“Fast! Fresh!” Logistic infrastructure in Incheon Airport

Two emerging trends in the airport logistics industry! In the previous post, we looked at increasing demand for e-commerce cargo and fresh cargo.

This post will talk about what infrastructure Incheon Airport is establishing in line with changing trends in logistics, focusing on major facilities.

1) Popular goods prepared in advance! - Global Distribution Center (GDC)

Incheon Airport is putting efforts to create a logistics hub specialized in e-commerce. One of such efforts is its GDC.

Global Distribution Center (GDC) refers to a center for global logistics which receives and stores products from global e-commerce companies, classifies and repackages them by item, and delivers them according to individual orders. The key is to predict demand for particular products with big data and place in advance such products at GDC.

For instance, you can bring clothes from Europe and the US and sell them in Japan and China. You can store products you bring by predicting their demand at Incheon Airport’s GDC and transport them to other countries when orders are placed. It is gaining attention as a business model which reduces time and cost while improving logistical competitiveness. In addition, GDC is expected to create more than 300 jobs and the economic value of more than KRW 100 billion and being highlighted as a logistical facility that contributes to the national economy.

Incheon Airport is making efforts to build infrastructure, such as a lot for GDC as well as direct/return routes. Furthermore, to attract competitive logistical companies to GDC, it is seeking various activities to improve competitiveness in GDC land, such as implementing strategic incentives and providing multifaceted policy support through a government-wide committee.

2) “One-stop” logistics handling beyond storage - Fulfillment Center

Incheon Airport is trying to attract fulfillment centers of global tech companies, such as Amazon and Alibaba, in response to increasing e-commerce and changing processes in the distribution industry. If such companies come here, it may work as a breakthrough to get ahead with e-commerce cargo in the Asia-Pacific region and become an important growth engine.

Fulfillment refers to logistics performed by professional logistic firms on behalf of sellers, including storage, sorting, packaging, delivery, and handling. While distribution centers used to simply store products, fulfillment is a concept over the full cycle including product storage, orders, packaging, and after-sales service.

Incheon Airport acquired additional land for its Fulfillment Center from some part of the land reserved for Sky City and is conducting activities to encourage government-wide policy support. In addition, it is focusing on attracting more fulfillment centers by actively making use of relative stability in laws and regulations in Korea, business friendly policy environments, and the country’s location connecting Asia and the Americas.

3) Cool and fresh… Facility designed to handle fresh cargo! Cool Cargo Center (CCC)

Temperature control and product value are key in transporting fresh cargo. Since food or drug products show performance at different temperatures, they need a cold chain cargo terminal combining various facilities and future technologies.

In this regard, Incheon Airport is garnering attention as it pursues the construction of Cool Cargo Center (CCC), a facility dedicated to handling in the passenger apron, for the first time in Northeast Asia. If the facility is constructed, it will greatly shorten the logistical process. While fresh cargo was transported to the passenger terminal from the cargo terminal through the cargo waiting place in the past, it will be moved directly to the passenger terminal with CCC. It can create belly cargo of more than 60,000 tons annually, which reduces 120 minutes in connecting time and 60% in distance!

Apart from providing a strategic terminal area and period depending on the type of cargo and seasonal temperature, Incheon Airport will introduce the Cool Chain Dolly cold chain container to minimize outdoor air exposure for fresh cargo while loading and unloading to and from airplanes and provide technical support including temperature history control by using IoT and blockchain.

Drug product transport in particular is expected to grow the fastest in the air cargo industry, and competition is getting fierce among airports around the world. In June 2019, Incheon Airport acquired IATA CEIV Pharma, a quality certification for the air transport of drug products, built a higher level of trust, and is ramping up its efforts to attract and expand more drug products.

We have so far looked at how Incheon Airport is preparing its logistical infrastructure for emerging cargo trends.

Let’s look forward to more achievements and efforts by Incheon Airport, which is preemptively responding to changes by developing specialized logistical facilities and systems, including Global Distribution Center, Fulfillment Center, and Cool Cargo Center!

Hottest trends in air logistics

“Huh? There are trends in air logistics?”

Of course! Markets change according to changes in production and consumption, and with new markets come new trends. Recently in the air logistics industry, many are trying to attract demand in the rapidly emerging new growth cargo.

Curious as to what exactly is new growth cargo? Let’s find out!

Newly emerging “e-commerce cargo” and “fresh cargo”!

