Incheon International Airport Expands Cargo Capabilities

May 24, 2012
Just a decade after opening, ICN is already the world’s fourth largest cargo airport and has a billion dollar plan to become even larger.

Management at Incheon International Airport, Seoul, South Korea, is aggressively promoting the airport’s cargo business and undertaking a multibillion dollar building campaign to handle 7.7 million tons of cargo annually by 2020.

“With encouragement from our government, Incheon is keen to push its cargo traffic,” Young-Geun Lee, the executive vice president of ICN told Ground Support Worldwide during a briefing at the airport. “The cargo sector is viewed as an important component of our economy.”

ICN is already one of the world’s key cargo airports. Just 10 years after opening, the airport has increased its annual cargo tonnage by 125 percent.

Airports Council International currently ranks ICN as the fourth largest cargo airport based on 2010 data, up from No. 15 in its first year of operation. According to ACI, ICN handled 2.68 million tons of cargo in 2010, a 16 percent increase from 2009.

Passenger service at ICN, however, gets most of the worldwide accolades. With a daily average of 600 takeoffs and landings and a total of 120,000 passengers, ICN has been named the world's best airport in service quality for six consecutive years by the ACI and has a five-star rating by Skytrax – a rating only shared by two other airports.

It’s easy to see from passenger performance metrics how the airport got so far so fast.

Currently it takes passengers an average of 12 minutes to be processed for arrival and 16 minutes for departure, well below the 45-minute and 60-minute averages recommended by the International Civil Aviation Organization. Time needed for transit passengers is 45 minutes, far below the 60-70 minutes recommended by ICAO.

Another performance metric for any weary traveler is baggage handling. Rates for lost or delayed baggage amounted to 1 in 100,000 bags in 2010.

Such high marks have allowed the airport's managing agency, Incheon International Airport Corp., to expand into airport consulting worldwide.


But cargo is starting to earn its share of awards, too. Air Cargo World presented ICN with its Award for Excellence at an awards ceremony held just last month.

That’s good news no doubt took some of the sting out a decline in cargo activity at ICN last year due to the economic downturn of South Korea’s major markets, particularly Europe and the United States, which account for roughly 40 percent of total cargo activity.

ICN’s managers, however, are confident in the year ahead and forecast a 4 percent growth in cargo traffic.

ICN’s current cargo facilities are spread across 21,6 million square feet and include separate terminals, warehouses and other related facilities. The immense South Cargo apron can park 32 B747 aircraft at the same time.

The two biggest terminals are naturally operated by South Korean carriers Korean Air and Asiana, respectively. The next largest facility is the Foreign Carrier Cargo Terminal used by FedEx, UPS and other international airlines.

Korean Air, for example, is the airport’s biggest cargo customer accounting for 53 percent of all shipments passing through ICN in terms of tonnage. Consequently, its cargo terminal is the largest covering nearly 881,600 square feet and capable of handling 1.6 million tons of cargo annually.

Regardless of size, ICN’s Air Cargo Information System offers a 100 percent online system that lets forwarders book, check and track shipments and generate electronic airway bills.

Other pioneering IT systems include UNI-PASS, an online clearance system that allows export clearance within 2 minutes, import clearance inside of 3 minutes and tax payment within 10 hours.

The introduction of RFID technology in 2010 for tracking practically all imported goods has further reduced processing times by up to 3 hours.

An unlikely 72-hole golf course separates cargo operations from the Airport Logistics Park opened in 2006 in a bid to make the airport a more attractive proposition for transit cargo arriving from China and traveling between South Korea and Europe, North America and Southeast Asia.


Lee outlined ICN’s ambitious expansion plans for cargo infrastructure that is expected to cost $2.7 billion. Blessed with land around it, ICN has an edge over other airports in the region, particularly Japanese and Chinese airports where expansion is precluded by limited space.

The airport is expanding the cargo area by 1.1 million square meters, primarily for express cargo and adding 500,000 square feet to the logistics park primarily for manufacturing.

“Korea is keen to attract companies interested in setting up manufacturing operations because, in the final analysis, manufacturing will provide a strong impetus to the air cargo sector,” Lee says. “Korea may not be a low-cost economy, but it is also a reliable source of high-quality products and services.”

