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Commentary: Can Singapore be a major COVID-19 vaccine transshipment hub and save its aviation industry?

The share of COVID-19 vaccines that land in Singapore and utilise the cold chain equipment of Changi’s cargo handlers may ultimately be very small, says Brendan Sobie.

Commentary: Can Singapore be a major COVID-19 vaccine transshipment hub and save its aviation industry?

Pharmaceutical shipment being loaded on a Singapore Airlines plane. (Photo: Singapore Airlines)

SINGAPORE: Transporting COVID-19 vaccines will boost cargo revenues for airlines and airports globally but this will not be sufficient for Singapore’s aviation industry to return to profitability.

The cold chain facilities at Singapore Changi Airport are state-of-the-art, enabling the handling, storage and transshipment of vaccines.

They are also large enough to enable Changi to serve as a regional distribution centre for vaccines.

However, the share of COVID-19 vaccines that land in Singapore and utilise the cold chain equipment of Changi’s two cargo handlers, dnata and SATS, may ultimately be very small.

Based on an estimated two doses per person, Singapore’s small population means only about 10 million doses will be required for local use compared to over 8 billion doses required to immunise all of Asia Pacific.


Singapore therefore needs to attract vaccine shipments heading to other countries to achieve significant market share but most Asia-Pacific countries are keen to fly the vaccines they have purchased directly to their own international airports, preferably using their own flag carriers.

READ: Commentary: China’s COVID-19 vaccines have gone from lab to public at breakneck speed. Are they safe and effective?

Singapore's Transport Minister Ong Ye Kung acknowledged during a CNA interview on Dec 11:

I believe for many countries they will prefer a direct flight so faster delivery.

However Mr Ong added: “There is a limit to that. At some point you need a hub-and-spoke delivery system.”

Singapore could in theory be well-positioned for handling vaccines heading to emerging markets in Southeast Asia such as Cambodia, Indonesia, Myanmar, the Philippines and Vietnam 

However, these countries are likely to mainly source vaccines from nearby countries, namely China and India, making a stop in Singapore unnecessary.

READ: Commentary: Should COVID-19 doses be split to cover more people?

Chinese airlines are particularly well-placed to carry Chinese-manufactured vaccines with direct flights from China to primary, secondary and even tertiary cities in Southeast Asia without the need of an intermediate stop.


Even though distribution will be a challenge in many areas of Southeast Asia – given the geography and remote location of villages, which in many cases are several hours from the nearest airport – this complex logistical issue will be tackled at the local level with surface transport.

Workers unload a container containing experimental coronavirus vaccines made by Chinese company Sinovac from the cargo bay of a Garuda Indonesia plane at the Soekarno-Hatta International Airport in Tangerang, Indonesia, on Dec 6, 2020. (Indonesian Presidential Palace via AP) ADDITION Indonesia Vaccine

For other regions that Changi has traditionally served as a hub for, such as Australasia, vaccines can also be flown directly and likely to be done so by the national carriers of these countries.

Major airlines and airports throughout the world have been preparing for COVID-19 vaccines shipments for several months and are as ready as SIA and Changi to rise to the biggest logistical challenge in decades.

Moreover, for any market where transshipment becomes necessary, Changi is not the only hub that is ready and capable of serving as a vaccine distribution centre should the need arise.

For example, Dubai also has state-of-the-art cold chain infrastructure and has a potential geographic advantage given its proximity to Africa, a vast incredibly challenging region which could require a transshipment hub more than Southeast Asia. 

Listen to infectious disease expert outline what's needed to get a vaccine manufactured, transported and administered in our Heart of the Matter podcast: 



It’s certainly important that Singapore is ready to handle COVID-19 vaccines and serve as a distribution hub if needed but the bigger picture - that the region is successfully inoculated as fast and as efficiently as possible – is of greater consequence. 

That will help open borders and resume travel within the region to pre-pandemic levels, or as close as possible, which will ultimately benefit the aviation industry and all of the region’s economies.  

It’s also important to recognise that a relatively small role in transporting vaccinations does not mean Changi Airport or the SIA Group would lose out in terms of enjoying a buoyant 2021 in terms of cargo traffic and revenue.

