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May 13, 2008, issued by: IIAC

Information Memorandum

Incheon International Airport FTZ : A True World-Class Logistics Hub

New Air Cargo Service to ICN Request for Expression of Interest

Table of Contents

1 Purpose of the Information Memorandum ___________________________ 1

2 Introduction of Incheon International Airport_________________________ 2

2.1 Excellent Geographical Location & Network _____________________________________ 2

2.2 Incheon Int’l Airport Free Trade Zone __________________________________________ 6

2.3 Airport LogisPark(ALP) __________________________________________________ 10

2.4 Cargo Terminal Area (CTA) _________________________________________________ 15

3 Incentives ____________________________________________________ 16

4 Response Form_________________________________________________ 4

5 Contact Information ____________________________________________ 19

Appendices

1. Current & Future Market Analysis _________________________________ 21

2. Voice of the Airlines _____________________________________________ 4

1


1. Purpose of this Information Memorandum

The purpose of this Information Memorandum is to provide you the information about Incheon Int’l

Airport Free Trade Zone, which gives the most convenient and competitive business environment to

you.

Airport LogisPark (ALP)

Disclaimer

This Information Memorandum is issued solely for information and planning purposes and

does not constitute a formal invitation to bid, nor is it binding on either party. Responses to

the RFEOI will not be returned. Please note that IIAC cannot reimburse any expenses

incurred in responding to this RFEOI.

2


2. Introduction to Incheon International Airport

2.1 Excellent Geographical Location and Network

Incheon International Airport(hereinafter, ICN) is the gateway of Northeast Asia, located in the

Republic of Korea. Strategically located between China and Japan, ICN lies at the center of a giant

market that has 1.5 billion people and 61 cities with population over a million people within 3 hours’

flight from ICN. Furthermore, the Northeast Asian region accounts for 20% of world GDP and 27% of

the world logistics volume. Korea’s economy has a prominent role in the region, with a GDP which is

currently 12th largest in the world.

Free Trade Agreement (FTA) between the USA and Korea, concluded in April 2007, will eliminate

tariffs and other barriers to trade, promote economic growth, and strengthen economic ties between

the two countries. Ties with EU market will also be fortified with additional FTA between EU and Korea,

which is under negotiation now.

Figure 1: A potential market of 1.5 billion people (Source: IIAC)

• World’s 2nd largest cargo airport

• 2005, 2006 & 2007’s winner of

the ACI Service Excellence

Award as “The Best Airport

Worldwide”

• The Best Connectivity in North

Asia : 70 airlines Connect 167

cities

• Non-stop service to North

America

• Key Gateway to & from China

with high service and labor

quality guaranteed

• Bridge between North Asia &

South Asia

3


Although it only began operations in 2001, ICN has experienced rapid growth: passenger and cargo

volume have increased with a cumulative annual growth rate of 8% and 9% respectively, while aircraft

movements have seen an average annual growth of 16%. It offers currently the best global network in

Asia, connecting 169 cities including Latin America with 69 airlines.(As of August 2008)

Japan26 cities

China35 cities

Europe26 cities

Asia32 cities

MiddleEast

8 CitiesAfrica2 Cities

NorthAmerica24 Cities

Austrailia5 Cities

Figure 2: ICN global network (Passenger and cargo flights) (Source: IIAC, Dec. 2007)

Figure 3: Number of Cities served(compared with Hong Kong/Singapore/Shanghai Airport)

49

24

34

26

35

58

11109

36

79

912417

28

911

17

41

0

20

40

60

80

100

120

140

160

180

ICN HKG SIN PVG

China

Japan

Europe

North America

Others

4


There are 25 dedicated cargo airlines such as FedEx Express, UPS, DHL, Polar and Atlas Air serving

at ICN.

Figure 4: Major cargo airlines operating at ICN.

ICN the 2nd largest international cargo airport by tonnage. ICN’s cargo transshipment rate

has steadily increased and currently reached 50.6%. Its facilities rank 1st in terms of service levels,

winning ACI Service Excellence Award as “The Best Airport Worldwide” for 3 subsequent years ; 2005,

2006 and 2007.

