Some of the same supply chain challenges that are driving prices higher for everything from appliances to coffee beans are also pushing the Anchorage airport’s cargo business to new heights.
Long one of the world’s most popular stops for freighter jets, Ted Stevens Anchorage International Airport moved up a spot to be the fourth-busiest cargo hub on the planet last year.
The logistical problems that started more than a year ago with pandemic-induced shutdowns and business restrictions continue to ripple across the globe, according to Bill Popp, CEO of the Anchorage Economic Development Corp., which has studied and championed the air cargo activity at the city’s airport.
“We’re seeing this shift in tonnage and this fairly significant spike in tonnage (through Anchorage) is because of what has been just a disastrous entanglement for West Coast U.S. and Asian ports,” Popp said in an interview.
“Air cargo is becoming the option of choice for desperate retailers.”
Logistics firms are regularly reporting quotes of $16,000 and greater to move a container across the Pacific via cargo ship; that’s for a 30- to 45-day trip that ran in the $1,500 range pre-pandemic, according to Popp.
The increase in cargo is not unique to Anchorage, but the rate of the increase is. According to data from the Airports Council International, the aggregate tonnage among the world’s top 10 busiest cargo airports increased 3 percent in 2020, while the landings at Anchorage were up 15 percent year-over-year to more than 3.1 million tons of cargo.
Anchorage overtook the UPS hub of Louisville, Ky., which saw a 4.6 percent growth in cargo business last year, for the fourth spot behind the Shanghai, Hong Kong and Memphis, Tenn., airports.
In the first half of this year, cargo throughput was up 23 percent over 2020 at 1.73 metric tons, according to Anchorage airport leaders.
While Anchorage’s cargo business isn’t likely to keep growing at such a pace, it isn’t expected to stop growing anytime soon, either. AEDC is projecting 8 percent growth this year overall and annual tonnage increases in the 2 percent range thereafter.
That’s in part because the current global and domestic logistic challenges aren’t likely to be overcome anytime soon. The pandemic also encouraged many more Baby Boomers to retire than otherwise would have, Popp said, which has exacerbated pre-existing labor shortages among truckers, longshoremen and other trades.
“It was a system that was stressed to begin with and the ramifications of COVID go well beyond the shutdowns from outbreaks of the disease,” Popp said.
It has all caused a significant increase in furniture, of all things, on the jumbo jets making a refueling stop in Anchorage.
“How does that make sense?” he wondered.
As more cargo continues to arrive from the air, developers are finally working to capture the benefits of when it’s on the ground.
The man the airport is named after secured unique trade exemptions for Anchorage, Fairbanks and the Port of Anchorage in 2004 that allows cargo landed in the state on its way to and from the Lower 48 to be shuffled among planes and carriers at that time without being subject to federal regulations.
Historically, Anchorage has simply been a refueling stop for the vast majority of carriers as stopping to refuel allows them to carry more cargo on trans-Pacific flights.
The ability to freely transfer cargo between planes and carriers for years has been touted by airport leaders and others as a way for shippers to greatly increase the efficiency of their operations but it hasn’t been until now that air carriers, logistics firms and developers have all sought to utilize the exemptions at a large scale.
Plans for up to five large projects collectively totaling approximately $700 million, according to AEDC, are in the works and two development groups have signed long-term leases at the airport in an ostensible commitment to develop.
Rob Gillam, CEO of McKinley Capital, the Anchorage-based investment firm that is the majority owner in the 700,000 square-foot Alaska Cargo and Cold Storage, or ACCS, project, said in an interview that the logistics industry has been slow to capture the potential of Anchorage’s opportunities partly due to the fact that it takes a long time to change a complex system.
Additionally, cargo airlines operating in a highly competitive industry are commensurately tight-lipped, meaning it’s often difficult to determine what’s being shipped now and what might be in the future to plan ground facilities accordingly.
“If they don’t open the door they don’t have to tell you what’s on the plane, “Gillam said. “It could’ve been an empty airplane; it could’ve been an airplane filled with bricks or filled with iPads.”
He also noted that there is an inherent hesitancy toward being the guinea pig in a major business venture.
“Somebody has to go first. There’s no doubt in the economic value of cargo through Anchorage,” Gillam said. “No doubt.”
The ACCS project is currently in the permitting stage and is envisioned as a three-phase development, he added.
Anchorage Airport Director Jim Szczesniak said in an interview that airport officials have changed the focus of their efforts to market the airport’s potential from carriers and logistics firms to the developers that would actually invest in the necessary facilities.
“We wanted to help (developers) with their business case,” Szczesniak said.
“From our perspective it’s not a ‘build it and they will come’ scenario. They’re already here so it’s a matter of making what we have here more efficient for their operations,” he said of the carriers.
Popp added that “sometimes ideas can stare you in the face for a long time before they become recognizable,” and emerging market opportunities, such as shipping South American produce to Asia, should continue to benefit Anchorage with revenue to the airport but most importantly with new jobs potentially measured in the thousands.
Gillam said facilities like ACCS not only require cargo handlers but also more support service providers, including aircraft ground crews and others.
“We’re excited about the potential investment because that’s what we’re in the business of doing, but we’re really hopeful about the knock-on benefit to the Anchorage economy,” Gillam said.