New growth cargo refers to cargo whose which consistent growth is expected with the latest rapid growth in demand. There are two types that are gaining a lot of attention: e-commerce cargo and fresh cargo.

(1) E-commerce cargo

Let’s take a look at e-commerce cargo first. The global e-commerce market is growing immensely as a result of an ever increasing global mobile and web accessibility.

Global e-commerce consists of international purchases (Korean consumers buying overseas products) and domestic sales (overseas consumers buying Korean products). Recently, the global online shopping market is growing rapidly with overseas content from YouTube, cheaper prices than those in Korea, and fast parcel services.

According to the global market research company Euromonitor International, the e-commerce market in 2019 was worth USD 2 trillion, which has grown 21% on average over the past 5 years. This year, as consumers avoided going out to prevent COVID-19, e-commerce is emerging as an alternative shopping channel. You can easily find someone around you who buys stuff from overseas online. With advances in information technology and logistics infrastructure, competitive products are moving freely across borders.

(2) Fresh cargo

Leading fresh cargo products are food and drugs. Taking a closer look at the trends in their growth will make you realize how and why they are gaining attention.

According to the Ministry of Agriculture, Food and Rural Affairs (MAFRA), export of fresh food in 2019 exceeded USD 1.3 billion for the first time with ginseng and kimchi sales recording USD 200 million and USD 100 million, respectively. K-food is gaining huge popularity in Southeast Asia and other parts of the world. Meanwhile, export of Korean drug products in March reached USD 576.68 million, up 45.4% from the previous month, and there is growing interest in personal healthcare including personal hygiene products and health products as personal hygiene and health management are becoming all the more important due to COVID-19.

The reason why the logistics industry focuses on food and drug markets is that they represent high added value, which requires a high level of expertise in services. In particular, products which value is determined by time (live vs frozen lobsters) create added value beyond logistical cost.

For food and drugs, it is critical to maintain freshness during storage and transport. It is tricky to do so since the appropriate temperature varies depending on the product. That is why there is increasing attention to infrastructure to control temperature in the supple chain and maintain freshness, such as cold chain.

We looked at two trends in air logistics, from e-commerce cargo to fresh cargo. Wondering how Incheon Airport, Korea’s leading airport logistical hub, is responding in line with these new growing cargo trends? Stay tuned to the next post for more! 😊

Phase-by-Phase Construction of Incheon Airport at a Glance

Anyone who visited Incheon Airport would be surprised by its giant scale. Surely, the facilities must have been built over a long period of time. Since its opening in 2001, Incheon Airport has increased its facilities according to the increasing demand for air travel.

The picture above is an aerial view of Incheon Airport, where you can see its facilities in different colors according to their construction phase. As you can see, Incheon Airport’s construction was completed over the course of four phases. Let’s find out more about phase-by-phase construction of Incheon Airport from phase 1 to phase 4 and take a brief look into what facilities were built, including the passenger terminals and runways, and what effect they have brought about.

Construction Phases 1 to 3 (1992–2017)

Incheon Airport that served roughly 40 million passengers at the beginning of its construction phase has now turned into a giant hub airport that serves over 160 million passengers. Let’s look into the history of its construction from phase 1.

[Construction Phase 1 (1992–2001)]

Yeongjong Island was finally decided as the land for the airport and the big run of eight years and four months started with the construction of a seawall and the site construction. Construction phase 1 was a large-scale project that incorporated almost every cutting-edge construction methods of South Korea. Over this period, the firm foundation of Incheon Airport was built through the construction of passenger terminal 1, runways 1 & 2, aprons, and other facilities.

[Construction Phase 2 (2002–2008)]

Through construction phase 2, the concourse, runway 3, and cargo terminal were constructed, and other facilities were extended. Incheon Airport was able to increase the capacity of its passengers and cargo during this phase, becoming a major hub airport in Northeast Asia.

[Construction Phase 3 (2009–2017)]

Incheon Airport’s status began to soar during construction phase 3 with passenger terminal 2, opening the age of multiple international terminals. After the successful opening of passenger terminal 2 through construction phase 3, Incheon Airport became able to accommodate 77 million passengers and 5 million tons of cargo annually.

Construction Phase 4 (2017–2024)

Construction phase 4, with aims to make Incheon Airport one of three mega-airports of the world, was to expand passenger terminal 2 and construct runway 4, aprons, and the transportation network.

