Air cargo, long cited as an economic engine in Anchorage, continues a five-year low amid a tough global economy, stagnant consumer demand, and more long-range aircraft coming online that can overfly the city's international airport.
Cargo passing through Ted Stevens Anchorage International Airport has fallen about 25 percent since 2007, with the decline continuing into 2013, says airport manager John Parrott.
"Cargo's been down significantly since the global economic crash of 2009," he said. "That's a big piece of the issue."
Anchorage International serves as a fueling stop for cargo planes flying between Asia and the Lower 48 states. Some carriers swap cargo between planes in Anchorage, and FedEx operates a hub at the airport, where hundreds of workers sort everything from iPads to designer jeans and load them on planes bound for cities across the country.
With American consumers not buying as much, Asian manufacturers have curbed production. That means less cargo passing through Alaska's largest city. The trend has persisted since late 2008, when the worst financial crisis since the Great Depression started to take hold. A collapse of the global financial markets was followed by economic stagnation. Freight markets improved toward the end of 2012, but the International Air Transportation Association reports international air freight traffic fell by 2.1 percent in March.
Despite the shortfalls in recent years, Anchorage remains integral to the global market. It's less than 9.5 hours from 90 percent of the industrialized world and ranks second in the nation for cargo and fifth in the world.
An average of about 6 million pounds of cargo a year passed through Anchorage international in fiscal 2006 through 2008. In 2009, as the nation was in recession, the amount fell to about 4.3 million pounds. Anchorage experienced a rebound in 2011, with cargo totaling 5.8 million pounds, thanks to federal stimulus money working its way through the U.S., Chinese and Japanese economies, says airport controller Keith Day.
But as the flow of money waned, freight dropped to 5.5 million pounds in 2012 and continues to drop in 2013, he says.
And so has revenue for the airport, which collects landing fees based on weight. Operating revenues at the airport fell from $110.8 million for fiscal 2009 to $98.6 million for fiscal 2011 and 2012.
FedEx responds to weak markets
FedEx, the 16th-largest private employer in Alaska and the jewel of Anchorage International's cargo industry, plans to decrease freight to and from Asia and "aggressively manage traffic flows to place low yielding traffic in lower-cost networks" due to weak international airfreight markets, says FedEx spokesman Scott Fiedler.
Air cargo may be declining in Anchorage, in part, as result of increased reliability of ocean shipping, the cost savings that come with ocean freight, and faster inventory planning, says Keith Schoonmaker, a transportation analyst for financial research firm Morningstar. Consumers are choosing cheaper, less urgent options for shipping, a change FedEx recognized in a recent earnings report.
Meantime, UPS -- another big cargo operator in Anchorage, with 180 takeoffs and departures a week -- remains committed to Anchorage, viewing the airport as a vital link in its global logistics network. The number of Asia routes through Anchorage remain relatively constant, says UPS spokesman Mike Mangeot.
'Tech effects'
Signs point to a sagging global economy for the decrease in cargo, but newer long-range aircraft deployed for air freight have also impacted Anchorage's international airport.
In 2000, Boeing began production on two long-range versions of its popular 777 wide-body jetliner, commonly called the "triple seven." The 777 Freighter -- the first of which was delivered in 2009 to Air France -- is an all-cargo version of the twinjet. The plane's flight range is about 5,600 miles, with a maximum payload of 226,000 pounds.
Greater range is possible when flying less cargo. A Triple Seven, as it's often called, with a lighter load can travel from Hong Kong to Memphis -- FedEx's headquarters -- without stopping for fuel in Anchorage. The Boeing 747-8 has similar capabilities.
"Over time, freight aircraft have gotten bigger and better," Day said. "Planes make fewer stops and they're somewhat more efficient in how the cargo's distributed. There's definitely been some tech effects on the volume of traffic that come through (Anchorage). That's probably, without a doubt, a little bit of a factor."
Flying into Anchorage's hub, FedEx handles Triple Sevens and MD-11s, said spokesperson Paula Bosler. FedEx owns a total of 23 Triple Sevens and plans to add two to its fleet every year until 2018.
Contact Jerzy Shedlock at jerzy(at)alaskadispatch.com