• Sat
  • Nov 22, 2014
  • Updated: 1:07am

Beijing Airport seeks bigger share of freight

PUBLISHED : Monday, 14 September, 2009, 12:00am
UPDATED : Monday, 14 September, 2009, 12:00am
 

Beijing Airport plans to halt the erosion of its share of air cargo flown in and out of northern China and reclaim its role as the natural air-freight hub of the region, according to Desmond Shum, a vice-chairman and chief executive of the capital's Airport City Development.

For years, Beijing had been overlooked in favour of larger mainland rival Shanghai Airport and South Korea's Incheon Airport, Shum said, but the capital was now poised to recoup its share of the cargo business through the launch of an airport-based free-trade zone in the first quarter of next year.

'It is unreasonable that about 80 per cent of air cargo generated from Shandong in northern China is bypassing Beijing for Shanghai and Incheon at present,' Shum said.

Shanghai Airport last year handled 2.6 million tonnes of cargo, compared with Beijing's 1.4 million tonnes.

While this imbalance could be explained partly by the concentration of high-technology manufacturing plants in the south's Yangtze River Delta area, Beijing also had itself to blame because it had neglected the air-freight and logistics services at the airport, Shum said.

'Beijing has not spent sufficient time developing the cargo business and focused too much on passengers,' he said.

A Hong Kong-based investment consortium led by Shum teamed up with Capital Airports Holding, the parent of Beijing Capital International Airport, and the Shunyi district government to form Airport City to tackle the elements missing from Beijing's logistics business.

Airport City invested four billion yuan (HK$4.54 billion) to build a bonded logistics park, Airport City Logistic Park, of 3.4 million square metres in an area north of Beijing Airport. The park offers tax-free imports and export tax rebates. Ten international logistics companies have since moved in.

Given the approval of the Beijing Tianzhu Free Trade Zone by the State Council in July last year, the park would be broadened to include exhibitions, trade and manufacturing, by which stage an estimated 60 tenants would have moved in, said Shum.

Present and prospective tenants include General Electric, Johnson & Johnson, Kerry Logistics and other multinational companies. At last count, 70 per cent of the 300,000 sqmetres of warehouse space had been rented out.

A further six billion yuan is expected to be invested in the park by Airport City in the next six to seven years to fully develop the 3.4 million sqmetres of land into warehouse, office, exhibition and manufacturing facilities.

'An initial public offering is an option, but now we are content with using bank borrowings as interest rates are low,' said Shum.

Beijing has an edge over Shanghai as a logistics hub since its export and import trade was more balanced, he added. The ratio of export to import volume in Beijing is six to four, compared with Shanghai's eight to two, since Beijing has a bigger demand for imported goods.

Cargo handled by Beijing Airport in the first eight months was unchanged from a year ago, Shum said. He predicted cargo volume would rise 10 to 12 per cent next year on gross domestic product growth.

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Airport City is building a logistics park in Beijing with an investment of, in yuan: 4b yuan

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