Costing a total of KRW 4 trillion 840.5 billion, it was expected to generate an added value of about KRW 13 trillion beside production and create more than 60,000 jobs, largely contributing to the national economy. Let’s take a look at the details.

① Expansion of Passenger Terminal 2

With the extension of passenger terminal 2, Incheon Airport will become a giant hub airport that can accommodate a total of 160 million passengers per year. It will be the first airport in the world that has two passenger terminals that can accommodate over 50 million passengers.

Not only the extension of the space, but also the customized services using the technologies of the fourth industrial revolution, such as big data, IoT and VR/AR, will be introduced and its “airport in the park” where the natural environment and the buildings will be harmonized will be realized to provide users with more convenient, safe, and fast airport services.

② Establishment of Runway 4

When the establishment of runway 4 increases the times of flight operation from 90 to 107 per hour, more passengers and cargos can be delivered and the operation during the peak hours will be stabilized. Additionally, the expansion of the rapid exit taxiway* will cut the occupancy time of the flights, maximizing the efficiency of facilities.

* Rapid exit taxiway

The passage to enable an airplane that has landed on the runway to get out of the runway without slowing down enough

③ Extension of Aprons, etc.

There are other constructions to extend and reduce various facilities are in operation. The number of aprons will be increased from 210 to 285, the link road between terminal 1 and 2 will be reduced from 15.1 km to 13.2 km, parking spots will be increased from 30,000 to 40,000, and two access roads to passenger terminal 2 will be expanded at the same time.

The aforementioned details comprise the phase-by-phase construction of Incheon Airport. Incheon Airport has made constant efforts to provide the best airport services with a greater vision. Currently, the demand for passengers is low due to the COVID-19 crisis, but Incheon Airport will follow its early plan, believing that the crisis will be over soon. Please show your support for Incheon Airport so that it can complete construction phase 4 and contribute to the national economy!

Incheon Airport Nearly Could Not Open

An airport is one of the most important social infrastructures. As its impact on the economy and people’s lives is enormous, an airport is a large-scale project that involves many stakeholders—from construction to operation.

This post introduces the story behind how Incheon Airport, the biggest project in Korean history, was constructed and developed.

The reason why backpacking increased in 1989

Just a generation ago, not everyone could travel overseas. Trip to overseas was prohibited to the extent that no passport was issued for tourism purposes, only for business purposes. The turning point was made through an international sports event. As the government hosted the 1986 Asian Games and the 1988 Summer Olympics, there came the waves of globalization and internationalization, where the government reviewed whether to lift a ban on overseas travel and finally opened the door to the world in the same year.

As overseas travel became available for everyone in 1989, the number of outbound tourists exceeded 1 million for the first time. It was due to an increasing number of undergraduates, who went abroad to study and backpack during their vacation. A lot of travel agencies were created in response to this rising demand, giving rise to a boom in tourism. Although the Gimpo Airport made its expansion, it couldn’t keep up with the increasing number of passengers. So, the government decided to construct a new airport in the Metropolitan Area to replace Gimpo Airport.

22 regions competed for the new airport. And the winner is…?

The New Airport Construction Committee in March 1989 narrowed the new airport candidates down to 22 regions in Gyeonggi-do and Chungcheongnam-do, and to 7 regions including Yeongjongdo Island, Sihwa 1, and Sihwa 2 after the preliminary survey. In the final stage, 3 regions including Yeongjongdo Island were competing. Among them, Sihwa was expected to cause a potential noise pollution as the southern part was bordered with land.

Based on the above feasibility study, Yeongjongdo Island was selected unanimously as the final region for the new airport on June 14, 1990.

Yeongjongdo Island is Korea’s 6th largest island. Its original area was smaller, but a large-scale reclamation project connecting 4 islands was executed to construct Incheon Airport, resulting in this large island we know today. Half of this island is used by Incheon Airport.

Incheon Airport stood tall against all odds

Things seemed to go well but had never been easy.

“The airport’s area of 56 million ㎡ is twice that of O’Hare International Airport, the world’s biggest airport, and five times that of Kansai International Airport, Asia’s biggest. It is worrisome if the airport can be maintained as planned after construction.”

“Instead of adhering to investing in new airport construction, the scale of the new airport project should be revised to accommodate the current economic conditions by expanding or better operating Gimpo Airport.”

The construction of Incheon Airport faced many oppositions from the beginning. There were negative opinions from the one that the area for the airport was too big to the one that it costs too much.

