The Asia-Pacific (APAC) region is well known as the area with the fastest economic growth. China has been the production base in APAC for the past 30 years, but due to recent geopolitical issues, its role is being dispersed to Southeast Asian countries such as Vietnam and Malaysia, as well as Japan and Korea.

What is particularly noteworthy from the perspective of airfreight transportation is that the main production facilities for semiconductors, automobile parts, and e-commerce products, which are major airfreight items, are concentrated in this cluster.

On the other hand, the major demand regions, North America and Europe, are located very far from the APAC region. As a result, a large portion of products produced in APAC are transported as airfreight to Europe and North America. Due to these characteristics, APAC is becoming an attractive market that cargo airlines, which mainly have E-class large freighters, consider first.

“The growth of cargo transportation from Incheon Airport to Southeast Asia and other regions is very high,” Hoon Lim, Incheon Airport’s Deputy Director, stated.

“As the demand for international passenger transportation centred on overseas travel in the Asian region increases, the supply of air cargo transportation using passenger aircraft has increased significantly. This has been particularly noticeable within Asia, and as a result, the main players in air cargo transportation have changed. Passenger airlines have become the main players in short-distance routes within the APAC region, while cargo airlines have become the main players in long-distance routes between Asia, the Americas, and Europe.

“Cargo airlines with small cargo aircraft such as 737Fs that must compete with passenger airlines in the APAC region are experiencing poor performance, while cargo airlines with large cargo aircraft such as 747Fs and 777Fs are showing good performance. In the future, the transport share of large cargo aircraft is expected to significantly exceed that of small cargo aircraft in the APAC region.”

Emerging in the industry

Incheon Airport’s greatest strength in APAC is its location at a geographic hub connecting APAC and the Americas. In the case of cargo flights connecting the American mainland, it is necessary to utilise the airport in the Asian region closest to the Americas as a hub in order to transport cargo with the highest payload, and from this perspective, Incheon Airport is the most suitable.

Another advantage is Incheon Airport’s sufficient airport infrastructure. When there is a significant volatility in the market, such as Covid-19 or a port strike, there are cases where cargo transportation must be temporarily increased. Incheon Airport has the infrastructure to respond to the surge in cargo transportation due to such market fluctuations.

“Incheon Airport is focusing its capabilities on strengthening connectivity between Asia and the Americas. Various airlines, such as Korean Air, Asiana Airlines, Polar Airlines, FedEx, and UPS, use Incheon Airport as a transit point when transporting cargo between Asia and the Americas,” Hoon explained.

“To this end, IIAC continues to develop infrastructure such as cargo terminals and cargo plane apron, and provides support in various ways such as continuous expansion of cargo plane-only slots and provision of cash incentives based on cargo transport performance.”

Servicing the e-commerce boom

As expected, the most recent growth is in e-commerce cargo from China. To this end, Incheon Airport is focusing on strengthening multimodal connectivity with China. In particular, Incheon Airport is actively strengthening the “Sea to Air” transport method, which transports cargo from China to Incheon Airport by sea and then transports it by air from Incheon Airport to the final destination.

Currently, major Chinese e-commerce companies such as AliExpress and Temu are utilising this transport method, and the transport time from China to Incheon Airport is approximately 12 hours. The handling volume in 2023 was 98,000 tonnes, but in 2024, it is expected that approximately 120,000 tonnes of cargo, which is an increase of about 20 percent, will be transported using this transportation method. The ‘Sea to Air’ transportation method for the China-Incheon Airport section is expected to continue to grow in the future as it is cheaper than the ‘Air to Air’ method that transports all sections by air, and has sufficient capacity.

Partnering for growth

Incheon Airport is a hub airport, and in order to become a hub, cooperation with various stakeholders, namely airlines and other airports, is most important. A total of 95 airlines operate at Incheon Airport, connecting 187 cities in 54 countries.

This means that Incheon Airport has 95 airline partners and 187 airport partners. It holds regular information exchange meetings with airlines to strengthen cooperation, and at these meetings, it receives requests for Incheon Airport and reflects them in its airport operation plan.

It also signed agreements for mutual cooperation with various overseas airports, discussing information sharing and opening flights between the two airports. Such cooperation is one of the biggest driving forces for Incheon Airport’s continued growth.

This is particularly important given the backdrop of Japan’s decrease in air cargo due to economic recession and relocation of production bases. In 2018, before Covid-19, a total of 303,000 tonnes of air cargo was transported annually between Incheon Airport and Japan. However, in 2023, the amount decreased to 230,000 tonnes.

“Incheon Airport is focusing on developing networks with emerging growth countries such as Southeast Asia to make up for the decline in demand from Japan, as mentioned above, while also strengthening its network with local airports in Japan where semiconductor factories are newly established,” Hoon outlined.

“Continuous development of logistics-related infrastructure. Incheon Airport has a total FTZ of 3.2 million sq m, which consists of a cargo terminal and a logistics complex. In particular, the Airport LogisPark of two million sq m has a total of 42 cargo warehouses, and approximately 800 companies operate logistics facilities. Such large-scale logistics complexes play an important role in maintaining the steady demand for cargo at Incheon Airport.”