Combatting congestion at US airports

Truck drivers have come to expect long waits to pick up shipments at major U.S. cargo gateway airports. Upon arriving for their first pickup of the day, they present required documents, then wait for cargo to be collected from the warehouse, and then to be loaded onto the truck. Wait times are compounded as drivers make their rounds to various cargo-handling facilities throughout the airport, which can each produce wait times of two to three hours. While unfortunate, this problem is not considered unusual, just the reality of congestion at major cargo gateway airports in the United States. Technologies exist to improve these processes, but most handling facilities at U.S. airports do not have the slot-booking systems in place to schedule efficient cargo pickup. These U.S. gateway airports afford cargo shippers access to multimodal transit, businesses and consumers, but they also present major hurdles for planning efficient and effective operations. Cargo stakeholders end up competing with each other — as well as passenger-related operations — for limited resources and space at airports and surrounding properties. Typically, cargo operations have not enjoyed the priority afforded to passenger operations at the busiest airports in North America. However, since the early days of the COVID-19 outbreak, that balance has shifted with widespread passenger flight cancellations and increased freighter operations. But as a result, have airport stakeholders experienced a reprieve from the usual congestion? Taking a DIY approach North American airport operators are well aware of these capacity and congestion issues, and some — like Los Angeles (LAX) and Chicago O’Hare (ORD) — have taken steps to address the issues through restructuring. However, delays and limited attention from major airports for cargo projects, as well as environmental and “not in my backyard” (NIMBY) movements by local citizens, sometimes further limit the scope for cargo development at airports, pushing air cargo providers to devise their own approaches. “During the peak season it’s like driving through a maze of trucks,” said Fred Ruggiero, Cathay Pacific’s vice president of cargo for the Americas, when describing congestion in cargo areas at LAX. “If you drive through cargo areas, you’ll see lines of 10, 15 trucks lined up at loading docks waiting to pick up cargo. You can see why truck drivers get so frustrated — sometimes they’ll wait for hours at a time. And to make matters worse, trucking regulations also only allow the drivers to be on the clock for so many hours at a time.” Some cargo handlers, like Los Angeles-based Mercury Air Cargo, which provides ground handling and warehouse service for British Airways, Air Lingus, Iberia, Hong Kong Air, Fiji Air and All Nippon Airways, have sought to reduce truck wait times with technological solutions. The company in October 2019 implemented CargoSprint’s SprintPass, a digital cargo communication and payment platform, allowing freight forwarders to schedule a pickup time, and input data on the import shipments they plan to pick up at Mercury’s facilities at LAX before driving to the airport. By leveraging SprintPass, Mercury intends to reduce wait times and increase operational efficiency despite continued the congestion at LAX. Mercury, which has been at capacity for several years, handles 2.4 million tonnes of cargo in 2 million square feet of warehouse space. The facility is oversubscribed by 40%, according to John Peery, Mercury’s president and chief operating officer. Peery said he believed that the new program would convince freight forwarders to recognize the benefits of digital scheduling and promote buy-in throughout the community. And while there has been some progress, Mercury is still working to promote an industry move to digital by informing the import department, freight forwarders and LAX Air Cargo Association about the benefits of the available technology. “It’s a very logical and simple approach, but we need everyone to take part in it,” Peery said. While this strategy can combat congestion, space limitations are a greater issue for some airports looking to grow their cargo capacity and operations, especially when they are up against NIMBY and environmental movements. For example, San Bernardino Airport (SBD) recently came under fire from a local NIMBY movement for its plans to build a new 658,000-square-foot Eastgate Air Cargo Facility. Concerns surfaced when news emerged that Hillwood Enterprises — a developer that has built facilities at U.S. airports for many large companies, including Amazon — plans to lease the facility from SBD for an initial term of 35 years, and may sublet the space to a tenant during that period. At other U.S. airports, like San Diego (SAN) and LaGuardia (LGA), which are located close to residential neighborhoods, curfews curtail airplane operations in an effort to cut down on noise pollution. Some stakeholders have simply sought to avoid the major U.S. gateway airports in favor of alternatives. Due to slot shortages, U.S.