What is the most cost-effective BHS and how do we calculate it?

When it comes to deciding which baggage handling system (BHS) is more cost-effective, often focus is on the initial capital investment, with a prevailing perception that conventional conveyor systems are less expensive than Individual Carrier Systems (ICS). But this is not always a given and if recurring costs are also factored in, ICS can often prove more cost-effective. It really depends. 

By Uffe Edslev

This article explores the considerations to take into account when determining which BHS system will be the more cost-effective solution.

What does a BHS cost?

It must be said from the outset that it’s difficult to determine with certainty which BHS is more cost-effective as there are a myriad of varying factors that come into play.

Factoring in technical requirements of a BHS

Take the technical requirements an airport may have of its BHS.

The price per metre of a system, for example, will always depend on the requirements the system must deliver. Other questions may be:

  • Is the system needed simply for transportation from A to B, or is integrated hold baggage screening also required?
  • What about tracking ability?
  • What kind of check-in facilities and make-up facilities will the BHS need to work with; each will impact on the overall price differently.
  • How reliable does the system need to be in terms of getting baggage processed efficiently to meet passenger expectations and satisfaction?

Other associated considerations

But there are other considerations impacting the price of a system. The cost of installing the system will depend on whether it’s a brownfield installation involving numerous phases or a greenfield installation for which an empty building is available.

The cost of system delivery and logistics will also influence the overall price of a system. It’s more costly to install a system in-country than it is on a coastal site and wages will vary depending on location.

Moreover, as baggage handling consultant Blair Cox of JSM & Associates notes, it really depends on the airport’s paramount aims and how it wants to prioritise its costs.  An airport whose primary concern is the cost of energy will have a vastly different approach and rationale than an airport mostly concerned about the price of maintenance or the impact on the environment.

That being said, if we calculate the costs at the level of each cost area and assess these over the life of a system, we can start to draw some conclusions on the cost-effectiveness of different systems.

CAPEX: What’s the difference between conventional systems and ICS?

Let’s start with CAPEX: how does the CAPEX of each system compare?

Again, this will depend on many factors, such as the size of the system. The CAPEX of small systems with simple functionality will likely be similar irrespective of the BHS. Larger systems with many specifications, however, will involve quite different CAPEX.

Here are some considerations.

How much space does the airport have?

Firstly, does the airport have enough space to accommodate a conveyor system that is able to perform all its required functionalities?

More equipment is needed in conventional systems, necessitating greater space. Achieving the best possible tracking with conveyors, for example, requires a lot of space between bags and a slower processing speed. ICS, by comparison, can deliver flawless tracking at faster processing speeds in less footprint.

The costs of screening

Then there’s the cost of obtaining the required TSA approval of the CBIS area. For conveyor-based installations, this means pushing baggage out of place for tracking to be tested. By comparison, securing TSA and ECAC approval for ICS can prove faster due to its near perfect tracking.

In addition, further conveyors will be needed in the CBIS area because bags screened in conveyor technologies have to remain separated on different lines after Level 1 screening due to the risk of loss of tracking. Whereas, the merging of bags on a single line after Level 1 screening is allowed for some ICS technologies due to the smart system configurations of CBRA workstations. This means baggage is not co-mingled after separation because each bag remains separated in its own individual tote and there is only one tote on each system element at a time.

For a deeper deeper understanding of what ICS technology is, download our white paper “Modern Individual Carrier Systems For Airport Baggage Handling”.

The costs of installation

Then there’s the cost of installation. Conveyors of conventional systems must be assembled on site, which can be costly. But ICS is normally installed in plug and play modules which can prove more affordable.

When the costs for space, screening and installation are taken into consideration, the capital expenditure needed to implement ICS can often end up being more affordable than conventional systems.

Reducing CAPEX with reduced footprint

The overall CAPEX needed to install a BHS can be reduced if the system’s footprint is minimised. ICS can occupy a smaller footprint than conveyor systems due to its compact design, higher processing capacity and therefore smaller amount of equipment.

There are a number of ways that ICS can save precious airport real estate.

  1. Maintenance access can be reduced to just one side of the system, reducing the need to build walkways.
  2. The compact size of the system allows for shorter emergency exit routes.
  3. Cox notes that fewer conveyors are needed for Level 2 and Level 3 screening and airports can make better use of feeding the EDS machines to further shrink the footprint.
  4. Bags can be transported vertically by lifts – although lifts are one of the more expensive modules in ICS and will often only be used when space is very limited. Conveyors can also transport between two levels, but they need to occupy long stretches and require many conveyors to achieve the same.
  5. ICS offers cross-transfer in limited spaces and at high capacity because the divert and merge functionalities are compact and easily integrated in the design.