22000055

22000066

“Best Airport Worldwide” in ASQ Servey by ACI

§ Best Airport Worldwide

§ Best Airport Asia Pacific

§ Best Airport over 25 million passengers

§ Most Improved Airport “Best Airport Worldwide” in ASQ

“Award of Excellence” by ATRS

“Readers Travel Choice Awards” by Time Magazine

“Airport of the Year” by CAPA (Center for Asia Pacific Aviation)

22000077

“Best Airport Worldwide” in ASQ (3 consecutive yrs)

“World Best Airport” by OAG (Official Airline Guide)

“World Best Airport” by Global Travel Magazine

“World Best Airport” by Global Travel Magazine

22000088 “Eagle Award” by IATA

“Best Airport Worldwide” in ASQ (4 consecutive yrs)

5


Korea has “Open Sky” agreements with 28 countries including China, Japan, India, USA, Germany,

Vietnam and Malaysia and bilateral agreements with many others. Korea also plans to reach

liberalization with the EU, Russia, Philippines and other countries with sufficient air transport demands

in order to secure the status that benefits the world’s 8th largest air transport country.

Figure 5: ICN has the best connectivity to Japan and China

Table 1 : Cargo Capacity of ICN

6


2.2 ICN Free Trade Zone

IIAC is operating Free Trade Zone, which consists of Cargo Terminal Area(CTA) and Airport

Logispark(ALP). Total area of FTZ is 2.1 million ㎡. IIAC wants to invite promising value added

companies in the manufacturing and logistics industries to FTZ. With the state-of-the-art facilities and

networks, IIAC is ready to support the dynamic needs of companies and to enhance competitiveness,

quality and customer service level and to reduce cost.

Figure 6: ICN Free Trade Zone consists of Cargo Terminal Area (CTA) and Airport LogisPark (ALP)

Figure 3: Airport layout (Source: IIAC)

Traffic Statistics

IInntteerrnnaattiioonnaall PPaasssseennggeerrss aanndd CCaarrggoo,, WWoorrlldd NNoo..1100 aanndd NNoo..22 ((22000077))

31 million int’l PAX, 2.6 million tons of int’l Cargo

211 thousand int’l flights operations

Highest transshipment rate in the region (50.1%)

Operating Free Trade Zone comprised of Cargo Terminal and Airport LogisPark

475 2 5 3 5 5

5 96 3

69 7 1

0

20

40

60

80

2001 2002 2003 2004 2005 2006 2007 2008

0

500

1000

1500

2000

2500

3000

3500

2001 2002 2003 2004 2005 2006 2007

PA

X(X

10

,00

0)

PAXCargo

Number of airlines Operating at ICN PAX & Cargo

Occupied

Unoccupied

Cargo (X1,000 tons)

7


2.2.1 Advantages of Airport Logispark (ALP)

Fast & Easy Customs Clearance

• ICN customs office operates a 24 hour customs clearance system called UNI-PASS. This system

can handle all types of customs clearance procedure automatically in a singe window.

• It takes less than one hour to clear imported goods. This system is the fastest among 169 members

of the World Customs Organization.

Figure 7 : The fastest customs clearance system among the 169 members of the World Customs Organization

Table 2 : Customs Clearance Systems od Major Countries

Simplified Int’l to Int’l Re-export Customs Procedure

The required time for customs clearance for by-passing cargoes is considerably short for the

manufacture’s hub operation. Bill of Lading (B/L) split & mergence for re-export, especially required

for Bonded Warehouse Transaction, are removed, and improved for 3PLs to paperless clear the

goods to be re-exported followed by “Use and Consumption Declaration”

a b A B C

Order

(a, A, B)

B/L

a A B

Re-export Declaration(paperless)

+Load & Ship

Time Taken

1.5 hrs

Use/Consumption

Declaration

Inventory Repackaging

B/L (1)

B/L (2)

a b A B C

Order

(a, A, B)

Split &

Combine

B/Ls

B/L (3)

a A B

Re-exportDeclaration

(Document Submission & inspection)

Load

&

Ship

Time Taken

Approx. 4 hrs


As-Is

As-Was

8


Comprehensive multimodal transport system

• ICN is the center of the comprehensive multimodal transportation system. ICN is able to provide

intermodal transportation system between China and Korea, such as Sea& Air and Air& Sea with

the combination of Incheon Port.

