In the freight world road, rail and maritime commerce often rack up high numbers in terms of volume (tonnage or twenty-foot equivalent units – TEUs), but it is air commerce that is critical to transporting the most valuable, time sensitive, and perishable cargoes.
The figure below highlights the Top 30 air cargo airports in the US according to Federal Aviation Administration (FAA) data. While some of the top airports might not surprise you (yes, Chicago O'Hare International (ORD) is a major cargo airport), others may. After review of this data, here is my take on the unique role these airports serve in global and niche supply chains, and what to watch for in the future.
The Midwest is not just the America’s breadbasket, it is also home to some of the largest and fastest growing global cargo airports. Growth in Midwest air cargo is due in part to proximity to a large portion of the US population base and its insatiable desire to “point, click and ship,” also known as e-commerce.
The #1 tonnage airport in the US today is Memphis International (MEM), and since 2010 it has shown strong growth (~22%) due to the FedEx (global) SuperHub located there. Cargo activity has placed MEM as the 2nd busiest cargo airport in the world behind Hong Kong. FedEx notes that planes land roughly every 40 seconds, during peak periods (10 PM to 1 AM). FedEx also has a national hub Indianapolis International (IND), the 7th highest tonnage airport in the US.
The 3rd highest tonnage airport in the US is Louisville International-Standiford Field (SDF), the location of UPS Worldport. UPS Worldport is the hub of the UPS global network, is as big as 90 football fields, has 155 miles of conveyer belts, and can process 115 packages and documents per second.
Rickenbacker International (LCK) in Columbus, Ohio (currently placed as the 26th highest tonnage US airport), has seen nearly 44% growth between 2010 and 2016. Traditionally a fast fashion center handling these “perishables”, today more and more Middle Eastern carriers (e.g., Etihad, Emirates, and Qatar) are also using the airport as a hub to deliver a variety of goods, including garments from southeast Asian countries like India and Sri Lanka. Over 70 million square feet is adjacent to the airport making this an attractive site for these specialized e-commerce businesses requiring warehousing and distribution facilities and a means to quickly get product to market.
Many of the flights that land in the Midwest are also counted in Ted Stevens Anchorage International (ANC) tonnage, the #2 tonnage airport in the US. ANC had long been the top tonnage airport in the US, but Memphis took the lead in 2008. ANC, located 9.5 hours from 90% of the industrialized world, serves as a technical stop for planes destined to/from the Pacific Rim. Planes land, refuel, and often switch out crew at this “midway point” between Asian and US markets. While planes today are able to make the 15+ hour flight between points in the US and Asia, a stop at ANC allows planes to carry more cargo and less fuel. There is a cost associated with landing at ANC, and time will tell if this remains a viable node in air cargo supply chains in the future. Between 2010 and 2016 tonnage handled dropped over 13% at ANC.
While the airports in the Midwest have typically catered to Asian and European markets, Miami International (MIA) has long been known as the gateway to Latin America and the Caribbean, handling 64% of all US perishable imports and 90% of all US flower imports. This role has helped MIA achieve the rank of #1 international freight airport in the US (excluding transit activities at ANC). In 2015 MIA became the first airport in the US, and the second in the world, to be certified as a pharmaceutical freight hub by the International Air Transport Association, which helped contribute to its growth. MIA also serves a unique role in the ocean to air freight program permitted by the US Department of Agriculture; flying perishables that have arrived in MIA via ship.
Los Angeles International (LAX) also serves as a top hub for US trade with the Pacific Rim, and provides a west coast stop that minimizes the need to stop at ANC. China was LAX’s largest import partner with trade in 2015 valued at more than $20 billion, followed by India, Japan, Taiwan, and Germany. Top import commodities through LAX were computers; cellular and land-line phones, and parts; and computer chips, commodities that will remain as long as major electronics manufacturers are located in Asia. For example, Apple uses the equivalent of one full 747-8 freighter for every 600,000 iPhones sold (in Q4 2016 Apple sold 45.5 million phones). How many freighters will be required for the iPhone 10 release?
E-commerce has helped both UPS and FedEx realize over 20% growth at MEM and SDF hubs since 2010, but e-commerce may also change the face of the air cargo network due to Amazon’s recent entry as an air cargo service provider (Amazon Prime Air).
With more packages being delivered every day, Amazon has decided to take control of its supply chain. This year they announced that it will establish a $1.5 billion dedicated air cargo hub at Cincinnati/Northern Kentucky International (CVG) that includes several facilities on over 900 acres of land, including a 3 million-square-foot sorting facility, and enough ramp space to house 100 cargo jets. Amazon is also making other investments in its air cargo network including expanding its distribution center at Dallas-Fort Worth International (DFW), adding a new distribution center near MEM, adding two daily flights to Chicago/Rockford International (RFD), and increasing its presence at many other US airports.
While the prospect of developing the Amazon CVG hub is exciting, there are also many questions:
The question I am most interested in having answered is, with Amazon’s changes, will consumers get better service, lower cost options and consistently shorter delivery windows? That’s a future that I look forward to.