Singapore Changi Airport saw muted cargo volumes in March compared to the same period last year, as the Asia Pacific hub recorded 152,000 tonnes. For the first quarter, air freight movements at Changi totalled 417,000 tonnes, sliding 9 percent year-on-year. The group said demand remained soft, especially in the first two months of the year, no thanks to global economic uncertainty and inflationary pressures. Collegues talk to Lim Ching Kiat, executive vice president for air hub and cargo development, to find out more about the group’s top priorities for cargo.
What are Changi’s top priorities for cargo? What’s the group’s overall direction?
While global air cargo demand has weakened, Changi Airport remains optimistic on long-term growth, especially in Southeast Asia. Despite the recent economic headwinds, Southeast Asia’s air trades with the rest of the world continued to expand over the past four years. Given the expectation of strong long-term progress with urbanisation and industrialisation, Southeast Asia is primed for growth in manufacturing, trade and logistics. Singapore, being in the heart of Southeast Asia, will have a critical role to play in global supply chains, contributing to the flow of international goods.
Towards this end, while cargo connectivity remains critical for Changi Airport to anchor its position as a leading air cargo hub, our other priorities are to raise service quality in cargo handling and unlock capacity for long-term sustainable cargo growth by leveraging automation and digitalisation. At the same time, we are also putting in place steps to reduce the carbon impact of cargo activities in order to strengthen our resilience and secure our competitiveness as an air cargo hub.
To raise service quality in cargo handling, we firmly believe in taking a collaborative approach by working closely with our partners in the air cargo community. One key development is Changi Airport Group’s introduction of a cloud-based community data-sharing platform—the Changi Air Cargo Community System (ACCS). This is an open ecosystem of collaborative and community-based applications that aggregates data from all parties involved in the cargo handling process. Within that system, we developed a truck dock slot booking (TDSB) application, which aims to even out cargo lodgement and collection at our cargo handler’s air freight terminals, thereby reducing waiting time, optimising resources, and providing greater insights to airport landside activities. This move to digitalise provides greater predictability for forwarders, trucking companies, and cargo handlers. It also supports Changi Airport’s sustainability efforts to reduce carbon and tailpipe emissions. We have since completed the pilot and plans are underway for community-wide implementation later this year.
In the area of automation, CAG, together with our partners, has been investing in resources to trial autonomous solutions like autonomous tractors to reduce the manpower resources required for point-to-point transportation of baggage and cargo. Ongoing trials are promising and we expect to trial fully driverless operations for baggage delivery by 2024. On the digital front, solutions such as the tracking of all motorised ground support equipment will help optimise equipment deployment, boosting productivity and improving the quality of cargo handling capabilities. Additionally, we are working closely with our cargo handlers on warehouse automation and digitalisation projects to improve productivity and efficiency, as well as increase capacity.
Can you share more about the recent partnership on cargo with Brussels Airport? What are the opportunities in the Asia-Europe market?
In 2022, Europe remained Changi’s second largest region by air trades. Belgium-Singapore is a key air trade lane for high-value cargo such as biopharmaceuticals. Both countries place strong importance on international trades and advanced manufacturing, and have been established as key trusted pharmaceutical hubs in Asia and Europe respectively. Changi Airport and Brussels Airport share similar ambitions in shaping our air cargo hub and place strong priorities in areas such as cargo operations excellence and digitalisation.
Under the MOU signed on 2 March 2023, Changi Airport and Brussels Airport will jointly drive initiatives to enhance capabilities in pharmaceutical logistics, undertake studies and trials in the fields of digitalisation and sustainability, as well as exchange best practices in the handling of special cargo segments and community-wide cargo initiatives to transform the air cargo supply chain.
On the environmental sustainability front, under the ambit of Pharma.Aero, both airports will be actively participating in the Green Air Pharma Logistics project. Together with other Pharma.Aero members, we aim to define the parameters and framework for a green air pharma lane and develop a set of standards and measurements to quantify and qualify the lane.
How important is the refinery expansion by Neste for Changi and Singapore?