• In case of China, cargo from and to ICN can be delivered via Road Feeder Service (RFS)

Truck

TransportationLoad

truck &

car ferry

Truck Transportation

Move to

Destination

Airport

Capable of providing two-way service between Korea-China, China-Korea.

Truck

TransportationLoad

truck &

car ferry

Truck Transportation

Move to

Destination

Airport

Capable of providing two-way service between Korea-China, China-Korea.

Reasonable Operating Cost

Incheon Airport provides the lowest operating charges.

Figure 8 : Operating costsat Major Airports

(1) Based on 1 full cycle processing (unload – terminal processing – load) of 100 tons of cargo

(2) Total charge paid by airlines for a 3 hour turn-around flight of B747-400

(3) Assumption that airport usage fee is equivalent to Shanghai; data unavailable for Beijing

(4) Ground handling fee includes USD 15,000 that is transferred to the shipper

Source: Booz Allen Hamilton (Ground Handling Fee), IATA (Airport and Air Navigation Charges), IIAC (Airport Usage Fee, 2007),

Asahi newspaper

6,155

ICN PEK (3) NRT HKG (4) KIX PVG

Ground Handling Fee (1) Airport Usage Fee (2)

USD

6156

7,568 9,959

17,354 17,249 23,300

4,266 6,043

9,126

4,791 8,892

6,043

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

11,834 12,198

19,085

22,145

26,141

29,343

9


Excellent workforce and supporting IT infrastructure

• Korea’s workforce is highly productive, highly educated (97% possesses college education or

vocational training background) and very job-committed, more skilled than China and more cost

competitive than Japan. In addition, Korea is backed by a superior telecommunication and IT

infrastructure which has become a global benchmark.

Firm vision, mission and commitment of central government and ICN

• Incheon Airport established a long-term logistics roadmap to develop into a true world- class

logistics hub, bolstered by strong determination of government.

-Thomas Held, former CEO of Schenker

ICN PVG SIN HKG

Ground

Rental Cost

(/sqm/year)

USD 7 USD 8 USD

15.97

N/A

Distance to

Airport

Inside

the

28km

to PVG

Inside

the

N/A

Process

Efficiency

High Low High High

Costs in case of 5,000m2, 30,000 tons

during slack season for a year

(thousand

HKG SIN

* Assumption that ICN’s air tansport charge is

USD 3 for 1 kg.

0

9,000

11,000

ICN

112,520

97,200+

100

13,000

: Ground Rental

:Air Transport Charge

90,0

Estimate

5 54 80

Air Transport Charge(Direct Flight to LA)

PVG

Figure 9 : Operating Costs at Airport LogisPark

Ground Rental Fee for Transfer Cargo

ICN PVG SIN HKG

To LA 100 140 N/A 113

To Frankfurt 100 132 125 127

* Assuming Incheon as 100 in 2007.

* No direct flight from SIN to LA.

10


2.3 Airport Logispark (ALP)

Figure 11 : Airport LogisPark

Lot No. Size (m2) Company

A2,A2-1 25,303 Pantos

A3 38,347 Korean Duty-Free Association

B1 79,083 Incheon Int’l Logistics Center

B2 8,892 Samsung Logitec

B3 9,052 K.W.E. Korea

C1 5,363 Britestone

C4 6,986 Hyundai Logistics

D1~D6 52,695 Neo Semitech

F1~F4 65,706 AMB Property

G1, G7 21,608 Daewoo Logistics

G2 6,973 Haewoo Logistics

G3 10,000 Schenker Korea

G4 6,531 Hanaro T.N.S.

