Singapore"s Changi Airport Seeks Growth With Gold, Tuna

Changi Airport, Southeast Asia’s

largest freight airfield, plans to attract more gold bars, tuna

and vaccines to Singapore as it seeks to increase handling of

high-value cargo to make up for slowing trade.

The airport may process 7 percent more cargo by volume for

pharmaceutical products such as vaccine and test drugs, as well

as perishable goods including tuna and meat this year, James Fong, assistant vice president of cargo and logistics

development at Changi Airport Group (Singapore) Pte. Drugs are

one of the three biggest items handled by value, he said.

“An underlying demand for these things is growing with the

rise of the Asian middle class,” Fong said in a May 15

interview. “People want higher-value, higher-quality food.

Demand in North Asia is growing fast.”

The airport is offering 50 percent rebates on landing fees

since the start of the year to help cargo airlines struggling

with lower demand amid sluggish economies in the U.S. and

Europe. Changi is enticing carriers of high-yield cargo with

a tax-free maximum-security vault to store valuable art, gold

and gems, as well as Southeast Asia’s biggest refrigerated

facilities for perishable goods.

Economic growth in the Asia-Pacific region will boost

household incomes, increasing the need for higher-quality food

and luxury items, Fong said. The size of the middle class may

jump almost fivefold in 20 years, according to Airbus SAS.

Global Trade

Airlines haul about $5 trillion of cargo annually,

accounting for a third of global trade by value, according to
International Air Transport Association.

The global cargo market may increase 2.7 percent this year,

benefiting Asian carriers the most as they are the biggest

operators, according to IATA. The industry shrank 2 percent in

2012 for a second consecutive year, and airlines were filling

less than half of their cargo capacity because of weak demand in

the U.S. and Europe, according to the group.

Changi Airport handled 434,000 tons of cargo in the first

quarter, 2.2 percent less than a year earlier. Air freight may

recover next year, Fong said.

“With a more affluent population, cargo should pick up,”

said Siyi Lim, an OCBC Investment Research analyst in Singapore.

“The increase may not be pronounced yet because it takes time

to ramp up. The factors are there but it ultimately comes down

to costs. It depends on how competitive Changi wants to be.”

Fine Arts

Singapore Freeport opened in 2010 as a free-trade zone and

offers maximum-security storage services with direct access to

Changi Airport for valuables including wines, fine arts,

diamonds and gold. The facility will expand as all the space has

been leased.

Full-year growth in handling such valuable goods is

expected to reach about 16 percent, helped by a 55 percent surge

in the first quarter, Fong said.

Changi Airport has the region’s biggest facility to handle

all goods that require different temperatures, ranging from

frozen meat to flowers and vaccines, Fong said.

Coolport@Changi, the 8,000 square-meter (86,000 square-foot) facility operated by ground handler SATS Ltd. (SATS), has rooms

with temperatures ranging from minus 28 degrees Celsius (minus

18 Fahrenheit) to plus 19 degrees. The area handles about 18,000

tons of goods a month. It is Southeast Asia’s only such facility

certified under international standards.

A second temperature-controlled center run by Dnata,

another ground handler at Changi Airport, is expected to open

later this year, Fong said.

Indonesian Tuna

The ability to handle fresh produce at Changi Airport has

helped attract business for transshipment of seafood and meat

products from Australia and New Zealand to north Asia and

Europe, Fong said. The airport mainly handles seafood from

Indonesia that is flowns to Japan and China, he said.

“A lot of tuna in Japan is shipped from Indonesia,” Fong

said. “Those go to the famous fish market in Tokyo, they

auction it and it comes back again at a higher price.”

Shipping lines including Maersk Line (MAERSKB) have won cargo

business from airlines amid the global slowdown as customers

sought to cut costs when transporting items such as notebooks,

televisions and wine. There are signs that some shippers may be

turning to airfreight as the industry tests new methods, Fong

said.

“Speed is our biggest selling point,” IATA Director

General Tony Tyler said in December. “But it comes with a price

that is many times more expensive than shipping by sea.”

The airport is working with an unspecified airline and meat

producers in New Zealand to ship meat by both air and sea to cut

the transport time by about half, Fong said. Meat is now

typically transported by ship alone and takes about a month from

New Zealand to Europe, he said.

“For perishable goods, the longer you are in the mode of

transport, the lesser value you’ll get by the time you get to

the destination,” Fong said. The new offering is “something

we’re quite excited about because we see more shift this way.”

To contact the reporter on this story:

Kyunghee Park in Singapore at

kpark3@bloomberg.net

To contact the editor responsible for this story:

Vipin V. Nair at

vnair12@bloomberg.net

Enlarge image

Singapore’s Changi Seeks Growth With Gold, Tuna

Munshi Ahmed/Bloomberg

Changi Airport is enticing carriers of high-yield cargo with a tax-free maximum-security vault to store valuable art, gold and gems.

Changi Airport is enticing carriers of high-yield cargo with a tax-free maximum-security vault to store valuable art, gold and gems. Photographer: Munshi Ahmed/Bloomberg

Singapore"s Changi Airport Seeks Growth With Gold, Tuna