Furthermore, some argued that the project must be scaled down as they could not expect that the passenger demand would continue to rise. There were also other concerns that Yeongjongdo Island was not a good place for the new airport due to the risk of bird strikes, the potential aftermath of ecosystem destruction, construction costs, the airport scale, natural disasters, and environmental pollution.

However, given today’s Incheon Airport, we can see that those concerns in the past were “unwarranted.” For 19 years since its opening, Incheon Airport has proven itself as a hub airport in Northeast Asia and a global airport in the world through its safe and stable operations.

In particular, because the Incheon Airport land area reclaimed between Yeongjongdo Island and Yongyudo Island is 52 ㎞ away from Seoul and 15 ㎞ away from Incheon, it is considered the optimal place to operate 24/7 without causing any noise pollution.

Incheon Airport made efforts to minimize any environmental harm by installing barriers in its construction and dredging area to prevent any suspended materials from leaking. It is also currently investing in eco-friendly facilities and reducing energy consumption.

Aircrafts landing or taking off in Incheon Airport do not pass migratory birds’ habitats, and the impact of migratory birds on aircraft damage or operation is very low. Incheon Airport is currently operated by the cutting-edge instrument landing system CAT-lllb, where an aircraft can land or take off as long as visibility is ensured for 75 m. So, the impact of fog is also minimal.

If we were overwhelmed by opinions emphasizing potential risks in the beginning, it would not be possible to witness Incheon Airport today.

We have so far looked into the amazing story behind Incheon Airport’s construction. The next post will dive into Incheon Airport’s construction projects by phase. By looking at how adjacent facilities, including passenger terminals and runways were built one after another, it will be a good opportunity to understand how Incheon Airport has become what it is today. Stay tuned! 😊

How Incheon Airport Maintains its Status as the “Hub in Northeast Asia”

“We are going to Cebu, Philippines via Incheon.”

There was a time when Japanese passengers visited Incheon Airport more than they did airports in Japan. In Japan, Tokyo has Narita International Airport for international routes and Haneda Airport mostly for domestic routes. It took 2 hours to go to Narita International Airport from Haneda Airport in order to transfer to an international route.

Due to this inconvenience, Japanese people living in other areas flocked to Incheon Airport, instead of Narita International Airport. As a result, the Japanese government felt threatened and responded by opening the New Haneda Airport. The Japanese government could not let its people use an airport in Korea to go overseas and used a strategy that encouraged them to go to Haneda with convenient transportation to go abroad. The reason why the Japanese government had no choice but to use this strategy while worrying about whether it may undermine the competitiveness of Narita International Airport was that it attempted to compete with Incheon Airport, which was rising as a hub airport in Northeast Asia.

Likewise, the competition has been going on between airports in neighboring countries to get ahead as a hub airport. This post will look at what efforts Incheon Airport is making in order to maintain its status as a hub airport in Northeast Asia and attract more passengers!

‘JV’ BETWEEN AIRLINES ATTRACTS PASSENGERS!

In the previous post, we pointed out the importance of flight networks on various routes as a qualification for hub airport. A flight network is an asset accumulated by airlines through various efforts over a long period of time, and it is not easy to widen the network in a short period of time. What could happen if airlines with different networks joined hands? That is another story.

▲Source: Korean Air

In 2018, close cooperation between two airlines caught a lot of attention. This was a joint venture (JV)* between Korean Air and Delta Air Lines. Under this JV, both airlines operate in terms of fare and schedule as if they were one airline and share profits and costs in Pacific routes connecting North America to Asia. In other words, Korean Air’s 77 routes in Asia and Delta Air Lines’ 271 routes in North America establish a system connected by Incheon Airport as a hub.

It refers to the highest level of cooperation in the airline industry where two different business entities operate certain routes together and share profits.

 

Code share, which many of you may have heard of, allows a partner airline to sell a portion of seats on another airline’s flight, but under a joint venture. In other words, an airline can use all the seats on a partner’s flight. In addition, while alliances such as SkyTeam and Star Alliance just share miles or lounges, joint ventures not only operate together, but they also share costs and profits. For instance, as the joint venture between Korean Air and Delta Air Lines was approved, consumers could book and use all routes of Delta Air Lines just like they did Korean Air. Furthermore, they can earn the same amount of Korean Air’s SkyPass miles from boarding Delta Air Lines’ flights.

(1) How does the JV benefit passengers?

