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  December 17th, 2015 | Written by

Low Altitude

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  • Global Logistics: Why Smaller International #Airfreight Gateways Struggle

Work has started on a new air cargo terminal at Rickenbacker International Airport in Columbus, which handles the Ohio city’s freighter activities. The 100,000-square-foot facility, scheduled to come online in mid-2016, underscores the commitment of the Columbus Regional Airport Authority to build on Rickenbacker’s momentum. A frequent destination for charters bringing in fashion products traffic from Asia, over the past two years the airport has managed to attract regular international freighter flights by three large airlines.

The new warehouse will relieve the pressure on capacity, but it is also a strategic asset to develop exports, notes David Whitaker, the airport’s vice president of Business Development and Communications. Mindful of the pressures that airlines face to generate returns on both inbound and outbound legs, Whitaker is bent on building up export volumes from Rickenbacker’s catchment area.

He has a strong case for airlines, shippers and their forwarders to use Rickenbacker rather than a large gateway such as Chicago O’Hare or New York’s John F. Kennedy airport. Besides enjoying lower costs, shippers can expect to move their cargo faster through a smaller airport by avoiding the congestion that has plagued the large hubs.

“Convenience and speed are probably the main aspects for forwarders,” Whitaker says.

Last year, New York Governor Andrew Cuomo suggested that perhaps cargo operations should move upstate from JFK, New York’s premier airport, to Stewart International Airport in New Windsor. Shawn McWhorter, president for the Americas of Japanese freighter airline Nippon Cargo, sees appeal in the idea, pointing to high costs, outdated and fragmented infrastructure and difficult truck access at JFK. However, he does not expect the idea to take off.

Airlines that have both freighters and passenger aircraft do not want to split their operations. Likewise, freight forwarders are reluctant to establish branches at smaller airports, notes Mike Webber, president of cargo consulting firm Webber Air Cargo and a former airport executive.

These factors have frustrated the many airport authorities with ambitions to establish their location as a gateway for cargo. Efforts by Los Angeles World Airports to nudge international airlines to shift their freighter operations from Los Angeles International Airport to Ontario have failed to produce results. In the Midwest, Chicago Rockford International Airport has managed to establish itself as a regional hub for UPS, but efforts to attract regular international freighter flights have not yielded any results.

Webber notes another factor that undermines the appeal of smaller airports: Freight forwarders funnel most of their cargo through key gateways, leveraging their volume to obtain better pricing from airlines.

As a result of these factors, airports such as Rickenbacker or Alabama’s Huntsville International (which was built up by a multinational forwarder and a partnering freighter airline as a gateway for automotive traffic in and out of the Southeast) have been rare success stories of international freighter ambitions for smaller airports.

If anything, the outlook for smaller airports has worsened. The years following the downturn of 2009 have seen increased consolidation of traffic at the main gateways, according to Webber. At the same time, domestic freighter operators have gone to the wall or been taken over as more freight migrated to the road as a result of better performance standards of trucking providers, he adds. This has shrunk the pool of possible anchor tenants for aspiring cargo airports.

Freighters carry roughly half of the global air cargo volume; the other 50 percent is moved in the bellyholds of passenger aircraft. The arrival of the Boeing 787 and Airbus A350, which carry 270 to 350 passengers and have considerably more space for freight, has ushered in new connections, such as Tokyo-San Diego or Tokyo-Boston. The large U.S. airlines—American, Delta and United—do not operate freighters but they have large orders for these aircraft types.

This is good news for shippers who are prepared to pay a premium for direct flights, notes Webber. For the most part, however, shippers and forwarders prefer to go for the savings associated with funneling consolidated traffic through a major gateway, where capacity is ample and prices low.

As they are not directly involved in handling cargo, most airport authorities target airlines and forwarders in an effort to attract cargo traffic, but they mistakenly ignore shippers, argues Enno Osinga, head of Cargo at Amsterdam Schiphol, one of Europe’s premier gateways. Rather than talk to airlines, he tries to find out what shippers want, as they are the key to generating cargo traffic at his airport, he says.

By the same token, Whitaker finds that many shippers do not pay attention to their forwarders’ routing decisions. “Shippers, especially big ones, make a mistake if they do not get involved in gateway discussions of their forwarders,” he advises.
“My dream has been to get a shipper, a forwarder and an airline together at one table with us to discuss the best solution to move that traffic,” he says.