G5 9,580 Incheon Air Cargo Center

G6 9,464 Baekma Cargo

Total 355,583 (Occupancy ratio: 76%)

G4 G5

G3

E2(16,743)

E3(19,246)

E1(16,604)

C7(16,322)

C5(6,685)

C3(9,545)

C2(6,711)

A2-1

G6 G7

G1

F1 F2

F3 F4

D1D2 D3

D4

B9 D5

B1

B3 B2

A2

A3

G2

C6(13,799)

PublicFacilities

C8

D5(16,368)

D6(9,640)

C4(6,986

)

Leased out

To be leased

A1

C1(5,363)

Lot No. Size (m2) Company

A2,A2-1 25,303 Pantos

A3 38,347 Korean Duty-Free Association

B1 79,083 Incheon Int’l Logistics Center

B2 8,892 Samsung Logitec

B3 9,052 K.W.E. Korea

C1 5,363 Britestone

C4 6,986 Hyundai Logistics

D1~D6 52,695 Neo Semitech

F1~F4 65,706 AMB Property

G1, G7 21,608 Daewoo Logistics

G2 6,973 Haewoo Logistics

G3 10,000 Schenker Korea

G4 6,531 Hanaro T.N.S.

G5 9,580 Incheon Air Cargo Center

G6 9,464 Baekma Cargo

Total 355,583 (Occupancy ratio: 76%)

G4 G5

G3

E2(16,743)

E3(19,246)

E1(16,604)

C7(16,322)

C5(6,685)

C3(9,545)

C2(6,711)

A2-1

G6 G7

G1

F1 F2

F3 F4

D1D2 D3

D4

B9 D5

B1

B3 B2

A2

A3

G2

C6(13,799)

PublicFacilities

C8

D5(16,368)

D6(9,640)

C4(6,986

)

Leased out

To be leased

A1

C1(5,363)

ALP was established and started operating in March 2006. It is located in the FTZ, on the east side of

the two runways and cargo terminal area. Total area of ALP is 992,000 m2 and 636,417 m2 is to be

leased out. IIAC owns and lease the land to companies for their business implementation. Currently,

the occupied rate of ALP is 76% (355,583m2).

Table 3 : Airport LogisPark Leasing Specification

11


l Space: 8,907sqm

l Height: 14.5m

l Located at Terminal Area

IIAC WarehouseIIAC Warehouse

l AMB : Global top 3 Investment and Leasing Company

l Space: 36,000sqm

l Height: 12.4m

A M BA M B

l Kintetsu World Express

l Space : 8,877 sqm (F1~F2)

l Schenker : Global top 2 Air Logistics Company

l Space: 19,946 sqm (B1~4FL)

l Height: over 10m

K W EK W E

SchenkerSchenker

l Pantos : Korea’s Top Air Logistics Company

l Space: 7,162sqm

l Height: 15m

PantosPantos

Table 4 : Warehouse Facilities in Airport LogisPark

2.3.1 Business Models for the investors (logistics companies) With the exemplified businesses below, right in the heart of the emerging Northeast Asia economy,

you can create new values and revenues in response to customer’s needs, which enables you to

enhance business competitiveness and customer service level in terms of cost, quality and speed.

Logistics business

• Global sourcing center : You can optimize your supply chain and by establishing global

sourcing center at ICN along with competitive multi-vendor, for instance, sourcing general parts

from China, and cutting-edge parts from Korea & Japan. In case of this, you can also reduce the

cost and add value by using the advantages of FTA.

• Global distribution center : Transport whole products from production site (located in China,

Vietnam etc.) to ICN global distribution center, perform total inventory management and distribute to

overseas dealer at the point of order, without any loss that can be generated from quick price

change.

12


• Value-added logistics : You can perform item sorting, light assembling, labeling, packaging and

other value-adding activities in addition to traditional distribution activities.

Manufacturing business

• Postponed manufacturing : In order to reduce inventory cost and improve efficiency of total supply

chain, you can postpone production or distribution at ICN, corresponding to an instant demand and

need, with ICN’s minute transportation network, swift customs clearance and customized logistics

system.

• Light Manufacturing : Airport is the best place for products which demand quick distribution. You can

perform light manufacturing (eg. assemble modules to end product)at ICN and transport in/out

Korea in no time. Additional heavy manufacturing, however, is also possible as long as swift

distribution is required.