In addition, by deploying ICS, footprint can be saved at the CBRA area, says baggage handling consultant Matthias Frenz, President at Logplan LLC. The ICS in Denver International Airport, for example, collects the ‘alarmed’ bags from different screening zones and transports them all to one, centralised area where the TSA conducts its intensified investigation.

The CBRA workstation will consist of additional pieces of equipment added to the manual handling station element. These will consist of a storage cabinet under the element, two side tables that will be used for articles removed from the bag being searched and a back panel for mounting the screening monitors. The monitors will be attached to articulating arms that will allow the TSO to adjust the monitors to suit their personal preferences.

A BHS that occupies less footprint in a number of points throughout the baggage handling process, can result in significant CAPEX savings for an airport and contribute to making CAPEX more affordable in the long-term.

What is CBRA?

OPEX: How savings can be made with ICS

To calculate the cost-effectiveness of a BHS, an airport also needs to factor in its OPEX costs over the lifecycle of the system.

According to baggage handling consultant William Gibbs of Swanson Rink, this involves tabulating, on an annual basis, ongoing operations and maintenance costs for each BHS, such as the number of staff per shift, spare and replacement parts, OEM maintenance contract costs, electrical power consumption, costs to operate the inbound and outbound bag room and TSA operational costs.

In ICS, OPEX savings can be made due to certain factors inherent to the system:

  1. Modern ICS does not use gearboxes and the belts are practically everlasting, requiring less service and maintenance than with conventional tech.
  2. ICS has a higher degree of reliability, so there are fewer system jams, system stops and downtime that require manual processing and fewer resources are needed to supervise the BHS.
  3. ICS controls and monitoring abilities can predict potential problems, so maintenance can be planned accordingly to avoid over-resourcing.
  4. ICS’ simplified design and use of common components across different elements of the system mean fewer maintenance needs and lower spare part consumption.
  5. When comparing both types of systems running at the same capacity, ICS will use approximately one-third less energy. However, Gibbs notes that energy savings must be proven by actual energy demand and usage data.
  6. ICS uses only the power required to start the belts and shuts down as soon as a bag passes. Conveyor systems can do the same but have to run for a length and half to make sure they’re empty before shutting down. A conveyor-based system will run constantly, even if just using one-third capacity. ICS, however, runs one-third of the time at any capacity.
  7. ICS’ high sortation accuracy means reduced costs due to less mishandled bags that must be short shipped – and most likely a higher passenger satisfaction and airport or airline reputation.
  8. ICS complements automated baggage storage and when this is combined with batch loading and speed loading, it facilitates reduced costs for baggage handlers and an improved service level for the airlines and their passengers.

Suppliers of modern BHS can contribute to minimising OPEX by providing O&M services and knowing the systems best.

System reliability: redundancy and downtime

Another area that an airport ought to consider in terms of cost-effectiveness is system reliability. When it comes to redundancy, for example, ICS can prove the less expensive option, because often there’s no need to build in redundancy when using this technology.

Consider these factors.

  • ICS rarely fails: ICS breakdowns occur on average just once every eight years. Even in the event of failure, repair time is approximately  8-10 minutes, faster than conveyor systems. The resultant downtime is negligible and the cost of bags not reaching their destination during those 10 minutes will be a fraction of the cost incurred in conveyor systems.
  • Redundancy is inherent to ICS: There is no need to build an extra line for redundant baggage in an ICS system, given its two-directional flow and the ability for the baggage control room to quickly reroute a bag. The system can even reverse the bags.
  • In ICS, there’s more than one line directed to the same place: Large system designs, in particular, have an open line that provides functional redundancy at virtually no cost. Even if full capacity is not achieved, some capacity is delivered, which will be greater still if the breakdown occurs during slow traffic.

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Calculating the cost-effectiveness of different BHSs is a difficult art, given the myriad of varying factors that are always present in a BHS project and that each airport has its own individual requirements and specifications. However, if reliable baggage handling, 100 percent baggage tracking, overall lower maintenance and environmental costs, space and energy consumption are critical issues, then it may be that ICS technology emerges as being a more cost competitive option over the lifetime of the system.