Airfreight Operators Skip the Line at America’s Crowded Airports

Date: Wednesday, January 25, 2023
Source: Wall Street Journal

Freight forwarders are increasingly looking to fly around America’s congested air hubs.

A combination of shifting manufacturing supply chains and bottlenecks at big airports is leading the freight middlemen to hire their own aircraft and seek alternative gateways, establishing operations that are boosting business at smaller, regional sites like Greenville-Spartanburg International Airport in South Carolina and Chicago Rockford International Airport.

Forwarders say they can move cargo through the smaller airports more quickly, cheaply and reliably than they can through the big gateways that handle millions of tons of freight a year.

To do so, the logistics operators are departing from their traditional strategy of booking space in the bellies of passenger planes or on scheduled freighters, and instead chartering aircraft to run routes through alternate sites, often on schedules that suit their customers. In some cases they bring in their own equipment and take control of loading and unloading operations that are usually managed by third-party ground handlers at major airports.

Dave Edwards, the chief executive at Greenville-Spartanburg, said just over a decade ago his airport had no international air cargo operations. It spent about $1.5 million to install its own cargo-handling equipment and lured German luxury car maker BMW AG , which has a large plant nearby, as a first customer.

BMW today accounts for about a quarter of Greenville-Spartanburg’s roughly 15 international cargo flights a week. Mr. Edwards said other companies such as Volvo Car AB, Volkswagen AG and Siemens AG , which also have plants within trucking distance, are regular users of the airport.

“The efficiency of the operation has really caught the attention of many freight forwarders, and some of the manufacturers as well who like the fact the product is coming into an airport nearby,” Mr. Edwards said.

Air cargo volumes fell through most of last year as manufacturers and retailers pulled back on orders because of slowing consumer spending. Falling freight demand doesn’t appear to be dampening enthusiasm for secondary hubs, said consultant Doug Bañez, managing director at Charlotte, N.C.-based Hubpoint Strategic Advisors.

Supply-chain disruptions during the pandemic led many companies “to consider alternatives and they learned that these alternatives work,” Mr. Bañez said.

Historically, about 50% of air cargo is carried in the bellies of passenger aircraft, so experts say major airports will always be the main channels for airfreight. But forwarders and industry consultants say secondary airports can be useful for high-priority cargo because they are less prone to delays that can hit passenger operations and can ripple through cargo operations.

Charles Edwards, a vice president at Canada-based Strategic Aviation Solutions International, said secondary airports can also lower costs because aircraft can make it through the sites more quickly, saving on aircraft chartering rates that often run to about $10,000 an hour.

“I’m flying less, taxiing less, burning less fuel,” Mr. Edwards said. “I can either put that [savings] in my back pocket or I can share that with my customers.”

Industry executives expect secondary airports to keep growing as the federal government offers tax credits and other incentives to increase domestic production of electric vehicles and semiconductors. The efforts are already spurring manufacturing, especially across the South.

Danish forwarder DSV A/S is expanding its operations in Arizona, where Taiwan Semiconductor Manufacturing Co. , the world’s largest contract chip maker, and Intel Corp. both have large plants. TSMC recently said it would build a second factory just north of Phoenix.

DSV officials say they are leasing a hangar and bringing their own ground-handling equipment to Phoenix-Mesa Gateway Airport, which is about 30 miles from the main Phoenix Sky Harbor International Airport that serves the Arizona capital city. DSV expects to start operating weekly flights to Europe and Asia through Phoenix-Mesa, now primarily a home to regional passenger carriers.

Niels Larsen, DSV’s North America president of air and sea operations, said the forwarder usually flies Arizona-bound cargo into Los Angeles International Airport, but it can sometimes take up to two days to move air cargo through the airport, load it onto a truck and make the roughly 400-mile drive to Phoenix.

“When a flight arrives in Mesa, you can have cargo offloaded and delivered to the clients in Arizona within hours,” Mr. Larsen said.

Rockford, about 70 miles from Chicago O’Hare International Airport, has become one of the most successful regional airports for cargo. It is a hub for United Parcel Service Inc. and has attracted air operations for companies including Inc., DSV and A.P. Moller-Maersk.

Asok Kumar, executive vice president of global airfreight for Germany-based forwarder DB Schenker, said the difference between Rockford and O’Hare hit home during the height of the Covid-19 pandemic when two of the company’s loads landed at O’Hare and at Rockford at about the same time.

Mr. Kumar said DB Schenker got the freight from Rockford to a warehouse at O’Hare more quickly than shipments at O’Hare were unloaded and sent to the same warehouse 2 miles away. O’Hare ground handlers were coping with congestion and labor shortages at the time.

“Covid has proven that it does work,” Mr. Kumar said. “So it is a viable alternative and when a customer asks what is your contingency plan, we have something in place.”

A spokesman for Chicago’s aviation department said O’Hare handled an “unprecedented surge in freighter traffic” during the pandemic and that the airport is making significant investments in runways and cargo-handling facilities to speed the flow of freight.


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