• Convergence of IT, BT, NT : With backgrounds of Korea’s diversified industries, high-educated work

force and world best IT power, you can develop convergence of your cutting-edge technologies with

other brand-new IT, BT, NTs.

• Point-working by partnership : In Korea, as home of corporate giants, you can easily find your

business partners with least efforts and interchange high technologies backed by thorough

protection of intellectual property.

Case Study ) ASML’s Asia Distribution Center in Incheon

About ASML

Headquartered in Veldhoven, the Netherlands, ASML is the world’s leading provider of lithography

systems for the semiconductor industry, manufacturing complex machines that are critical to the

production of integrated circuits or microchips.

Hub Operation Plan

Currently, ASML’s spare parts warehouses are situated in Singapore and Taiwan. However, they

have planed to operate a kind of consolidation warehouse and surveyed to seek a right place in the

Asia since August, 2007.

- Candidate Countries: ROK, Singapore, Hong Kong, Taiwan, China

13


Requirements of Hubbing Operation

v Existence of big customers in Korea ○

vExistence of global 3PLs in Korea (or Incheon FTZ) ○

vCustoms procedures for Int’l to Int’l trade

- Item (peaces)-based clearance

- A bulk license of Compliance Program for strategic goods

Ⅹ

vExcellent aviation connectivity (for minimizing lead time) ○

vAccessibility to ASML’s customers ○

vNon-taxation on a DC operating firm under foreign jurisdiction who uses 3PLs in Korea

Ⅹ

Incheon Airport

ASML’s requirement was like above. Incheon has big customers like Sansung and Hynix, and

Global 3PLs in the Airport Logispark. And Incheon was at the center of Giant Northeast Asian semi

conductor market. Below is the distance analysis of ASML

Incheon (INC)

Product Transport Route

Tokyo (TYO)

1,190kmShanghai (PVG)

851km

Beijing (PEK)

946km

Kuala Lumpur

(KUL) 4,590km

Taipei (TPE)

1,470km

: Customer PlaceNote : Supply form HQ is not

considered in this case.

Incheon (INC)

Product Transport Route

Tokyo (TYO)

1,190kmShanghai (PVG)

851km

Beijing (PEK)

946km

Kuala Lumpur

(KUL) 4,590km

Taipei (TPE)

1,470km

: Customer PlaceNote : Supply form HQ is not

considered in this case.

3,421 3,5213,759

4,178

6,198

3,401 3,422 3,691 4,038

5,784

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

ICN PVG TPE HKG SIN

3,421 3,5213,759

4,178

6,198

3,401 3,422 3,691 4,038

5,784

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

ICN PVG TPE HKG SIN

Figure 10 : Total Distances from each airports in Asia

- Destination : Incheon, Shanghai, Beijing,

Taipei, Tokyo, Kuala Lumpur

Arithmetic Average Transport-weighted Average

14


Incheon met almost every requirement of ASML but failed to meet 2 conditions. First, it needed

shorter customs clearance time and simplified procedures for the int’l to Int’l re-export. So Incheon

Airport Corporation’s dediated team negotiated with the National Customs Authority and finally

removed Bill of Lading (B/L) split & mergence for re-export, especially required for Bonded

Warehouse Transaction.

a b A B C

Order

(a, A, B)

B/L

a A B

Re-export Declaration(paperless)

+Load & Ship

Time Taken

1.5 hrs

Use/Consumption

Declaration


B/L (1)

B/L (2)

a b A B C

Order

(a, A, B)

Split &

Combine

B/Ls

B/L (3)

a A B

Re-exportDeclaration

(Document Submission & inspection)

Load

&

Ship

Time Taken

Approx. 4 hrs


As-Is

As-Was

ASML’s second requirement was “Non taxation on DC operating firm under foreign jurisdiction who

uses 3PL in Korea. So Incheon Airport team met “Ministry of Strategy and Finance” to solve this

problem and finally got the progressive ruling by MOSF

üWas a taxpayer as

regarded their 3PL

warehouse as their fixed

business facility.

üNo taxation bilateral

agreement between ROK

and HK

As - IsAs - Was

cooperation with National Tax Service,

etc.

