Chinese e-commerce is driving a surge in cargo traffic at Incheon Airport

Source: Incheon International Airport Corporation.

South Korea’s Incheon International Airport Corp (IIAC) predicts air cargo volume will double to 6 million tonnes this year as manufacturers reorganise their supply chains and strengthen their “China plus one” strategy.

IIAC said on Thursday that the airport, the main gateway to Seoul, is expanding as a link between China and the United States, resulting in an increase in demand for warehousing facilities from 1,000 square meters a decade ago to 20,000 square meters today – thanks to the airport’s role as a global distribution center for microchips and other strategic goods.

IIAC deputy general manager (logistics sales) Lim Hoon explained: “Under the China plus One program, there is a need for places to relocate cargo manufactured in China. Geographically possible locations include Taiwan, Hong Kong, Tokyo and Incheon.

“However, Sino-Taiwanese relations have deteriorated, and Hong Kong is politically close to China. While Tokyo is farther from China, Incheon is closer and the free trade zone is inland, so it is the most suitable location.”

In particular, he added, sea and air transhipments from China through IIA have increased. Last year, such cargo increased 43% year-on-year to 98,560 tonnes, and Chinese airports are the departure points for all but one of the IIA’s main transhipment routes, while eight of the top ten destinations are US airports such as Los Angeles and New York.

Mr Lim said: “In the second half of 2023, the main reason for the growth in sea and air freight was the growth in e-commerce cargo. This year, China Post started shipping cargo through Incheon, and we expect sea and air freight volumes to increase again.”

He acknowledged that there are doubts whether China’s e-commerce export sales can actually increase air cargo volumes, especially as the U.S. Customs and Border Protection has stepped up import inspections to check for duty evasion. This has reportedly caused Chinese retailers to refrain from chartering flights to the US.

Mr Lim said: “According to local studies, there is no full inspection, but there are differences by region. Cities like Los Angeles and Dallas have increased e-commerce inspections and we are seeing some backlogs.

“However, it is difficult to completely stop the flow of Chinese goods into the U.S. because consumers are familiar with Chinese e-commerce websites and goods. Moreover, Incheon filters out safety issues and dangerous goods, so it is safer than exporting directly from China.”