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Suvarnabhumi » Future opportunities for Suvarnabhumi

Sunday, July 20th, 2008

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The serviceability and operability of Suvarnabhumi Airport and the proposed reopening of Don Muang are creating significant debate throughout the supply chain community.

The government is expected to make a clear decision whether to transfer part or all of the current operations back to Don Muang or to partially close the existing airport for repairs to runways, taxiways and some facilities.

For the many stakeholders involved in airport operations, there is much at stake: additional costs, relocation effort and planning, potential duplication of effort, increased costs of operating common infrastructure, synchronising transport and logistics activities between airports. For other groups, however, there are significant opportunities, particularly those operating transport and support services, as these are the functions that will increase the cost of undertaking business at both airports in parallel.

There is common agreement that the decision process required is complex, involves high risk/cost tradeoffs and will have a significant impact on the global supply chains of multiple organisations. At a time when Thailand is fighting to compete in the international market; cost control, delivery reliability and simplified logistics processes are critical. Most importantly, the way that Thailand deals with the various challenges will affect the perception of the international community.

In a recent news, the Thai Air Freight Forwarders Association (TAFA) raised concerns on the efficiency of Suvarnabhumi. These included increased delays and damage to produce, extended customs input times and multiple checks, complications in document handling and the longer times required to clear cargo arriving in passenger and freighter aircraft compared to previous operations at Don Muang.

According to Stewart Sinclair, managing director of Bangkok Flight Services, both cargo terminal operators (BFS and Thai Cargo) are now operating their import processes in a stable manner and measuring delivery performance key performance indicators (KPIs).

The current performance is similar (and in many cases better) than that experienced at Don Muang. For the import process, the average time between the arrival of cargo to the time containers are broken down and consignments stored ready for pickup is two hours for cargo arriving in passenger aircraft and four hours for freighters.

The initial plan for Suvarnabhumi was that all parties would utilise a totally integrated Aircargo Customs Community System (ACCS). Although similar automated systems are in use in other countries, ACCS was being implemented in an environment that had never been exposed to high levels of horizontal process and information integration across so many multiple players. The accelerated opening schedule, complex design and implementation requirements for ACCS precluded any effective integration testing and the system implementation was abandoned just weeks prior to opening.

This required freight forwarders, cargo terminal operators (CTOs) and customs to revert to semi-automated processes and use old-format EDI messaging, with which some new operators at the airport had no prior experience. This fall back situation resulted in freight forwarders and CTOs having to manually key in airway bill and consignment information to send to Customs.

Some integration challenges resulted in that not all information (such as the eight-digit Asean harmonised customs codes) was compatible with the existing seven-digit interface at Customs. This required the re-keying of missing information by freight forwarders. To its credit, Thai Customs subsequently sponsored and developed a much simpler e-Customs system to ease the burden of manual entry and streamline processes at the new airport.

The current system is still not optimal as freight forwarders and CTOs must manually key volumes of information to initiate the customs clearance process. This will be significantly improved once e-Customs is fully implemented in the next few months. Although the concerns of TAFA are noted, it is not clear where current delays are being experienced for imported goods.

In order put cargo operations at the new airport in perspective, let’s understand the process steps more clearly.

For imported consignments arriving by aircraft, freight forwarders and CTOs must first manually enter airway and clearance information to the customs systems. In parallel, inbound cargo is received from arriving aircraft; loads are broken down and located in the cargo storage systems. Normally within two hours freight forwarders are able to pick their consignments from the cargo terminal. Currently for BFS, 99% of all shipments are available to be picked up in less than the target of four hours.

According to Mr Sinclair, there has been a trend for forwarders to turn up at the cargo facility to pick up their consignments at a regular time (usually after 1 pm) regardless of the time of arrival of the aircraft – reinforcing the perception that delays are occurring.

For the export process, Suvarnabhumi cargo operators only see the start of the process once forwarders turn up to deliver their consignments and customs export permits are collected. There are Customs gate checks and product inspections. However, the original target for Customs was that only 10% of consignments were fully checked. The actual sample rate could be less depending on the available resources on shift at a particular time. On a busy day there are only small queues of vehicles waiting inspections – so it is likely that this process is working well. Once products are cleared for export, they are delivered to the cargo terminal for screening, loading and dispatch to aircraft.

For perishables, the Suvarnabhumi cargo terminal operators (both Thai Cargo and BFS) have established some of the best airport perishable facilities in the world. The entire process of perishable air-cargo export can be in undertaken in temperature-controlled facilities. More than 20% of all air cargo exports handled through BFS are perishables. BFS has 16,000 cubic metres of cold-room storage alone and is implementing a range of value-added cold-chain handling services.

Usually customs inspections are not undertaken for perishable exports, and quarantine inspections are carried out inside the cargo facility cold rooms, providing improved protection for inspected produce.

From BFS’s experience, a majority of perishable cargo arriving at their cargo facilities is within temperature tolerance. Ongoing improvements in cold-chain handling are under way to ensure fresh produce is protected from packing house to final destination.

Once the important decisions are made in relation to repairs and maintenance of the operational infrastructure at Suvarnabhumi, Thailand will be able to secure its position as a premier regional cargo hub. (Bkk Post – Barry Elliott/Chris Catto-Smith)

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