Hartsfield-Jackson Atlanta International Airport has long been heralded for its passenger operations. As the world’s busiest passenger airport — a title Hartsfield-Jackson has held for 13 consecutive years — Atlanta airport welcomes travelers from all corners of the world. And if Hartsfield-Jackson’s aviation development manager Warren Jones has it his way, this dominance will one day apply to the airport’s cargo operations, as well.
Although Hartsfield-Jackson certainly has a long way to go before it achieves such accolades in the airfreight arena — out of the top 50 cargo airports on the Airports Council International’s 2012 ranking, Atlanta finished 33rd, with 663,162 tonnes in 2011 — Jones thinks the tides are changing. “If you look at the past history of Hartsfield-Jackson, in 2010, we saw 17-percent growth; in 2011, we saw 2-percent growth,” Jones says. “But in 2011, a lot of the other major U.S. gateways had declined in cargo volumes overall.”
Hartsfield-Jackson also saw the introduction of Qatar Airways’ freight service to Atlanta in 2011. The twice-weekly Boeing 777F flights, which commenced in November, highlight Atlanta’s position as a key exporter to the Middle East, the airport’s Louis Miller asserts. “Companies can readily connect with air, road and railway transportation systems in Atlanta,” Miller said last fall. “The addition of Qatar Airways further enhance[s] our airport’s reputation as a leading cargo airport.”
Jones says the March recommencement of Air France-KLM Cargo and Martinair Cargo’s service to Atlanta backs up his colleague’s assessment. After a three-year flying hiatus, customer demand drove the combined carrier to resume flights to Hartsfield-Jackson, Air France-KLM Cargo and Martinair Cargo’s Harm Winkeler reveals. The need for automotive parts transportation out of Atlanta topped the list of most-requested services.
Global automakers Hyundai, Volkswagen, BMW and Mercedes all fly their car parts through Hartsfield-Jackson on a daily basis, Jones points out, and Kia recently expanded its 2,200-acre manufacturing facility in nearby West Point, Ga., to increase its vehicle production rate. In fact, Jones says, Kia set up shop in the tiny Georgia town in 2010 to take advantage of Hartsfield- Jackson’s cargo connectivity.
It appears that luxury brand Porsche is following Kia’s lead. Industry rumblings suggest that nonstop flights from Hartsfield-Jackson to Porsche’s Stuttgart, Germany, headquarters led Porsche officials to purchase 33 acres of land, with an option for 20 more, adjacent to the airport.
Porsche’s new facility, which is slated to open in late 2013, replaces the automaker’s current North American headquarters. The $100 million development was announced in 2011 and will help establish the Aerotropolis mixed-use concept, which is located on a former Ford Motor Co. plant. Bob Pertierra, vice president of supply-chain development at Metro Atlanta Chamber, isn’t surprised by this move. Calling Hartsfield-Jackson the Southeastern U.S.’ “largest economic engine,” he says proximity to the airport is often a key determinant when companies are selecting a location.
Pertierra reveals that he regularly attends meetings where Hartsfield-Jackson representatives tell companies eying the Atlanta market about their flight schedules and frequencies. Officials use the airport to lure companies into thinking about Atlanta. “So it’s very much a part of how companies pick their locations,” he says.
After all, Pertierra says, “The airport gives us access to global markets, both for cargo and people — and companies want to be near to that, and they often request and compare Atlanta’s airport with other cities’ airports to see what’s best for their business.”
The other factor that companies consider, he says, is whether a prospective market is growing. And in the U.S., the Atlanta market certainly is, Pertierra asserts. “So we point out the fact [to companies] that the population demographic for the Southeast U.S. is growing — it’s adding people — whereas the Northeast U.S. and West are losing people,” he says.
Atlanta’s vast population is an advantage that Alan Schlesinger regularly cites — particularly when selecting freight forwarders with whom to do business. As the president and CEO of Duluth, Ga.-based Airflotek — a distributor of air filtration systems — Schlesinger says nearby Atlanta’s robust forwarding community helps keep prices low. “I have about four companies that I do business with, and I will shop them continuously,” he says. “These forwarders already know they can’t be over the top on price because they know that everyone is shopping the competition.”
Schlesinger says Airflotek’s proximity to Hartsfield-Jackson airport affords similar advantages. Since so many carriers fly to Atlanta, competition always exists — which, he says, ensures best pricing. “And I can always find room in a cargo hold, even if it’s at the last minute,” Schlesinger adds.
Steve Blane, district manager for Atlanta at Air-Sea Forwarders Inc., says the influx of capacity may not be a good thing, however. Pointing to the recent fluctuation of cargo activity out of Atlanta, Blane says traffic has been sluggish lately, albeit “with a few positive spikes.” In June, for instance, Hartsfield-Jackson’s cargo volumes fell 3.2 percent, year-over-year, to 54,755 tonnes — a drop in line with the declines the airport recorded in the first six months of 2012. Blane and other stakeholders are hopeful that traffic will turn around in the latter half of the year, but are realistic about the situation.
“Individual air shipments seem to be getting smaller — two to three skids or less,” Blane says, “but the shippers are still looking for deep discounts, like they would have received on shipments requiring containerization/palletization. He says the problem stems from three key issues: economic uncertainty, political unrest in certain regions and loss of volumes to seafreight. And, surprisingly, escalating airfreight costs isn’t the only factor driving the latter trend, Blane says. In fact, Georgia’s seafreight rates, such as those out of the Port of Savannah, have risen steadily since 2010.