To enable the adoption of sustainable aviation fuel (SAF), CAG had been working closely with industry and regulatory partners on stakeholder engagement, as well as facilitating trials. Neste’s refinery expansion will provide for up to one million tonnes of annual SAF production capacity in Singapore. Having domestic SAF production will enable Changi Airport’s airline partners to achieve their sustainability objectives with lower carbon footprint compared to importing SAF from other production locations. In addition to building this production capability, Neste has established an SAF supply chain to Changi Airport to offer blended SAF directly to airlines operating at Singapore Changi Airport.
Since July 2022, Singapore Airlines and Scoot flights out of Changi Airport have been using a blend of regular jet fuel and SAF as part of a year-long trial. With Neste’s refinery expansion, we look forward to working with more airline partners to promote the acceleration of SAF uplift in Changi Airport.
How has the concept of sustainability evolved from an airport perspective? Can ‘sustainable’ be ‘profitable’ in the long run?Over the past years, sustainability has evolved into a license to grow for many businesses and industries. Although airports account for only about 2 percent of global aviation emissions, we form the common platform upon which a multitude of aviation partners operate. As such, it is a priority for us to work hand in hand with the airport community to achieve responsible and sustainable growth.
Over 99 percent of CAG’s Scope 1 and Scope 2 emissions come from the use of electricity in operating our passenger terminals. As such, we concentrate our efforts in raising building energy efficiencies through constant upgrading of our systems to the best-in-class energy efficient models. For example, past upgrading of our chiller plants has seen up to 30 percent savings in energy consumption, which achieves not only cost savings but also carbon emissions reduction. We are also expanding on-site generation of solar energy, which offers energy resilience against the backdrop of fluctuating energy prices and volatile macro-economic conditions.
Most of our efforts in reducing Scope 3 emissions centre around working with airline partners and ground handling agents at Changi Airport. Our recent development on SAF (detailed above) is one example. As an industry, more work has to be done to address the SAF price premium through balancing supply and demand. Different types of policy levers are being employed around the world, ranging from mandates to incentives. We are in close engagement with the Civil Aviation Authority of Singapore in its development of a Singapore Sustainable Air Hub Blueprint, which will set out tangible pathways to achieve sustainability goals for the Singapore aviation industry.
To decarbonise ground operations including those pertaining to air cargo, we started working with our ground handling agents in 2017 to transition towards electric baggage tractors. Today, we have installed a network of more than 100 EV charging points to support a 100 percent electric baggage tractor fleet at Changi Airport. Moving forward, all new airside light vehicles, tractors and forklifts will have to be electric from 2025. This target was developed with cost parity and availability of viable electric variants in mind. In the longer term, we aim to have all airside vehicles running on cleaner energy by 2040. In tandem, we are working towards a community roll-out of the TDSB initiative, which aims to reduce truck waiting time, hence reducing carbon and tailpipe emissions.
CAG is committed to zero carbon growth up to 2030, with absolute emissions to be capped at 2018 levels even as we continue to grow our business and strive for cost parity while stepping up our sustainability efforts. At the same time, we will aspire for net zero carbon emissions by 2050 as Singapore transitions towards renewable energy and through technological advancement.
What can you say about Singapore’s status as a major logistics hub? Do you see any opportunities with intermodal operations?
In today’s highly dynamic environment, intermodal transport has emerged as an alternative and risk mitigation transportation strategy. The utilisation of intermodal operations can provide companies with more transportation options. It provides a middle ground between cost, transit time and efficiency. It could also help overcome geographical challenges, enable cost efficiencies in transporting products to new markets, while also securing supply chain resilience.
Singapore is home to the world’s 2nd busiest container port and 10th busiest international air cargo airport. Changi Airport has been working closely with PSA Singapore to drive intermodal transportation cargo flows through Singapore. Singapore’s modern port infrastructure, state-of-the-art air cargo facilities and close proximity between the air and sea ports allow seamless intermodal transshipments. During the Covid-19 pandemic which saw different transportation disruptions, Singapore’s uninterrupted operations and ability to handle intermodal transportation was a source of helpline for global shippers and logistics players.