At present, BCIA has four cargo terminals in operation, and two more cargo terminals are under construction for completion by the end of this year. Two cargo ground handlers – Beijing Aviation Ground Service (BGS) with a 40 per cent market share and Air China with a 60 per cent share – have a total handling capacity of 1.68 million tonnes (BGS with 480,000 tonnes while Air China’s capacity is 1.2 million tonnes).
“BCIA handled 1.37 million tonnes of cargo in 2008, representing a decline of 3.5 per cent versus the same period in 2007,†according to a statement from the General Administration of Civil Aviation of China (CAAC). In comparison Shanghai Pudong handled 2.6 million tonnes last year.
But while the future is certainly promising, the very real impact of today’s downturn has also come home to roost in Beijing dragging Beijing Capital’s June volumes of international cargo down 14.9 per cent year-on-year to 52,667 tonnes, a result of shrinking trade and fewer orders from the traditional markets in US and Europe. The airport is served by about 80 airlines with nearly 75 per cent of its cargo volume carried in belly holds of passenger aircraft, and the balance by freighters.
Between January and June, BCIA handled a total of 287,909 tonnes of international freight inclusive of cargo from Hong Kong and Macau, down 9.1 per cent compared with the same period in 2008.
According to CAAC, China’s total air cargo volume was 4.03 million tonnes in 2008, up 0.3 percentage point compared to 13 per cent in 2007. In December 2008, the air cargo volume for the country, which was badly impacted by the global financial crisis, was 307,853 tonnes, down 15.2 per cent year-on-year.
Beijing has unveiled a wide range of policies during the year to help nurse its ailing airline sector back to health, including fee rebates and unprecedented aggressive cash aid to China Eastern and China Southern airlines.
Beijing’s Airport City Logistic Park
Against this scenario, it’s instructive to look back to December 2002, when the country’s national aviation regulator, CAAC established the Capital Airports Holding Company (CAH) which ultimately led to the establishment of Beijing Capital’s Airport City Logistic Park (ACLP). The CAH is a large-scale state-owned enterprise, which was created through the combination of, among others, Beijing Capital Airport Holding Company, BCIA and TBIA, which together hold more than 30 airports in nine provinces.
In December 2004, CAH and the Beijing Shunyi District Government then jointly founded Airport City Logistic Park Co Ltd (ACLP), which was made responsible for planning, development and management of Beijing Capital Airport’s logistics infrastructure. The airport logistics park was formed to promote the development of Beijing’s air cargo industry through the establishment of high-volume, efficient, modern air cargo and logistics facilities.
With an initial investment of four billion yuan (US$586.08 million), ACLP offers air cargo and value-added services that facilitate efficient one-stop air cargo operations for airlines, forwarders, ground services companies, customs and third party logistics companies.
With a land area of 3.4 million square metres, ACLP comprises fi ve functional zones – the Air Cargo Terminals, Express Centre, Custom Supervision Area, Bonded Logistic Centre (BLC) and Office Complex, where the Beijing Airport Customs, Inspection and Quarantine are located, ACLP’s director of the Corporate Development Department, Martin Chensays.
During the Beijing 2008 Olympic Games, only part of ACLP’s facilities were completed and utilised for the event. So far, 30 per cent of ACLP’s development has been completed. “We will complete the construction and start operation of phase one later this year,†Chen says.
“The construction of all five functional zones of phase one will be completed inthird quarter this year and most of the initial investment of four billion yuan has alreadybeen pumped into the project.†The ACLPproject, which will be carried out in threephases, will be fully completed in 2015.
Bonded Logistic Centre
Since November 2007, a 60,000 square metre area of ACLP’s logistics centre was made operational to serve the Beijing 2008 Olympic Games. Another 300,000 square metre warehouse and a 100,000 square metre office area will become operational before the end of 2009.
Located at the north end of the airport’s second runway, the Bonded Logistic Centre enables the tenants – mostly logistics providers – to carry out value-added logistics services, including bonded storage, export tax rebate, vendor management inventory (VMI) utilising the international distribution and purchasing centres.