  1. There are more flight schedules from which to choose.
  2. There are more direct flight options.
  3. You can earn the same amount of Korean Air’s miles from boarding Delta Air Lines’ flights.
  4.  It reduces transfer time and makes transferring easier.

As both airlines adjusted their flight schedules efficiently, passengers had more options from which to choose in terms of Incheon-North America flights, creating an absorption effect of Incheon Airport in terms of transfer demand from passengers who used other airports in Asia.

(2) How does the JV benefit airlines and Incheon Airport?

The JV has been beneficial for both airlines and Incheon Airport. For one year of the JV, Korean Air increased the number of North America routes by 2.9% (2,563,386 → 2,636,689 flights), Southeast Asia routes by 6.8% (4,126,488 → 4,408,655 flights), and Japan routes by 1% (2,58,0643 → 2,605,429 flights). During the same period, Delta Air Lines also operated 2,168 flights in North America routes, 11% more compared to before the JV (1,953).

As the number of connecting flights between Korean Air and Delta Air Lines increased, so did the number of transfer passengers in Incheon Airport. In the past year, the airport accommodated 2,870,517 passengers, 240,000 (9.1%) more from 2,630,669 a year earlier. In fact, after Delta Air Lines closed routes to Osaka, Bangkok, and Taipei via Narita International Airport in Japan to cooperate with Korean Air, the number of transfer passengers in these routes via Incheon Airport increased by 5 times.

INCREASE PASSENGER CAPACITY BY EXPANDING “SLOTS”!

Everyone wants to fly at a similar time. Many people want to get out fresh in the morning and enjoy the afternoon at their destination. For a long flight, they want to depart at night and sleep during the flight. It is not easy to wake up early in the morning and there are not many transportation options at late at night, not to mention that it is also physically demanding.

Though airlines want to operate only during golden times from 8:00-9 a.m. or 6:00 to 9:00 p.m. during which people often fly, there is a reason they cannot. This is because the total number of flights is determined for each airline during a particular time. These is called “slots.” To prevent traffic congestion, an airport allocates slots to airlines in order to adjust their take-off and landing schedule. The more slots there are, the bigger the airport’s capacity.

To solidify Incheon Airport’s position as a hub airport in Northeast Asia, it is important to continuously secure slots. It is not easy to secure slots. It is important to secure slots both in arriving and departing airports in order to fly an airplane, and additional slots are allocated depending on physical infrastructure such as runways, air traffic control systems, and passenger terminals as well as human resources.

Incheon Airport increased its number of slots from 43 to 63 after finishing the Phase 2 Construction Project in 2008. After opening Terminal 2 in 2018, Incheon Airport’s number of slots has increased up to 70 per hour. Currently, Incheon Airport’s physical infrastructure is designed to accommodate up to 90 slots per hour, but it must not exceed 39 slots for departure and 40 slots for arrival. These numbers are calculated based on Incheon Airport’s transportation capacity in terms of runways, aprons, customs, immigration, and quarantine (CIQ), and air traffic control. Incheon Airport’s CIQ capacity per hour amounts to 7,285-7,785 arriving passengers and 9,600 departing passengers.

The official term set forth by the Ministry of Land, Infrastructure and Transport in its regulation is aircraft operating time. In practice, however, the term “slot” is often used. Slot refers to an opening in a computer or device into which you can insert a circuit board or memory card. This term is also used in the airport in the sense that you can insert it into a flight schedule.

 

The concept of slot originated from the United States. According to the Korea Transport Institute, as demand for flights skyrocketed in 1969, the US applied slots to restrict landings and take-offs at five airports: O’Hare International Airport, Ronald Reagan Washington National Airport, LaGuardia Airport, John F. Kennedy International Airport, and Newark Liberty International Airport. This was because passengers experienced huge inconveniences as flights were delayed due to congestion. Since then, slots were introduced at major airports in Europe, and now most airports use slots in accordance with the requirements of the International Air Transport Association (IATA).

From the joint venture between airlines to increase passenger demand to a strategy to expand slots for flights per hour by expanding the airport’s infrastructure, today we have looked at Incheon Airport’s noticeable efforts to increase connectivity as a hub airport while securing various routes and time slots so that passengers choose Incheon Airport.

Even though flight demand is stagnant around the world due to COVID-19, we hope you are looking forward to the future of Incheon Airport, which flies further as a hub airport in Northeast Asia, when flight demand recovers!