-based ACMI and charter operator Kalitta Air departed JFK last May and launched scheduled freighter services between Stewart Airport (SWF) in upstate New York and Los Angeles International (LAX) to to support the United States Postal Service operations. Amazon, meanwhile, pursued its own model and avoided launching operations at major U.S. gateways, instead opting for airports like Wilmington Air Park (ILN), Chicago Rockford (RFD), Fort Worth Alliance Airport (AFW) and Lakeland Linder International Airport (LAL). By developing these small airports into cargo hubs for their network, the company had huge advantages in terms of flexibility and capacity offered. So, while useful for individual operations, the efforts of industry actors to solve congestion pain points remains fragmented and could slow the holistic improvement to cargo challenges at airports when not collectively addressed. Added pressure With the advent of the coronavirus pandemic, cargo providers and their operations have become the new priority at airports as they lead efforts to fight the virus. However, although many global carriers have engineered strategy pivots to launch charter flights and cargo-only passenger aircraft flights to meet demand for urgent goods, airfreight volumes will remain lower than normal as other shipments fall to backlogs. The resulting revenue drops, layoffs and skeleton crews mean ground congestion in cargo areas at airports has worsened. In its preliminary data for February released in April, the International Air Transport Association (IATA) indicated that freight volumes fell across most key regions except Africa, Latin America and the Middle East for the month. While carriers in the Americas and Europe saw single-digit declines, Asian carriers were most affected with a 15.5% YoY drop in demand. Airfreight volumes fell 23% YoY in the four full weeks of March, according to a report CLIVE Data Services issued at the beginning of April. The decline in demand accelerated week on week throughout March, reflecting the influence of the coronavirus pandemic on volumes as a result of slashes across carrier passenger schedules. This initial shock to supply chains depleted the market of precious belly hold cargo capacity. Although IATA has yet to announce its assessment of traffic results for March and April, global carriers and airports reported declines across the board in their March results. Asian and European airports reported single to double digits drops in cargo volumes, ranging from declines of 5% to 32%. Global carriers took hits as well with decreases in demand ranging from 8% to 55% YoY for the month of March. Continued volatility into April suggests further plummets in markets may be unavoidable in April results. Meanwhile, Los Angeles-based ground handlers Griley Air Freight (GAF) reports it has seen a drop in volumes resulting in a 35%-40% cut to revenues from mid-January to March 31, and that it saw an additional volume drop the last week of March, leading to a further drop in revenue. “I think volumes will go back up, however, we probably won’t see numbers like we did last year because of the economic slow-down,” said Katie Griley, vice president for sales and operations at GAF. “20%-30% down in revenue will be a new normal for all of us in airfreight.” As a result the company, like many other airfreight stakeholders, has had to make limited cuts to its payroll and adjust the working hours of its essential staff while sending office staff to work from home. Major carriers with U.S. operations have also made staff cutbacks and as a result, do not have enough staff loading, offloading, building and breaking down cargo. Even as airfreight volumes are down, congestion at handling facilities has increased. In the first weekend of April, wait times skyrocketed at some major LAX cargo facilities like Mercury Air Cargo, requiring drivers to wait in line for over four and sometimes even five hours, according to data provided by a U.S.-based trucking company. Major integrators have also been heavily hit, with sources saying they have barely been transferring any exports to airlines at this time and are also sending staff to work remotely. While it is hard to predict what may occur as the situation unfolds, there is a silver lining for the long-term impact. Clearly, the importance of freighters and freighter hubs has been emphasized in the crisis. Therefore, a collective call to review the supply chain, cargo infrastructure and restrictions on cargo operations by the industry may be more readily received by lawmakers and airport stakeholders in the aftermath of COVID-19.

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