dentifying trends within airport cargo terminal design is complicated by the variety of projects and different circumstances around the world that affect their priorities. Nevertheless, a discussion with air cargo specialists Districon reveals a number of interesting patterns within this field, including the increasing importance of process optimisation within building designs; of third-party finance and developers; of flexibility of functions; and an increased desire for multiple options to be presented to clients.
Districon has been involved in air cargo terminal design projects across the world, with a client list that includes names such as BA World Cargo/IAG Cargo, Saudi Arabian Airlines and Luxair Cargo. Senior consultant Frank Rotteveel stresses that it is important to distinguish between the different types of customers for cargo terminals – for example, airlines at their hub versus airlines’ smaller, outer stations, where you have developments for dedicated third-party cargo-handling specialists such as Swissport or Menzies. Clearly there is also a difference between air cargo handling terminals that are connected directly to the apron, and the second-tier freight-forwarding facilities and cargo-village type projects.
“For the hub operations, where it is more of an airline product than a cargo-handling product, you see more emphasis on the quality and throughput; you see bigger investments because of different considerations; and you have higher levels of mechanisation,” says Rotteveel.
For example, if you look at the hub operations of Etihad, Qatar, or Emirates, or the new Cathay Pacific terminal in Hong Kong, these are multi-million dollar investments.
“No individual cargo-handling company will invest that sort of money without being backed by a hub carrier at a specific location,” Rotteveel says. “If you look at the dedicated cargo-handling operators, you tend to see ‘lean and mean’ processes, with open floor space as much as possible and limited upfront investments – to create flexible operations with low cost.”
There are also significant geographical variations. For example, in Asia and the Middle East there is more of a drive for mechanisation and automation, whereas in Europe the focus tends to be more on cost optimisation, efficiency and flexibility. And in the US, there is a tendency towards smaller, less-mechanised terminals.
Managing Director Frits Bisschop says: “In Europe and the Middle East, concession policy often limits the number of companies – whether the airline hub or independent handlers – having operations there, whereas the cargo handling market and the players are more fragmented in the US.”
EU policy also dictates that any airport of significant size has to have a certain amount of competition, whereas various different models apply in Asia. These factors obviously have an effect on the scale of projects, while other local factors also drive major differences.
Rotteveel says: “If you look at the space available, what you see in Asia at most airports is that there is quite a scarcity of land available next to the apron, and as a result you see the development of multilevel hubs. If there is more land available, you don’t go multilevel because it adds significantly to the handling costs per unit.”
The new Cathay Pacific terminal, for example, is eight storeys high, whereas in Europe, you see fewer multilevel buildings, except where space is a key factor, such as the IAG Cargo hub at Heathrow.
Another important factor is the regulatory framework, particularly the approach taken by the national customs and security authorities.
Bisschop observes: “In Europe, the regulatory framework is quite liberal, with limited screening, whereas in Asian countries the regulatory framework is a more dominant factor in your cargo handling processes. The design changes as well, because you need to allocate space, processes and capacity to the various government agencies.”
For example, in Europe you tend to have a risk-based approach with a modest physical inspection rate of shipments, whereas in certain countries in Asia it would be easily a double-digit percentage. In India, for example, it is the majority of the shipments.
Another key consideration is the volume guarantees contained in some airport concession tenders, usually where there is a scarcity of land, in which the airport needs to guarantee its cargo capacity for the future and only gives out concessions to cargo handling companies that guarantee a certain processing capacity. “This forces companies to create a design that will be able to handle that capacity,” says Rotteveel.
Some of these factors also apply to cargo village logistics parks or freight forwarding facilities, where land scarcity or capacity guarantee requirements may also push freight forwarders to build multi-level facilities or parking on the roof of a building, for example.
Economic downturn effects
One trend resulting from the recent global economic challenges has been a greater focus on efficiency and flexibility, with airlines trying to limit their investment. “This pressure has opened up the option of using third-party specialist logistics real estate developers, not only for more standard warehouses, but also on air cargo terminals,” says Rotteveel. In this model, airline customers would explain their requirements and the developer would finance and construct the shell.
“Airlines have recognised that these types of building, even if it is part of their hub concept, can be developed and owned by third parties.”
Back in the 1990s, material handling equipment suppliers were also more involved in the early stages of the design process, whereas now there is more focus on separating the conceptual design process from the suppliers of material handling equipment.