With 155,000 square metres of land area in Phase 1, the logistics centre is the first nation-wide airport-based facility of this kind that has been officially approved by General Customs Administration.
The goods value handled in the centre amounted to about US$1 billion in 2008 by logistics companies such as DTW Logistics, Rockwood, and Kerry EAS Logistics, serving a number of global and international companies, such as GE, SonyErisson, NEC, Panasonic and Merk.
The Bonded Logistic Centre is the only facility customers can use in the airport area that provides bonded storage and logistics, port operations and preferential services.
“The government is in the process of providing more preferential treatment to the facility customers, including business and corporate income tax rebates,financial awards to big customers and foreign exchange preferential treatment,â€Âhe says.
Beijing Logistic Centre’s untapped potential
According to Chen, the logistics centre has only been operating for about 20 months and its potential has not been fully tapped. Despite the overall slowdown of international cargo volume, the volume processed in the BLC has almost doubled in the first half of 2009 compared to the same period last year. Once the rest of Airport City Logistic Park’s other functional area are operational later this year, the logistics centre’s cargo volumes will get a significant boost, notes Chen.
Looking ahead, Chen forecasts that the slowdown will stabilise with a recovery possibly in the fourth quarter of this year.†In general, China’s imports and exports have been hit very badly by the financial crisis. “The imports and exports of IT products, which make up a large portion of airport cargo throughput, have been particularly negatively impacted and contracted by 20-30 per cent in firsthalf year of 2009.
“The good news is that there have been signs of stabilisation in recent months, evidenced by the recovery of IT products’ imports, more activity in Japan’s and South Korea’s IT sector and the improved performance of US high-tech companies, that are better than market expectations in the first half of 2009. With recovery of the global economy, it is believed that the international air cargo throughput will bounce back very fast. For domestic cargo throughput, the growth will continue and be more robust, benefiting from the Chinese government’s 4 trillionyuan stimulus plan,†he says.
Beijing Tianzhu Free Trade Zone
As part of Beijing Capital International Airport’s strategic plans, Airport City Logistic Park is to build the first airportbased free trade zone in China – the Beijing Tianzhu Free Trade Zone (FTZ) in Shunyi District – to further boost economic development in the region.
Both the FTZ Administrative Committee and ACLP will jointly extend the functions of air cargo bonded logistics, and develop business models that include bonded warehousing, sorting and distribution, consignment and maintenance, and display and exhibition in the FTZ. All of ACLP’s five functional zones have committed potential tenants to most of the space.
The ACLP International Building caters to the business needs of its corporations by providing quality office space, food and beverage outlets, transportation services and a business and customer service centre.
A large portion of ACLP International Building has been committed to the air cargo logistics related customers, such as Shunxin Logistics, Beijing Leather Products Import & Export Corp, China National Silk Import & Export Corporation, and China Machine Tool& Tool Builders’ Association etc.
The planned area of the Beijing Airport City is 100 square kilometres, touching the 6th Ring Road in the northeast, Litian Road in the south, and Wenyu River and Jingcheng Expressway in the west.
The Beijing Airport City, which appears to have borrowed heavily from the Dubai World Central mega development concept, is to become a multi-functional, architectural mega-structure centred around the airport, featuring eight areas including the airport, bonded logistics area, international trade, industrial areas, finance and commerce, internationalexhibition facilities, ecological living and international schools.
The Beijing Airport City development, which is expected to be completed by 2010, is expected to significantly drive the economic and social development of the areas in the airport’s vicinity.
With ACLP’s operation, the Beijing Capital International Airport is expected to get a greater share of international air cargo business from South Korea’s Incheon airport, and further help transform Beijing into the air logistics hub of Northeast Asia, as well as contributing to the economic growth of the Asia Pacific region.
Tianjin Binhai International Airport
But while Beijing Capital airport is busy developing its grand plans, a nearby and potentially voracious competitor, has not been idling in the shadows of its northern neighbour. Located only 150km south of Beijing, Tianjin Binhai International Airport is a key part of a larger economic development plan.