üNot a taxpayer if they uses

3PLs in Korea only for simple

warehousing, repackaging,

and delivering the goods they

have imported and exported.

15


2.4 Cargo Terminal Area (CTA)

The CTA is located in the FTZ, east of the 3 runways. It consists of 5 cargo terminals and provides

ample space with 36 cargo aprons. It currently covers a total land area of 1.10 million m2 (to be

expanded to 2.15 km2 by 2015.

Table 4 : Cargo Terminal Area specifications

Company Size (m2) Capacity (ton)

Korean Air Cargo 54,600 1,200,000

Asiana Cargo 50,400 1,110,000

Foreign airlines 77,700 780,000

AACT(Atlas Air Cargo Terminal) 11,250 200,000

International Post 29,724 350,000

American Army Post 1,516 20,000

DHL 9,454 220,000

Air cargo warehouse 16,180 120,000

Total 250,824 4,000,000

The CTA provide logistics companies with an excellent environment to operate in:

• Superior cargo handling service level: in order to provide the fastest and most predictable cargo

handling service, ICN introduced a continuous service improvement program, ensuring a better

service quality than those of other leading airports.

Table5: Cargo Performance Index

16


3. Incentive Programs

a) Tax Incentives

If you invest over USD 10 million as a manufacturing-based company or over USD 5 million as a

logistics / SOC company, the following incentives will be granted.

b) Land lease incentives

Below are the prevailing land lease incentives based upon investment capital:

c) Others

- Goods can be used or consumed in the FTZ without having to pay customs duty

- Supply of goods or services within the FTZ is exempted from imposition of value-added tax

17


4. Response format

Those who received this Information Memorandum are invited to submit an expression of interest

(EOI) for:

• Leasing of the unoccupied land plot(s) at the ALP, as indicated in Figure 6, stating the land plot

number(s) or the ground surface area they would like to lease as well as the desired land use

period.

And/or

• Leasing of the unoccupied building property owned by AMB, including the desired property use

period.

In addition, you are requested to submit EOI materials that illustrate your company’s strength,

competence, and experience in the manufacturing, assembly or logistics industry.

All EOIs will be received by Incheon International Airport Corporation(IIAC) and IIAC will respond with

all the support for companies to start business at ICN.

It is recommended to make a site visit before submitting the EOI. IIAC could offer a site invitation at

the stage of finalizing the lease agreement.

18


Table 6 : Example of response format

General information

Company

Industry Revenue

Name

Title

Division

Address:_____________________________________________________________________

City:_______________________________ State/Province:_____________________________

Country:____________________________ ZIP: _____________________________________

Tel

Fax

E-mail address

Expression of interest

Degree of interest □ We are considering on long-term basis.

□ We are comparing with other candidates.

□ We want to start business now.

Planned business □ Manufacturing □ Whole Sale/Retail □ Logistics □ Others

Planned activities □ Global sourcing center □ Global distribution center

□ Integrated service hub □ Value-added logistics

□ Postponed manufacturing □ Light manufacturing

(if others, describe activities please)

Investment type □ Land lease (construction of your own facility)

□ Building lease (use of AMB owned property)

□ Use of logistics tenants in Free Trade Zone

□ Others

Investment amount

Land plot number

(*in case of land lease)

Use period

19


5. Contact Information

Responses to this Information Memorandum are to be submitted, either by e-mail or post, to:

Gene Kim

Logistics Team/Hub Strategy Division

2850 Unseo-dong, Jung-gu, Incheon

400-700, Republic of Korea

TEL +82 32 741 2277

FAX +82 32 741 2329

e-mail [email protected]

20


Appendices

21


1. Current & Future Market Analysis

Figure 8 depicts the worldwide cargo traffic growth rates for 2005-2025. Growth of cargo traffic from

and to Asia outstrips growth of cargo flows between other regions. Obviously, China plays an

important role in realizing this growth in cargo traffic. ICN is located right next to this enormous market

and offers more connections to China than any other airport. (Hong Kong International Airport has the

largest number of connections, but does not have the advantage of connecting to China for non-

Chinese airlines due to absence of cabotage). As such, ICN can serve as a consolidating point for

traffic in the Asian region, thereby neutralizing the imbalance in inbound and outbound traffic volume.