“If you look five years back, the share of general cargo was quite high, but we see much more specialisation now in terms of cargo,” says Rotteveel. “Many cargo terminals are now stuck with high levels of mechanisation and automation and cannot offer adequate specialised facilities for cargo such as perishables or pharmaceuticals because of the general cargo design that they have applied.”
Bisschop believes the best approach is to always start with open floor space, to give customers maximum ability to adapt to changing circumstances, only putting in mechanisation if it is needed. “Obviously, sometimes you do need some mechanisation and automation, but it is a different perspective that we apply,” says Bisschop.
But he acknowledges that there is no such thing as a single ‘best design’, and that you have to look at the external factors at any airport. “What we have learned is that more and more new terminal design initiatives will require discussion, analysis and evaluation of options. In one case you may have a more standard or generic model, and in another case you may come to the conclusion that you need to be more mechanised,” he says.
“Users of buildings want to discuss factors like the different types of cargo, the relative importance of different markets, process requirements, security requirements. These aspects are fully integrated in this analysis, and you will end up with a conceptual model that is tested economically. And from there you look at the more specific involvement of material handling options and the involvement of suppliers. But their involvement now tends to happen more after the conceptual design.”
Another trend has been the increase in the importance of process optimisation. “In the past it was bricks and mechanisation,” says Rotteveel. “Now it is bricks, mechanisation and very importantly process optimisation. You see all the initiatives on e-Freight, Cargo 2000, to standardise processes and to eliminate paper, and you also see high levels of automation – and by that I mean automation of the administrative processes.
“For instance, you see a big tendency at the larger cargo handling operations that you will not get truck access without any pre-arrival information,” he adds. “So what we see in our designs is that we spend more effort defining how we envision future air cargo processes, especially in relation to the external stakeholders, meaning the forwarders handing over their cargo, and the truckers. As a cargo handling company, you are always dependent on your stakeholders in terms of how efficient your cargo terminal is. So what you can influence you will try to influence, and Cargo 2000 and e-Freight are quite good instruments for that.”
Impact of regulators
While cargo handlers work with their partners on these elements, and the dream of flattening their peaks, another key question for future designs is how the regulatory environment will evolve, particularly security and customs regulations. “So for new cargo terminal designs, you see increased dialogue between the cargo handling agents and the customs authorities, on how to optimise the processes, with the maximum focus on limiting the delay the customs causes in your processes,” says Bisschop. “The shorter the dwell times of cargo in the terminal building, the higher your capacity will be, and so the higher the earnings you can have.”
The ideal scenario for a cargo handler is a free zone, where he has no working relationship with the customs authorities. “If you look at the various models of airports, you see that cargo is able to move freely between the first and second tier facilities – the cargo handling facilities and the forwarding facilities.” Examples of this include Beijing, Shanghai, Singapore or Amsterdam.
“The more activities that have to occur in the first line of the cargo handling agent, the more inefficient the capacity per square metre,” observes Bisschop.
The traditional approach of customs used to be to perform physical inspection, and the tendency for a number of years has been to create a more risk-based approach with less physical inspection.
“But in contrast you see a tendency from a security perspective that more physical inspections are required,” says Bisschop. “And if you look at future scenarios or contingency planning that we apply in our cargo terminal designs, there is a risk in the industry that you may have to screen transit cargo as well. So, a lot of cargo carriers are looking at their hub operations and preparing contingency plans for how to cope with that.”
Approach to future proofing
Future proofing for that kind of scenario is obviously quite a challenge. “We aim for flexibility and modularity in our designs,” Rotteveel says. “The biggest factor in creating a future-proof operation is flexibility, often resulting in less mechanisation, and if you put in mechanisation, you have alternative scenarios in terms of how to change it in due time.”
Terminals also need to be able to facilitate the increasing focus by airlines on the speciality products at the high end of the market – for example, pharmaceuticals, high-value perishables, express, and valuable goods.
“So you need to have a cargo terminal building which provides sufficient flexibility to reallocate space to specific processes,” says Bisschop.
“We design buildings with a grid, with limited columns and with limited fixed structures, so you can always change your building. If you create a shell like this, you can put in your cold rooms, or you can change or take out your cold rooms, without too great an investment.”