The airport is also partnering with the corporate sector in an effort to achieve greater synergies. ICN, for example, is working closely with ASML, the world’s largest supplier of machines used to produce computer chips. ASML’s hub at ICN should provide a further push to cargo traffic as the company’s new products are launched in the market.

Also, a high-speed rail service traveling at more than 200 miles per hour will easily connect ICN with major South Korean cities by 2014 and further bolster cargo traffic by expediting delivery and providing support to express services throughout the country.


It was this “pro-business” approach that Karl Ulrich Garnadt, chairman and CEO of Lufthansa Cargo – the top non-Asian carrier in South Korea – noted during a recent visit to Seoul.

“There are good opportunities for South Korea’s air cargo market in 2012,” Garnadt told Ground Support Worldwide. “Growth impulses for cargo traffic will come from new hi-tech products, the automotive and pharmaceutical industry and free trade agreements between South Korea and several countries including the European Union.”

A free trade agreement already went into effect on March 15 between the United States and South Korea and had an immediate impact on ICN.

Indeed, the first day the agreement became official, ICN received cargo shipments of U.S.-made machines, electronics, clothing and medicines. Tariffs imposed until then on American-made clothing at 32 percent and pharmaceutical products at 6.5 percent were removed as consignments of these products arrived.

The United States International Trade Commission estimates the reduction of South Korean tariffs and tariff-rate quotas on goods alone will add $10 billion to $12 billion to annual U.S. Gross Domestic Product and around $10 billion to annual merchandise exports to South Korea.

Under the agreement, almost 80 percent of U.S. exports to South Korea of consumer and industrial products will become duty-free, and nearly 95 percent of bilateral trade in consumer and industrial products will become duty-free within five years. Most remaining tariffs would be eliminated within 10 years.

Sixty-four cargo planes currently fly between Korea and the United States each week. But with the agreement’s implementation and the resulting surge in trade, experts say more aircraft will be deployed between the two countries.


On that note, another reason for Lee’s bullishness is the acquisition of new aircraft by its biggest customer. In fact, Korean Air became the world’s first airline to operate both the B747-8 and the B777 freighters.

Korean Air plans to operate the B747-8 freighters on its trans-Pacific route, with stops in Osaka and Narita, and Los Angeles and San Francisco. The B777 freighter, however, will also allow the airline to expand into new European markets, particularly Vienna, Frankfurt and London.

This, ICN executives say, will vastly enhance their airport’s connectivity to the major trading points of the world.

ICN’s significance as a cargo airport will be further heightened when it plays host to the International Air Cargo Association's International Air Cargo Forum & Exposition in 2014.

“We want to promote and communicate our infrastructure and high service levels to as many people as possible and hosting the TIACA ACF & Exposition means Incheon Airport and Korea's air cargo industry will welcome industry leaders from across the globe,” Lee says.

Finally, while much of Lee’s discussion with us focused on international cargo, airport management’s long-range plan for ICN from opening day is be the leading airport hub in Northeast Asia for all traffic.

“Both China and Japan are two very big and attractive markets for us, and we would like to further intensify our cooperation with them,” Lee said, pointing to the “obvious advantages” that the airport offered to foreign airlines.

“Besides having no night curfew on flights, new airlines operating to Incheon enjoy exemptions from landing fees for the first three years, which offers easy connections to the world’s most attractive markets in the region,” Lee adds.

“Within three flight hours, we have 61 cities with populations over 1 million people,” Lee said, adding that he anticipates annual flights to grow to 530,000 by 2020 from today’s 410,000.

While airport management expects to spend $2.7 billion on cargo improvement, an overall budget of $3.1 billion includes a new 1.4 million square foot passenger terminal currently under construction that should add an additional capacity of 18 million passengers, Lee said. The plan also includes improvements to aprons and transportation centers.

After the terminal opens, the next expansion phase on the drawing board will include constructing a fourth and fifth runway. That last runway will be exclusively for cargo, although it will mean an end to ICN’s golf course.

By the time this phase is completed, ICN will be able to handle 62 million passengers annually.

The airport’s admirable marks for passenger service also undoubtedly have an impact on cargo. Belly-hold freight carried on passenger flights currently accounts for a third of all cargo handling at ICN.

Manik Mehta is a New York-basd journalist with extensive experience covering aviation, including ground support, airports, airlines, infrastructure and passenger/cargo traffic. Mehta travels frequently to Europe and Asia.