well-known for its regular cyclones and Hong Kong experiences around 15 or so of these each year. According to HACTL director Kenneth Chan, HKIA’s exposed position means it is quite vulnerable to these occasionally highly destructive winds and, as a result, “We have to take special precautions such as ensuring empty ULDs and pallets are well secured and that loaded pallets are triple-wrapped to prevent water damage to cargo while it is transiting the ramp”.

HACTL’s most recent challenge has come not from the nature of freight throughput at HKIA or from the weather, but from competition. In February this year, Cathay Pacific began handling its own cargo at HKIA when it opened up its own terminal at the airport.

Chan is by no means subdued, however, insisting: “We intend to maintain our current workforce with an aim to further improve service standards. Cathay Pacific at its peak accounted for around 40% of our volumes (but) we have been actively developing new businesses and expanding our portfolio. And we have plans to redeploy spare space in our SuperTerminal 1 for new, higher-yield activities.”

He continues: “Hong Kong will also continue to grow, both as a gateway to and from China (as its population becomes more prosperous, this will generate more imports and traffic will become more balanced), and as a hub for all of Asia (our transhipment business is now rivalling imports, and is the strongest growing segment). The third runway, when built, will further strengthen Hong Kong’s capabilities. So organic growth will also help to soak up the capacity released.”

Chan has ambitious growth plans despite the apparent setback of Cathay Pacific getting involved in the handling business, and show that there are certainly opportunities for an established handler beyond airside operations. “Expansion will come largely from our HACIS (Hong Kong Air Cargo Industry Services) subsidiary, whose main activities are express road feeders to and from China, and local collections/deliveries throughout Hong Kong. There is particular potential to grow the road feeder business to provide airlines serving Hong Kong with easy, efficient and economical access to a much wider catchment. This means they will generate more revenue on their flights, and we will generate more handling business.

“We will also put our focus on the development of HACTL Development Holdings Limited (HDHL), our newly-established marketing arm, to provide air cargo terminals operating at different levels of throughput and complexity with a wide range of professional services, including COSAC-Plus (HACTL’s new-generation cargo management technology), system development, human resources and training,” he concludes.

Handling the competition

HACTL is certainly not the only handler at HKIA. Aside from other, previous competitors, Cathay Pacific Cargo began its own freight handling at the airport in February.

It may not be the best news for HACTL, which used to handle the cargo of the home-based airline, but the additional processing capacity has been welcomed by Airport Authority Hong Kong (AA). According to AA: “The designed capacity of 2.6 million tones per annum of the Cathay Pacific Cargo Terminal (CPCT) could raise HKIA’s cargo handling capacity by 50% to 7.4 million tonnes. AA will closely co-operate with different business partners to ensure smooth and efficient cargo operations at HKIA.”

Cathay Pacific Services Ltd (CPSL), the wholly-owned Cathay Pacific subsidiary that was awarded a 20-year franchise to design, build and operate the facility, was, unsurprisingly, delighted with the inauguration of operations at its HK$5.7 billion (US$735 million) terminal earlier this year.

Algernon Yau, CEO of CPSL, commented when the terminal handled its first cargo that “a new chapter in Hong Kong’s role as a leading international air cargo hub” had begun. He added that “we will be working tirelessly to enhance Hong Kong’s position as the hub of choice”.

In the first phase, CPSL will be handling valuable cargo, transit civil mail and interface transfer transshipments for its launch customers, Cathay Pacific and sister carrier Dragonair. Stage two operations due to commence this summer will see the facility process all transshipments, import cargo and empty ULD release. The complete range of handling for its launch customers is expected to be achieved by the end of 2013.

GSE support

Away from cargo handling in the warehouse – whether it be by HACTL, CPSL or Asia Airfreight Terminals (AAT), another handler at Hong Kong airport – AA points to the fact that the gateway hosts a number of “efficient and reliable service providers”.

These incorporate Dah Chong Hong – Dragonair Airport GSE Service (a joint venture of Dah Chong Hong (Motor Service Centre) and Hong Kong Dragon Airlines Ltd) and Ground Support Engineering Limited (GSEL), and provide repair and maintenance services to all types of unit load devices and more than 8,300 units of ground support equipment and vehicles.

Pros and cons

Clearly, at a huge hub like HKIA – as at Japan’s big gateways, at Shanghai Pudong and, to a slightly lesser extent, at Bangkok Suvarnabhumi – there are huge ground service support operations that provide massive opportunities for handlers.

Of course, not everything is as perfect as it might be. For example, one handler told Airside: “The Far East as a region has in my point of view been lagging behind Europe and North America in terms of ground handling and cargo services. Regulations have been implemented to prevent independent ground handlers from entering markets and it is quite difficult for foreign companies to offer services, since restrictions favour local companies (such as major airlines and/or their ground handler subsidiaries).”

But the range of handling options and the vast inventory of high-tech GSE on offer at massive airports such as those described above goes some way to explaining just how these gateways can accommodate the enormous volume of traffic that they do, and why the Far East is such a booming region for the aviation industry.