6.9%

8.6%

5.3%

5.0%

5.4%

3.8%

7.1%

5.6%

Intra

Asi

a

North America

IntraIntra

Europe

Europe-Asia

Asia - North America

Europe -North America

North America -Latin America

Europe –Africa

ICN

6.9%

8.6%

5.3%

5.0%

5.4%

3.8%

7.1%

5.6%

Intra

Asi

a

North America

IntraIntra

Europe

Europe-Asia

Asia - North America

Europe -North America

North America -Latin America

Europe –Africa

ICN

Figure 11: Average worldwide annual air cargo traffic growth rate for 2005-2025 (Source: Boeing Air Cargo Market Forecast

2006-2007)

22


Figure 12: ICN as a consolidating point for air cargo

The growth in cargo volume has been mainly driven by steady increase of both imports into Korea as

well as transit cargo (see also appendix II.c). Main transit cargo regions are the Americas (30.5%) and

China (22.7%). Although exports have slightly decreased in 2006, Korea itself provides plenty of back-

haul market opportunities as an exporter of high value products such as semiconductors, flat-panel

TV screens and cell phones.

Japan

12.9%

China

22.7%

Southeast

Asia

17.7%

Americas

30.5%

Europe

13.4%

Oceania

1.2%

Other

1.5%

Figure 4: Transit cargo volume specified by region for 2006.

Rationale for Northeast Asia Consolidating Point

• Cargo flow to/from secondary regions in China will continue

to grow at around 20~30%

• May be inefficient to serve secondary regions directly from

the US/EU and intra Asia hubs

• Today Chinese logistics operations lack infrastructure and

reliable operations practices

• Chinese regions prefer to ship outside of China, rather than

via points within China

Advantages

• Using consolidating point can neutralize significant

imbalance in inbound and outbound flow of air freight volume

• Can increase flight frequency and load factor

ICN as a consolidating point for air cargo

China ICN

Europe

US

Intra Asia Hub

23


2. Voice of Logistics Companies

“Most industry observers agree that Asia will continue to outpace the rest of the world in the growth of

new air cargo traffic. Incheon is a critical hub for transpacific and intra-Asian air cargo traffic, and it is

a frequent gateway of [Atlas sister] Polar Air Cargo and other air carriers for air cargo service to Hong

Kong, Shanghai and Beijing.” William Flynn, President and CEO Atlas Holdings. June 2007

“Our commitment to South Korea is largely driven by customer needs arising from a steady flow of

trade volumes into and out of South Korea. We are confident that our robust network infrastructure, as

well as our upgraded facilities, will not only serve the increasingly sophisticated needs of our

customers, but will enable us to actively enhance our role as a trade facilitator to improve trade links

between South Korea and the rest of the world.” Scott Price, CEO DHL Express Asia Pacific.

November 2006

“The dynamics [in this region] will continue to provide good demand for widebody introduction,”

William Flynn, President and CEO Atlas Holdings. June 2007

"The decision to add new frequencies is evidence of our commitment to the Korean market and

demonstrates our confidence in a revival of the Korea economy. FedEx will continue to provide the

most reliable and fastest express service to our customers in Korea." David L. Cunningham,

President FedEx Asia Pacific. January 2004

“Our new nonstop flight to Seoul will expand Delta’s service to Asia and support the establishment of

Incheon as one of Asia’s premier hub airports. The added freight capacity to and from the U.S. will

also benefit freight forwarders and cargo shippers around the world.” Glen Hauenstein, Executive

Vice President of Network and Revenue Management Delta Airlines. June 2007

Shanghai is full. Seoul is a better option for regional hub status. As a hub, Korea definitely plays an

important role, […] pointing to the presence of strong air and ocean carriers, a well-developed

infrastructure and its location. We use Korea very much as a hub. We have a lot of cargo from

Southeast Asia going through Incheon." Charles Kaufmann, Director DHL Global Forwarding

North Asia. April 2006

incheon international airport ftz : a true world-class ...aircis.kr/upload/011 information...

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