TYING FREIGHT TO ECONOMIC DEVELOPMENT:

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TALKING FREIGHT SEMINAR SERIESFebruary 18, 2004

TYING FREIGHT TO ECONOMIC DEVELOPMENT AIR CARGO
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AIR CARGO DEVELOPMENT POTENTIAL

• Air Cargo Markets
• Demonstrated unmet Demand
• Existing Airports are Capacity Constrained
• Regional Growth Driven Demand
• Speculative Development to Drive Regional Growth
• Air Cargo Airports
• Existing Underutilized Facilities
• Regional or Municipal Airports (G.A.)
• Military Base Conversion
• New Construction

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HOW DOES AIR CARGO CREATE ECONOMIC ACTIVITY?

• Direct Impacts
• Air Cargo Carriers, Forwarders, Truckers
• Support and Ancillary Services
• Indirect Impacts
• Shippers
• Manufacturing and Suppliers
• Third-Party Logistics
• Distribution (Retail and Wholesale)
• Enhance FTZ Utilization

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THE MULTIPLIER EFFECT
Greater Economic Benefit is derived from the
Secondary Impacts. Manufacturing and
Distribution Operations will locate and/or expand
to take advantage of new multi-modal
services. Air Cargo intensive Manufacturers and
Distributors produce and transport high-value
goods.
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PRIMARY PLANNING CONSIDERATIONS

• Market Understanding Service Demand
• Cargo Carrier Understanding Service Supply
• Anchor Tenant Concept
• Critical Mass

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LOCAL/REGIONAL AIR CARGO MARKET

• Demand Analysis
• Geographic Region to be Served Catchment Area
• Core Market Grouping(s)
• Population and Industrial Centers
• Identifies Competing Facilities within Region
• Identifies the Region that will Benefit

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WHAT THE DEMAND ANALYSIS TELLS US

• Is this Project Feasible in light of
• Current and Projected Volume of Air Cargo
• Capacity Constraints at Competing Airports
• Achievable Levels of Cargo Diversion
• Market Growth Potential
• Ideal Airport Location
• Types of Shippers and Freight within Region
  (Wholesale, Retail or Combination)

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SUPPLY ANALYSIS

• What Air Cargo Market will this Facility Serve?
• Air Cargo is NOT Generic
• Air Cargo Service is NOT Generic
• Wholesale Industrial/Manufacturing Shippers
• High Volume per Customer, High Frequency
• Heavy reliance on Forwarders and All-Cargo
  Charters
• Manufacturing Centers, Industrial Park
  Concentrations
• Retail Consumer and Business Shippers
• Low Volume, Sporadic Frequency
• Heavy Reliance on Integrated Express Carriers
• Large population and Urban Centers

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SUPPLY ANALYSIS

• Who will Provide the Service?
• Integrated Express Carrier
• All-Cargo Carrier
• Freight Forwarder
• Commercial Passenger Carriers
• Develop the Facility Based on the Anticipated
  Service Provider They are Your Customer.

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AIR CARGO AIRPORT TYPES

• Three Types of Air Cargo Airports
• Local Market Station Offers Service to
  Surrounding Market Area or Catchment Area
• Hub (Regional and National) Consolidates and
  Distributes Network Flows
• International Gateway Consolidates and
  Processes International Material

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AIRPORT LOCATION FACTORSIntegrated Express
Carriers
Catchment Area is Small Up to 100 Miles
Markets are Tightly Defined Airport Must Be
Located Near the Largest Concentration of
Customers
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AIRPORT LOCATION FACTORS Freight Forwarders and
All-Cargo Carriers
Catchment Area is Large Up to 600
miles Willing to Truck Greater Distances
Loosely Defined Market Areas Multiple Competing
Airports Can Serve a Single Catchment Area
Local Market Stations are Customer
Locations Flexibility - Networks are Fluid
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DEVELOPING CRITICAL MASS

• Necessary Ancillary Support to Facilitate Air
  Cargo Operations Include
• Interstate/Highway Access
• Distribution/Intermodal Facilities
• Warehouse Space
• LTL Trucking
• Ground Handling
• Customs
• Typically an Evolutionary Process
• An Anchor Tennant Will Jump-Start Necessary
  Critical Mass

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ANCHOR TENNANT

• A Single Airport User that Can Initiate and Drive
  Facility Usage.
• User Can be Either an Air Cargo Carrier or a
  Large Volume Shipper
• Air Cargo Hub, Local Market Station or Gateway
• National Distribution Center
• International Manufacturer-FTZ Tennant

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Successful All-Cargo or Cargo Focus Airports

• Alliance Dallas, Texas
• Rickenbacker Columbus, Ohio
• Huntsville Huntsville, Alabama
• Airborne Airpark Wilmington, Ohio
• So. Cal. Logistics Airport Victorville, CA

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ATTRACTING AIR CARGO SERVICE

• Market the Location!
• Air Cargo Carriers Must Operate from Airports
  Near Customers (Catchment Area) Highlight Local
  and Regional Customer Base
• Proximity Criteria is Dependant on Type of
  Carrier and Airport Function Understand Target
  Carrier Networks and Operations
• Airport Facility Quality is Secondary to Location
  Sell the Location not the Airport

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ATTRACTING AIR CARGO USERS
What Are the Marketable Benefits? Cost, Time and
Reliability Increased Freight Connectivity
Reduced Drayage Costs Access to New
Markets J.I.T. Manufacturing Capability Enhanced
Distribution Efficiency/Options
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TARGET INDUSTRIES

• High-value products, short life cycle products,
  time-critical J.I.T. and spare part goods.
• Aeronautics - Equipment Parts
• Automotive - Equipment Parts
• Pharmaceuticals
• Computers Computer Components
• Diagnostic and Medical Equipment
• Software
• Textiles - Garments
• Perishables - Flowers, Fruit, Vegetables Fish
• Economic perishables - Printed material
• Telecommunications Equipment - Cell Phones,
  Pagers

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ULTIMATE GOAL
Increase Regional Competitiveness via Increased
Freight Connectivity, Efficiency and Access to
Markets Air Cargo Operations Can Provide a
Competitive Advantage to Regional Economic
Development Efforts. Efficient Air Cargo Access
can Provide a Tangible Marketing Tool for
Attracting New Businesses. Most Air Cargo
Intensive Target Industries Exhibit Desirable
Economic Characteristics.