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US airport limitations hurt cargo industry

usscmc by usscmc
December 30, 2019
US airport limitations hurt cargo industry
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One international carrier has had to rethink its plans for the US market. Its ambitions for a freighter service to a major gateway had to be scrapped owing to a crucial detail: The cargo terminal’s cooler can accommodate only four or five pallets.

Speaking privately, the airline’s head of cargo was incredulous. “This is a big gateway in the biggest cargo market in the world, and they have only a small cooler,” he said.

Carriers that require cooler capacity are also out of luck in Philadelphia, notes Stan Wraight, president and chief executive of Strategic Aviation Solutions International. The only cooler there, is in American Airlines’ cargo facility, he points out.

“For pharma companies, Philadelphia is a preferred gateway for cargo, but they can’t use it unless they ship on American,” he says.

Forwarders also feel constrained by limitations on US airports. “Handling infrastructure is still not where it should be. We won’t find better solutions on the ground to differentiate ourselves if they can’t retrieve the cargo faster,” says a senior executive of a large logistics provider.

“We are hearing from airports: ‘Come and grow with us – but only if you’re willing to sit with our limited infrastructure’,” remarks Brandon Fried, executive director of the US Airforwarders Association. “Procrastination to build out infrastructure has resulted in unsurpassed truck congestion and stifling of commercial expansion.”

Wraight blames these shortcomings and the repercussions for cargo traffic on the hands-off landlord model that the majority of US airports have embraced.

“Airports that are landlords-only don’t get the business. That’s why Cincinnati now has 200,000 jobs,” he says.

Fried reckons that the dramatic growth of e-commerce may be giving some airport authorities food for thought. “Cargo has always been seen as the ugly stepchild. Now, as e-commerce is booming, it is getting attention. E-commerce is a driver,” he reflects.

It has not put cargo development in the fast lane in Los Angeles, though. In late September, Los Angeles World Airports (LAWA) confirmed speculation that the much needed development of a new cargo complex at Los Angeles International Airport (LAX) would be postponed.

Originally, the project was part of a $16bn undertaking to upgrade the airport’s set-up, with the bulk of the funding going to the expansion and modernisation of the passenger facilities before the Olympic Games in 2028.

However, LAWA decided to shelve the cargo expansion for two years. According to one source, it was facing resistance from the local community fearing the impact of work on multiple projects going on simultaneously.

In a statement LAWA declared that “we expect to begin the initial planning of a future cargo project in 2021”.

As Fried points out, this means a delay of considerably more than two years. “They’re not only deferring this until they’ve developed the passenger terminal, but during the deferment they’ll have to start the proposal again. They can’t just get started on the construction of the cargo complex,” he says.

For the long suffering operators, this means years more of being stuck in the slow lane – literally. One of the ills that the new complex is supposed to address is poor truck access to the cargo area. It is not unusual for truckers to spend five or six hours waiting for their turn to have their cargo unloaded or loaded.

These delays are costly. “I see truckers getting hammered for rates of having to put more hours in,” reports Peter Lamy, president of American Worldwide Agencies (AWA).

According to Fried, forwarders are often caught in the middle when shippers bristle at extra fees for waiting and storage charges from airlines or handlers.

Moreover, the status quo puts the shackles on development. Carriers with ambitions to expand their cargo activities at LAX are out of luck, remarks Shawn McWhorter, president of NCA Americas.

“If you wanted to go large scale in LAX now, you couldn’t do it. There’s no capacity for that,” he says.

Fried notes that the current slowdown in air cargo growth has eased the pressure on airport capacity somewhat. However, e-commerce continues to expand, and general growth should revive as the US and China make progress on their stand-off, he warns.

“If the general market recovers and the China-US issue is resolved, you don’t want ageing airport infrastructure to get in the way,” he says.

In a number of locations there is no land available to build on, but Fried does not buy this argument. Some Asian airports are faced with the same issue, but they have resolved it by building vertically, he points out.

Inadequate infrastructure and capacity could prompt some carriers and forwarders to turn to alternative airports, notwithstanding their limited networks, he reckons.

AWA is already moving in this direction. “We’re talking to airlines in San Francisco, Las Vegas and San Diego to truck cargo from here to bypass LAX,” says Lamy.

 

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