FlyingTypers caught up with the estimable
Steven J. K. Lee, Chairman of Singapore Aircargo Agents Association and
also a senior executive at DHL Global Forwarding. He believes that there
is plenty to be positive about on Asia lanes despite fears of hard landing
in China and ongoing doubts about European demand. He also warned that
the European emissions trading scheme will make it even harder for airlines
to cope with rising fuel prices.
the result for last year was not so drastic; some forwarders did better
than previous years and some forwarders did worse.
“Last year the first six months were
good. In the last six months though we saw a slowdown due to the Euro-zone
situation, Intra-Asia was pretty stable.
“I would describe the first months
of 2012 as months of non-confidence. Consumers still appear to be confident
in emerging economies such as China, Vietnam, and India, but in the developed
economies there has been a sharp fall in confidence.
“I think if the general market situation
persists and continues it’s of great concern. Singapore is no different
to other markets and the situation will continue to be unpredictable,”
said Mr. Lee.
But despite the low points and worries of
2012’s opening, there are still some things to which one can look
“The bright spots are Indonesia, Vietnam,
New Zealand, India, Japan, which is recovering from the tsunami, and Thailand,
which is already getting back after the floods.
“These lanes will continue to flourish
in 2012 and airlines are looking at increasing capacities and capabilities,
especially in serving Vietnam and India.
“Integrators are making gains in all
“The importance of China is unquestionable,
but forwarders in Singapore and the region are not totally reliant on
“The Singapore government provides
special incentive schemes to Small Medium Enterprises to diversify their
investments especially to the Asian countries. China still plays a major
role, but markets like Myanmar, Vietnam, Russia, Latin America, Middle
East, Africa, India, and Indonesia are now a major focus.
“I see forwarders are already flocking
to Myanmar to look for new opportunities.
“If China rebounds, hopefully for
the last six months of the year it will bring back the traditional peak
period and vibrancy to the industry.
“Europe is the main concern, but hopefully
there will be a rebound from the U.S., which is very unpredictable due
to the forthcoming Presidential election,” said Mr. Lee. He went
on to note that everyone is hopeful for more demand going to Europe, and
that “Everybody dreams for a rebound.”
“Europe may take a while longer; it’s
hard to know. If China comes to the rescue in the debt crisis the rebound
can be immediate. It is all down to the political situation.”
While most major air cargo gateways wound
up losing volumes in 2011, Changi remained static due in part to geography.
“Singapore is still very fortunate
to be in the most strategic location. It serves as a very important hub
for South East Asia, and all the airlines operating in and out of Singapore
are very stable.
“Changi Airport is always on a progressive
path with continuous upgrading. Recently, the Singapore government announced
that the budget terminal would be demolished and rebuilt as a bigger Terminal
4 to cater for demand.
“More wide-bodied aircraft have complemented
the stability of the industry. Changi Airport Authority of Singapore with
various authorities and agencies are always watchful and never leave opportunities
“Coolport is only in its second year
of operation and the impact may not be too visible yet, but it is a national
interest upgrade of the airport facility and in the long term it will
be a very viable facility.
“It will become a total logistics
hub for pharmaceutical and temperature control products.
“Changi Airport Group, together with
Singapore Airport Terminal Services, will continue to promote this capability
to ensure the facility will be fully utilized,” said Mr. Lee.
A key criterion for forwarders in Singapore
is managing the region’s higher costs, which is handled in numerous
ways as outlined by Mr. Lee.
“The companies with strong presence
here use different methodology in managing their operational costs. Most
of the companies do not make staff redundant, but compromise by reducing
their salary on a temporary basis, since staff cost is the main component
of total expenditure.
cost reduction includes travel, utilities and also maximizing airline
With SIA Cargo’s capacity reduced by 20 percent this, we wonder
how Singapore’s air cargo community will be affected.
“Although the freighter fleet of SIA
has been reduced by 20 percent in response to the weak economic environment,
cargo capacity has increased owing to the delivering of twin aisle aircraft
in response to passenger demand.
“The overall decline in load factors
is undermining cargo profitability. No particular routes are affected
and SIA did provide a head ups to SAAA in regards to the situation, but
the prerogative is still with the carrier.”
Capacity reduction is not the only concern
to the industry—high fuel costs and a new EU emission scheme are
also on the list.
“Over the last several months, weakness
in the Euro and gains in the U.S. Dollar meant that Euro-based airlines
could not take advantage of any falls in oil prices which are U.S. based.
“The higher cost is definitely a major
concern to air cargo. The EU emissions scheme in my opinion is going to
make it worse,” said Mr. Lee