As Atlanta Mayor Kasim Reed embarks on the first steps of a campaign pledge to increase cargo operations at Hartsfield-Jackson International Airport, he faces significant challenges amid one of the worst declines in cargo traffic in recent history.
“Atlanta is No. 1 in the world in customer traffic and we’re not in the top 10 in air cargo,” Reed said in outlining his ambitions in an address at the Buckhead Club last month.
But even if the economy recovers, it could be difficult to grow Atlanta into a leading cargo hub. Memphis, home to FedEx, had the world’s busiest airport for air cargo in 2009. It was followed by Hong Kong and Shanghai, according to Airports Council International. Atlanta fell off the list of the top 30 airports for cargo traffic in ACI’s preliminary rankings for last year.
Cargo traffic is heavily affected by the overall economy, by carriers’ decisions on where to route traffic, and by other factors such as mail volumes. Last year, Hartsfield-Jackson’s cargo tonnage was down 14 percent. That drop reflected the weakness in cargo globally, though the airport reported last week that traffic had increased year-over-year for the third consecutive month in January.
“We’re not in Memphis, where FedEx is based, or Louisville, where UPS is based,” said Hartsfield-Jackson spokesman John Kennedy. “There are a lot of reasons why some airports lead in cargo and traditionally have.”
Every airport, though, is feeling the pinch of a bad economy. The International Air Transport Association called 2009 the worst year the airline industry has ever seen, with the largest annual decline in international airline traffic since World War II. The industry has permanently lost 3.5 years’ worth of growth in the freight business, according to IATA.
But Reed appears undaunted. “Now is the time to set the stage [in Atlanta] for when the economy returns,” he told business leaders. “Now we can do quiet preparation without the volume and really work at it in a thoughtful, methodical way.”
Making cargo a priority
The mayor’s ambitions face many challenges. Along with freight declines, mail volume has declined dramatically in recent years at Hartsfield-Jackson and other airports as more people send documents electronically and use e-mail.
Meanwhile, a new requirement to screen all cargo going into the bellies of passenger planes could increase the cost of shipping by air. And Delta last year discontinued the freighter operation it acquired from merger partner Northwest, saying it lost $150 million on the venture.
Reed said he plans to work with Delta Chief Executive Richard Anderson to develop air cargo.
“We’re working in a coordinated way to identify any barriers to us expanding our role in air cargo,” Reed said. “Is there something we’re not doing? Is there something we can do better? Is there additional focus we can have? Are there assets that we have at the airport that you need? Those are conversations that we’re having at Delta and with many others.”
The mayor plans to go to this year’s International Air Cargo Forum and Exposition in Amsterdam. The 2012 conference will be in Atlanta, which Reed said he’ll use as a springboard to push his initiative.
“I want Hartsfield-Jackson prepared, and I want to send a clear signal to the country and to the world that we intend to compete in this space,” Reed said.
Reed also said he wants “someone who has a strong interest in the air cargo space” to replace outgoing airport manager Ben DeCosta, who will be leaving the airport after his contract ends in June.
Seeking foreign partners
Expanding Atlanta’s relationship with China is one cargo-building strategy Reed said he plans to spend “an extraordinary amount of time” on.
Atlanta once had more of an air connection to China than it does now. Last year, Delta discontinued its Atlanta-Shanghai flights, initiated in 2008, because of disappointing demand.
The mayor also hopes to expand air cargo traffic to Central and South America, making Hartsfield-Jackson a secondary hub to Miami International Airport for those regions.
“The international space is where we’re going to have to be strong to really build our air cargo capability,” Reed said in his talk in Buckhead.
Pushing for more air cargo could be politically useful for the mayor because of its potential impact across the local economy.
“The range of jobs that we can create in the air cargo space represents a huge opportunity,” Reed said.
Businesses ranging from restaurants getting seafood shipments to technology firms shipping parts or products benefit from a robust air cargo operation. Then there are the many businesses that handle air cargo along the way, such as freight consolidators and freight forwarders. Companies depend on air cargo to bring in textiles, machinery and car parts for assembly facilities such as the new Kia plant in South Georgia, and easy access to the airport means lower costs and shorter shipping times.
Produce, high-value products such as electronics and medical equipment, and parts needed for just-in-time manufacturing are among the items shipped by air.
Reed’s goal of growing cargo at the airport “is a wise goal to have,” said Chip Barclay, president of the American Association of Airport Executives. But he also warned that it doesn’t happen quickly. “I think it’s a long-term goal to say, ‘We want to focus on air cargo here.’ ”
Expansion plans ready
Since before Reed took office, “Atlanta’s gotten a lot of kudos and credits” on Hartsfield-Jackson’s cargo operations, said Christina Cassotis, a vice president at airport consulting firm SH&E.
Hartsfield-Jackson won Air Cargo Week’s 2009 Airport of the Year award and Air Cargo World magazine’s Award of Excellence for the best North American cargo operations in its category last year.
“The mayor is right to bring the focus back, to shine the light and get the public’s attention focused back on cargo, because it’s important. It is indeed key in returning the economy of this region back to a healthy status,” said Hartsfield-Jackson deputy general manager Mario Diaz, who noted that the airport is already “aggressively pursuing” new traffic.
Hartsfield-Jackson has plenty of unused capacity for new air cargo, Diaz said. Though traffic through Atlanta last year was down 35 percent from its high in 2004, the airport already can handle more cargo than it did that year, he said. It also has plans prepared to add two more 100,000-square-foot buildings of cargo space “should the economy come roaring back,” Diaz said.
-- Eric Stirgus contributed to this report.
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