The Tianjin Binhai airport – which recorded a 33.2 per cent rise in freight volume to 166,558 tonnes in 2008 – has its future intrinsically tied to the Beijing Capital airport as a result of a central government directive. Under the government’s 11th Five-Year Plan, Tianjin Binhai airport is to become a base for air cargo in northern China, as well as form an international aviation hub in the northeast Asian region alongside Beijing Capital. Hong Kong analyst CK Wong says Tianjin hopes to benefi t from BCIA’s airport logistic city plans, and is expected to successfully position itself to tap the cargo overspill from Beijing.
And next to the Tianjin airport and cargo centre is the beginning of a sprawling industrial complex called Binhai New Area which is slated to cover more than 2,700 square kilometers, making the total area roughly four times as big as Shanghai´s Pudong Industrial Zone. More than 10,000 Chinese and 4,000 international companies have settled in Binhai already. Seventy of the 500 world leading corporations have established subsidiaries in the Binhai area. This ongoing development – part of plans to develop the greater Bohai Gulf region of northern China, will clearly continue to feed the cargo ambitions of both Tianjin and Beijing well into the future.
Asked how the Beijing Capital and Tianjin Binhai airports could cooperate, Chen says: “ACLP is in discussion with Tianjin airport on potential cooperation, and no details can be released at present.â€Â
Located some 13 km from Tianjin city proper, the airport is rated as one of the country’s first-class aviation ports with a 4D-class runway, 3,200 metres long and 50 metres wide, the airport now serves more than 30 domestic and international airlines.
According to a Tianjin Binhai airport spokesman, the airport plans to raise its cargo volume by 30 per cent this year to 240,000 tonnes despite the economic crisis. The increase will be mainly due to an agreement with China Cargo Airlines to use the airport.
TBIA is also talking to other airlines, including China Eastern and China Southern in a bid to woo them to operate out of Tianjin. Currently, TBIA ranks 11th in China in terms of cargo capacity, but wants to be in the top five in two to three years, reflecting the airport’s ambitions.
The airport has three warehouses, and is now constructing a fourth one.
Labelling itself as the largest cargo airport in North China, TBIA points out that passenger airlines connect from its facilities to major domestic cities, Hong Kong, Malaysia, Japan, Korea, Kiev of Ukraine and New Siberia of Russia via scheduled and charter flights.
The airport’s cargo ambitions received a major boost when Lufthansa entered into a tri-lateral joint venture with a Taiwanese investment group and the Tianjin Airport Authority to open a new cargo terminal last year, principally to handle cargo for Lufthansa and its joint venture carrier Jade Cargo International.
Freighter aircraft, which experience slot problems and congestion at Beijing now have the option of moving to Tianjin. A boost to the airport in the coming years was given by the central government when it decreed that Tianjin, together with its seaport and industrial zones will be the logistics centre for Northern China.
Already Tianjin has begun plans to invest more than US$5.3 billion in 20 key transportation projects in 2009, including airport infrastructure and international air logistics facilities. Other ongoing infrastructure projects such as the Beijing-Shanghai High-Speed Railway, the Tianjin West Station, and the Tianjin- Qinhuangdao, are expected to boost the city’s cargo throughput.
As part of the central government’s 11th Five-Year Plan, Tianjin Binhai International Airport has been granted fi fth freedom status which is expected to attract more domestic and foreign carriers and open new routes to raise the volumes of both passengers and cargo. Moreover, Binhai New Area will build a modern ecological aviation town with functions like plane assembly lines, processing logistics, research and development in civil aviation technology, exhibition, aircraft maintenance and living areas.
In the final assessment, the full development of the Airport City Logistic Park and its five functional zones and the Beijing Airport City will dramatically raise the volume of passenger and cargo from next year. Undoubtedly, this lends credence to Chen’s optimism about the Beijing Logistics Centre’s as yet, untapped growth potential.
But at the same time Tianjin Binhai International Airport’s ambition to be northern China’s aviation logistics hub, as well as tapping Beijing Capital’s cargo overspill will surely give Beijing a run for its money. Only time will tell how great a challenge Tianjin will pose toBeijing and until then, both airports will probably continue to sell the theme that they are complementing each other’sservices.
