Singapore’s Aerospace Growth Supported by DHL

In today’s globalized economy, perhaps no other sector plays a more critical role than the aerospace industry in facilitating cross border trade and bringing communities together. Currently serviced by more than 15,000 commercial aircrafts globally, this sector transports over two billion passengers annually1. The Airbus Global Market Forecast predicted that between the period 2009-2028, 24,951 new aircraft (24,097 passenger planes and 854 freighters, as a mix of replacements and additions) will be delivered to the global fleet by 2028, which would have grown from a fleet size of 15,750 in year 2009 to 32,000 by end of year 2028.2

Asia holds the key to continued growth of the aerospace industry, underpinned by demand in fast growing regions such as China and India. Boeing has projected that the number of aircraft in service in the region will almost triple from 4,110 today to over 12,000 by 20293. In this same time period, the region is expected to become the largest contributor to the global airways, reaching more than 30 percent4 of total air traffic.

The projected rise in Asia passengers, emerging routes as well as freighter traffic results in increasing maintenance, repair and overhaul (MRO) activities in the region. A trusted logistics partner, such as DHL, hence plays a key role in enabling timely delivery of aircraft components to MROs and airlines in order to reduce delays and interruptions to service during scheduled and unscheduled maintenance.

The unique requirement of the aerospace industry calls for safe and efficient transportation of parts and components that is crucial to the overall aviation business. DHL has over the years acquired extensive knowledge of the industry and grown in providing turnkey solutions for the industry - from simple point-to-point transportation services through to complex supply chain solutions.

Singapore as Asia’s #1 Hub for Maintenance, Repair and Overhaul Services
Singapore is the largest Maintenance, Repair & Overhaul (MRO) hub in the Asia Pacific region and remains committed to developing the aerospace industry. For the last decade, the industry has been experiencing a Compounded Annual Growth Rate (CAGR) of almost 14 percent in the maintenance, repair and overhaul (MRO) and manufacturing sectors. According to the Singapore Aerospace Value Chain Study conducted, the lion city is expected to capture a significant market share from the MRO sector, with estimated total cumulative revenue of S$372 billion from 2010 to 20305. The MRO industry which provides jobs for 19,000 people, achieved a record output of S$7.1 billion in recent years. Accounting as much as 48 percent of the total MRO revenue, the engine overhaul sector is the single largest contributing segment. Other sectors such as the component repair, independent and airline MRO operators as well as OEMs accounts for 26 percent, 36 percent and 34 percent of the MRO revenue respectively.

Recognized as the preferred manufacturing investment destination for aerospace companies in Asia Pacific, Singapore possess the skilled labour force and capabilities needed to carry out comprehensive MRO services ranging from airframe maintenance, engine overhaul, component repair, structural and avionics system repair as well as aircraft modification and conversion. Singapore is also home to world-class aerospace design and original equipment manufacturers (OEMs) and suppliers, with products like engine casings, engine gears, electrical power systems and galley equipment all designed and manufactured within its borders.

Strong intellectual property (IP) rights coupled with a sustainable business environment, the aerospace industry in Singapore is set to take on new heights with the Seletar Aerospace Park – a world-class integrated aerospace facility – which, besides MRO, will play host to manufacturing and other business activities. Major aerospace companies are also establishing R&D centres here to tap into Singapore’s talent base, strong intellectual property programme, cost-competitive commercial environment and dynamic research infrastructure6. Singapore’s connectivity to the rest of the world, the nation is well poised to capitalize on the air traffic growth which is expected to exceed seven billion passengers by 20207.  
 
Challenges faced by the Aerospace Industry in Singapore
With growth and expansion experienced by the Aerospace Industry come challenges and uncertainties. The aerospace industry constantly faces volatile externalities such as rising and unstable operation costs, air-worthiness issues and high levels of regulatory controls.

Cost reduction and faster turnaround time of MRO services are some measures to address these challenges. MRO service providers are constantly required to reduce costs, improve turnaround time, while maintaining performance levels and adherence to regulations. Hence an effective supply chain performance will greatly influence the effectiveness of maintenance operations

According to Airbus, the cost for a plane to be grounded for technical reasons is €925,000 per day. A grounded aircraft is not only non revenue generating but the cost incurred will eat into the profits as well. Airline companies cannot afford to have a single aircraft from their fleet grounded at any point of time. As the traditional MRO model is being challenged, the ability to ensure rapid delivery of time-critical spare parts to a waiting aircraft is important in helping to yield substantial cost saving, increase efficiency, improve competitiveness and reduce Aircraft on Ground (AOG) downtime

DHL established its Aerospace Hub in 2007. The one-stop Aerospace Hub sees all three business units – DHL Supply Chain, DHL Express and DHL Global Forwarding, working closely together to provide the broadest end-to-end supply chain services, from having a dedicated aerospace warehouse, to delivering critical spare parts around the world, and having a devoted AOG Asia Pacific call centre that operates 24/7.

Faced with cost pressures, manufacturers need to transform and streamline their manufacturing logistics system, from managing inbound flow of materials from collection points (at their component suppliers’ facilities) to the consumption points (in their production facilities), in order to remain operational and cost efficient. As the world’s leading supplier of Logistics and Supply Chain services, DHL is well-positioned throughout the value chain to provide end-to-end supply chain management, giving customers the competitive edge.

 Achieving the industry’s most highly recognized accreditation for quality assurance - AS9120 and ISO, DHL provides customers with the highest level of service and logistical solutions that meets the stringent safety regulations and quality standards set. DHL continues to engage its customers to ensure that the company’s quality approach is closely aligned with their own. Testament to DHL’s focus in delivering quality service, the company was accorded the “Aerospace Logistics Company of the Year” at the 2011 Frost & Sullivan Asia Pacific Aerospace & Defense Awards8 for the second consecutive year.


1. http://www.saa.com.sg/saaWeb2011/export/sites/saa/en/About_Us/downloads/Managing_Airspace_Civil_Military_Aviation.pdf
2. http://www.logasiamag.com/article/aerospace-logistics/1874
3. http://www.boeing.com/commercial/cmo/pdf/Boeing_Current_Market_Outlook_2010_to_2029.pdf
4. http://www.centreforaviation.com/files/analysis/11400/2028 Forecast_Airbus.pdf
5. Singapore Aerospace Value Chain Study, Association of Aerospace Industries (Singapore), September 2009
6. http://www.kallman.com/shows/singapore_airshow_2012/aero_industry_development.pdf
7. http://www.airports.org/aci/aci/file/ACI Worldwide Air Transport Executive Summary.pdf
8. http://en.prnasia.com/pr/2011/06/07/110140612.shtml