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Can modest Shenyang Airport live up to its lofty ambitions?

Ian Putzger by Ian Putzger
December 7, 2016
in Airports, All Posts, Cargo Traffic, Carriers, Freight Forwarders, Specialty Cargo
Reading Time: 3 mins read
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decjan_news_asia-pacific_shenyang-airportHong Kong’s premier air cargo handler sees promising potential in northeastern China, not far from the border with North Korea. In September, Hong Kong Air Cargo Terminals Ltd. (Hactl) subsidiary Hactl Development Holdings signed a strategic cooperation framework agreement with Liaoning Airport Management Group, owner of Shenyang Taoxian International Airport, in what both parties described as “a first step in developing the airport as a major regional hub.”

That potential starts from a relatively modest base, despite Shenyang’s long-standing reputation as an industrial center in China. In 2015, the airport handled 142,000 tonnes, up 2.7 percent from the previous year. “While we have seen some growth in volume for Shenyang over the past year, the annual growth of 2.5 to 2.8 percent is still behind other developing airports in China, such as Shanghai Pudong, Shanghai Hongqiao, Chongqing Jiangbei and Zhengzhou, with growth figures of more than 6 percent,” noted Li Wenjun, head and senior vice-president, airfreight, for DHL Global Forwarding, Asia – Pacific.

One strong suit for the capital of Liaoning Province is its automotive industry base, with a clutch of local manufacturers besides General Motors and BMW and their respective tier-one and tier-two suppliers in the area. Forwarder DB Schenker has this vertical in its sights.

In May, it started construction of a dedicated logistics facility in the city, having signed a joint-venture agreement targeting this sector with Jinbei Automotive at the end of 2014. With a footprint of 45,000 square meters, the two-story building is the German logistics firm’s second-largest cargo facility in China.

Panalpina is another forwarder that sees large potential in Shenyang’s automotive base, and is looking to ramp up its presence there. “Shenyang is certainly an interesting airport for us, especially for automotive cargo, and we are in discussion with our preferred carriers, such as Lufthansa, to optimize routings from there to Europe and North America,” said Chee Sou Ping, Panalpina’s regional head of airfreight, Asia-Pacific. “We also believe that inland pick-up and delivery, as well as bonded transfer for cargo, ex-Shenyang via Beijing and Zhengzhou, can be improved further, regardless of the type of cargo. Here we are talking to the respective subcontractors.”

“With a mix of local and new automotive factories, in addition to many first-tier and second-tier automotive supplier plants in Shenyang serving the China domestic market, we expect to see more inbound volume for automotive going into Shenyang,” remarked DHL’s Li. He added that aerospace is another important industry in Shenyang that shows promising growth.

Hactl and the airport owner highlighted another sector when they announced their agreement. The latter has signaled plans to develop cool-chain and pharmaceutical traffic. As the first cargo handler in Hong Kong to obtain GDP accreditation, Hactl’s expertise in this field was apparently a strong attraction for the airport to join forces.

The reason for the pharma interest is the nearby home of Shenyang Pharmaceutical University, reportedly the first research institute in pharmaceutical sciences in China. According to business analysis firm Research and Markets, China is the world’s second-largest pharma market, globally, after the United States. In 2014, it generated some US$105 billion and is forecast to rise to $200 billion by 2020.

Currently, however, there are some drawbacks – the airport lacks the infrastructure and lift to live up to these lofty ambitions. It has only one runway and a single cargo terminal. The owners plan to add a second runway and two more at a later stage. For this reason, Shenyang’s airport plays only a modest role in pharma traffic. “There are some pharmaceutical flows, but the export volumes are not big. Pharmaceutical companies prefer to ship via Beijing because it offers more international connections and better infrastructure for temperature-controlled shipments,” said Panalpina’s Chee.

The existing setup at Shenyang is geared for belly freight. “Most connections in and out of Shenyang are passenger flights, so the infrastructure can only support normal cargo operations for loading, unloading and storage,” Chee added. “Any oversized or temperature-sensitive cargo still relies on the main gateways Beijing and Shanghai.”

Five Chinese passenger carriers currently serve the airport. Freighter operations at Shenyang – by China Postal Airlines and SF Airlines – concentrate on parcel traffic. “Most cargo to and from Shenyang still relies on the main gateways – Shanghai, Beijing and Zhengzhou. There are some direct flights, but they do not provide enough capacity for exports and imports,” Chee said.

Hactl CEO Mark Whitehead stressed that the development of Shenyang’s promise is still in its early stages. “We share the vision of the airport owners that Shenyang represents untapped potential, which is why we are enthusiastic to work with them on this project,” he said. “But we are at a very early assessment stage, and need to conduct some research and feasibility studies before we begin making projections or setting development work in motion.”

Tags: Chinachina postal airlinesDHL Global Forwarding Asia-PacificGood Distribution Practice (GDP)HactlHactl Development HoldingsmanufacturingPanalpinasf airlinesShenyang AirportTrade
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