“With the exception of very time-sensitive commodities, like perishables, seafreight has become a viable option,” Blane says. “Shippers, with few exceptions, are not as time-sensitive, and the service-quality gap between seafreight and airfreight seems to have narrowed. “Whether seafreight has improved and/or the airfreight performance has declined may just be a matter of perception and could be based on lower expectations for seafreight and continued higher expectations for air,” he continues. “That would be a great question for debate.”
Something that isn’t up for debate, however, is the importance of a bustling cargo market to a city’s health. Whether freight volumes come by air or sea, Blane says cities must have a transportation infrastructure that supports the flow of goods, instead of impedes it. He rates Atlanta’s cargo infrastructure — particularly Hartsfield-Jackson’s airfreight network and capabilities — as adequate. But Blane says it’s crucial that airport personnel keep an eye out for indications of stress to the infrastructure, whether due to increased age or demand, and take corrective actions before problems escalate.
Congestion is one possible problem, Vito Losurdo, vice president of global airfreight services at UPS, asserts. “Because Atlanta’s such a popular global and regional hub, it could, at times, result in traffic congestion, which could be a challenge for companies doing business in the area,” Losurdo says. “And it could potentially continue to be a problem with the lack of investment in our national highway system.”
Three major highways converge in Atlanta — I-20, I-75 and I-85 — and companies regularly truck freight to and from Hartsfield-Jackson to nearby Florida, North and South Carolina, Tennessee and Alabama, Losurdo explains. Without regular improvements to these roads, there could be kinks in the supply chain. Even so, he calls Atlanta’s transportation infrastructure “absolutely favorable” and reiterates the importance of Atlanta to UPS’ hub-and-spoke distribution network.
The city, which serves as UPS’ corporate headquarters, also sees regular UPS air service out of Hartsfield-Jackson. Losurdo says the “ease of doing business” at Hartsfield-Jackson attracted the global integrator. “With the lack of curfew restrictions and relatively low landing fees, it’s an advantage for UPS — and it would seem that the carriers are attracted to Atlanta as a result of this, too,” he says. “As a freight forwarder, the benefits of Hartsfield-Jackson attract and enable the operations of global carriers that we utilize for airfreight needs.” He points to the fact that Atlanta serves as the Americas headquarters for European carriers IAG Cargo and Lufthansa Cargo — as well as the world headquarters for Delta Cargo — as a manifestation of this.
Carl Unger, Lufthansa’s regional director of sales and handling for the Southern U.S., says Atlanta compares favorably to other Lufthansa Cargo stops in the country. In the South, carriers likely don’t have to deal with weather delays common to the Northeast and West, he says — though one notable exception, a winter storm that affected flights for a number of days, does exist in recent memory. Finally, the central location of Atlanta makes the airport a good distribution hub for the Southeast. “It is vitally important to have a presence in Atlanta, as many major players in the freight-forwarding industry have large gateways here,” Unger says. “These gateways consolidate cargo from all over the Southeast and tender it centrally in Atlanta.”
Ease of accessibility tops Unger’s list of benefits derived from the Atlanta airport. Hartsfield-Jackson, he says, is easy to navigate and is laid out well. The availability of undeveloped land near the airport — land that shippers are starting to take advantage of — is also a huge selling point for the city. Put simply and literally, Hartsfield-Jackson brings the airfreight business to Atlanta. “Hartsfield is always cooperative and listens to the requests of its cargo carriers, which is essential to maintaining a strong relationship,” Unger says. “Further, Atlanta’s mayor, Kasim Reed, is a big advocate for international air cargo, and has encouraged new carriers to bring freighters to Atlanta.”
Among carriers operating to Atlanta, Southwest is a newcomer, but the airline has quickly established its dedication to the city. Southwest officials opened a 26,000-square-foot cargo facility to much fanfare on February 12. In the first six months of the new operation, the carrier handled more than 2.5 million pounds of cargo, according to Southwest’s Wally Devereaux.
“We’ve been extremely pleased with the support of the Atlanta shipping community,” he says. “The Atlanta airport has been fantastic to work with. The airport aviation general manager, Louis Miller, and his team have been very supportive of our air cargo business thus far.”
A strong presence by Lufthansa, Delta, IAG and numerous other carriers is nice, but Hartsfield-Jackson’s Jones would still like to add some Latin American carriers to the expanding list of cargo and passenger airlines serving the city. Revealing that the airport is looking to increase connectivity to South America, Jones says he envisions Hartsfield-Jackson one day rivaling Miami International Airport as the gateway to South America.
“We feel that can offer more services to our freight forwarders [than MIA],” he says, such as centrality. “So we want to make sure we can meet the demand of our freight forwarders and our shippers to help them grow.” To help nurture this idea, Jones is busy gathering data for an airport masterplan, which will discuss the cargo strategy moving forward.
Blane concedes that Hartsfield-Jackson’s infrastructure and service options are superior to Miami International Airport’s, but he says the airport has a long way to go before it steals business from MIA. Even if trucking cargo from Miami takes three days, Blane says many supplychain professionals will choose this option out of habit. After all, he says, “The air cargo business is change-averse in many ways, and that would include choice of airports for exporting and importing products.
“Shippers and importers will choose comfort over change, unless there is an option that is too attractive to ignore — and close proximity to a majority of markets by itself is not going to drive that change,” Blane continues. Still, he believes that most shippers consider Atlanta’s centrality an advantage and, if all else is equal — or even close to equal — will select Hartsfield-Jackson over the competition.
In order for Atlanta to maintain its position as a cargo-friendly city, however, Blane says industry stakeholders must closely monitor the market. “The question the logistics community needs to ask now is: ‘What will we do to sustain [Atlanta’s industrial ] growth without it becoming an undue burden on the people and companies it is meant to benefit?’ he says. “As a member of that community, I’m looking forward to finding the solution.”