COVID-19 vaccines will be given the highest priority by all airlines, leading to less available space for other types of cargo as a large portion of the global freighter fleet is set aside to fly vaccines.

There has already been a shortage of air cargo capacity since the pandemic began in March due to the huge reduction in international passenger flights, which in normal years account for roughly half of all air cargo. 

READ: Singapore can be air cargo hub for COVID-19 vaccines: Changi Airport, CAAS

READ: Commentary: The Boeing 737 MAX is almost ready to fly again

Air cargo rates have shot up due to the lack of capacity, resulting in a more than doubling of cargo yields for many airlines.

For example, SIA reported a 137 per cent increase in cargo yield for the six months ending September to S$0.70 per load tonne kilometre.

Air cargo rates will remain high in 2021 and could rise as the need to fly vaccines leads to an even more pronounced gap between supply and demand.


For supply to increase, international passenger flights need to resume but ironically there is unlikely to be a significant increase in passenger flights until after most of the vaccines have been shipped and a large portion of the population is vaccinated.

For those airlines not carrying significant volumes of vaccines there will be a bigger indirect impact from vaccine shipments as carrying other types of cargo will become more lucrative.

Cool boxes are seen at KLM Cargo at Amsterdam's Schiphol Airport

The vaccines in theory could command a much higher rate or yield than other types of cargo but airlines are unlikely to abuse their pricing power for humanitarian reasons, resulting in vaccine shipment rates that are only modestly higher than normal cargo rates.

The surcharge for vaccines may therefore not translate to more profits for airlines and cargo handling companies given the extra costs and complexity involved with maintaining an extremely cold temperature.

SIA will be one of many airline groups benefitting from very strong overall cargo rates in 2021 but the uptick in cargo revenues will not be sufficient for SIA to return to profitability or even approach break-even.

READ: Commentary: Asian airlines may never recover without consolidation

Cargo is simply not a big enough business for SIA, which has a less than 2 per cent share of the global air cargo market, to offset the huge decline in passenger traffic. 

This was evident in SIA’s fiscal first half ending Sep 30, when the group incurred a S$1.86 billion operating loss despite a 28 per cent increase in cargo revenues to S$1.24 billion.

For the six months, cargo accounted for 76 per cent of SIA Group’s total revenues compared to only 12 per cent in the same period in 2019.


Airline groups generally do not have a big enough cargo business to offset the huge passenger declines due to the border closures, but there are notable exceptions in South Korea and Taiwan, where four airlines have been modestly profitable during the pandemic.

These four airlines – Asiana, China Airlines, EVA Air and Korean Air – relied on cargo for 20 per cent to 30 per cent of total revenues prior to COVID-19. 

They have been able to carry more cargo during the pandemic than prior and have been able to more than double their cargo revenues on an already high base.

SIA Group’s cargo revenues have increased more modestly on a smaller base while its cargo traffic has declined by 47 per cent during the first eight months of the crisis – April to November – to 440,600 tonnes. 

(Photo: Singapore Airlines Cargo)

The decline in cargo traffic was unavoidable due to the huge drop in passenger flights – even with SIA Group using over 30 of its passenger aircraft for cargo-only flights, including four aircraft where the seats have been temporarily removed, to supplement its seven freighters.

Changi also has experienced a significant decline in cargo traffic with the airport handling 804,000 tonnes of cargo in the first seven months of the crisis from April to October – a 31 per cent decline compared to the prior year. 

READ: Commentary: Southeast Asian airlines are falling from the sky in this COVID-19 storm

READ: Commentary: Want to travel again? It’s not sitting in a plane you should worry about

SIA and Changi should capture headlines when the first Pfizer-BioNTech COVID-19 vaccine shipment arrives in Singapore later this month and this moment will be an important symbolic milestone as it represents the beginning of the end to a pandemic that has decimated aviation as well as the global economy.

However, vaccines should not be considered a financial panacea for Singapore’s battered aviation industry.

Brendan Sobie is the founder of Singapore-based independent aviation consulting and analysis firm Sobie Aviation. He was previously chief analyst for CAPA – Centre for Aviation.

Source: CNA/ml


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