Leonard N. Fleming THE DETROIT NEWS
Cargo Could be Key to Lifting Detroit Airport Traffic
March 11, 2014
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  • As passenger totals have remained flat over the past few years, airport officials are developing a strategy to land more cargo to deliver.

    More cargo shipped through Detroit Metropolitan and Willow Run airports could bolster the region’s goal of becoming a transportation and logistical hub. If the plan is successful, it could drive down airport costs and relieve pressure on airlines to raise ticket prices, officials say.

    Metro Airport officials see the potential of increasing air cargo given the stronger Detroit automakers, advances in the former Aerotropolis project — now known as VantagePort — to develop land for industry between the two airports and the proposed $2.1 billion bridge between the U.S. and Canada. But the process could take years as the bridge hasn’t been built, the VantagePort project is moving forward slowly and airports worldwide have seen cargo traffic dip due to the high cost of shipping by air.

    “Detroit is wisely situated with rail, we have great interstates and access to Canada, the largest U.S. trade partner,” said Thomas Naughton, the CEO of the Wayne County Airport Authority, which operates the Detroit Metro and Willow Run airports. “Geographically, we’re in a great location. What we’re focused on is to make sure that we have the infrastructure to support cargo.”

    Naughton said airport officials will study the potential of growing its more than 2 million tons shipped in 2013 “to really try to identify what the potential market is for cargo.” The results for the $35,000 study by a Webber Air Cargo Inc., a Kansas-based cargo consulting firm, will be made public in the coming months. His sense is there are “many industries are out there that we could leverage” to grow the cargo base. Both airports sit along Interstate 94 that connects to other highways.

    Michael Belzer also sees the possibilities of growing cargo as equally as the difficulties. The associate professor of industrial relations at Wayne State University in Detroit, considered an expert on the trucking and freight industry, said transportation which includes cargo is a “drive demand industry.” If the economy picks up and the former Aerotropolis project takes off, air cargo gains may gain traction, he said.

    “I think it’s going to be a challenge,” Belzer said. “People are not going to want to ship by air if they can help it. It’s the most expensive way to move freight. You have to focus on increasing freight in the Detroit area and be working in a broader way to drive up the volume of freight that we handle here.”

    Statistically, Detroit Metro last year ranked 24th in the country and 83rd in the world when it came to shipping cargo in and out of airports. Two of the top three American airports in terms of cargo — Memphis and Louisville — are homes to the world headquarters of FedEx and United Parcel Service. Anchorage, which ranks second, gets to count cargo loads even though planes just land there on their way to other locations. Miami and Los Angeles round out the top five.

    Ninety percent of the cargo that pours through Detroit Metro in Romulus comes from FedEx, Delta Air Lines and UPS, respectively. The types of cargo that move through the air are perishables such as flowers and fruits as well as auto parts.

    There are two types of cargo. Integrated packages are moved door-to-door by one company like UPS. Belly cargo is placed in the lower part of an airplane on passenger flights. Belly cargo helps in many cases to make a flight profitable, said Marcus Kemper, the senior vice president for facilities and development division of Detroit Metro.
    On-demand cargo may grow

    Airport officials also see Ypsilanti Township’s Willow Run, which primarily deals with corporate and small cargo flights, expanding its on-demand cargo — smaller packages that need to be delivered quickly such as automobile parts — by marketing the advantages of being delivered quickly and for a less expensive price.

    “With the new bridge crossing, we think there’s opportunity there,” Suzanne Hall, the former airport authority chairwoman, said of the New International Trade Crossing bridge. “Because of how fast people want things now … using our airport for expanding cargo would be a good way to generate revenue and generate business.”

    New board chairman Al Glancy added “the airport authority board is committed to taking necessary steps to enable the development of more heavy cargo at both Detroit Metropolitan and Willow Run airports.”

    But Skip Miller, the executive director of Louisville Regional Airport Authority where the Worldport UPS hub is located, said despite the advantages Metro Detroit may have in terms of the need and infrastructure, the landscape to grow cargo is a difficult one because the worldwide economy is still in recovery mode.

    “So how any airport can grow their non-integrated cargo is a tough chore,” Miller said. “And the best way you can do it today is through raiding somebody else’s camp. There’s not much organic growth going on out there. What you have to do is go find someone that’s got a lot of it going on and start chipping away at it.”

    The recession, Miller said, prompted a retreat from companies using air cargo because of changes “forced upon us” by the slumping world economy. But Detroit’s success, he said, depends on how healthy the cargo market is and “you can see air freight being a key component to that.”
    Airports in standby mode

    Kemper said one way to handle growth is to be ready if cargo carriers such as UPS or FedEx seek to expand their locations or to be ready if others want in.

    “We’re trying to make sure that when the demand does show up, when there is somebody wanting to do additional cargo that we have a way to respond,” Kemper said. “What we don’t want to say is, build it and they will come. That has not proven to be the case at most any airport in the country. There are many airports that have built cargo facilities that remain unoccupied.”

    Kemper said Delta is examining its cargo operations and whether it will look to expand at Detroit Metro. Last fall, Delta’s cargo division opened up a 3,000-square-foot storage unit to keep cool temperature-sensitive items such as pharmaceuticals and perishables.

    He said the two airports will seek to attract cargo business by pointing out southeastern Michigan’s advantages — the port, rail, highways and the airport — that “aren’t limited to a specific mode of transport.” The airport has seen passenger numbers stay around 32 million annually for the past three years.

    “We’re not in the mode of just going and building a facility and believing that will generate cargo,” said Kemper, who believes growth will also come through increased passenger traffic. “The more people that we can have flying into Detroit, the more opportunities there is for cargo operators to take advantage of those flights if they want to use passenger traffic.”

    Lee Redding, an associate professor of business economics at the University of Michigan-Dearbon, said a successful VantagePort project and other businesses relocating here will help push cargo traffic.

    “If you are shipping air cargo, you’re shipping goods that are high value,” said Redding, who helped author a January study that showed the airport generates a $10.2 billion economic impact in the state. “It has the potential to be an important part of an industry organized around high value, high skill and to use some of the manufacturing talent we still have here in the area.”

    http://www.detroitnews.com/article/20140311/METRO01/303110027/Cargo-could-key-lifting-Detroit-airport-traffic