Air Cargo Advantage in the Edmonton Region
Air cargo represents the transportation of goods by… you guessed it, air. Many are unaware that nearly every passenger flight is carrying some freight along with the passengers and their baggage. In fact, about half of all air freight was transported in passenger planes. During the past two years however, passenger flight volumes drastically decreased (down 60% in 2020), while simultaneously cargo volumes drastically increased, to a point where cargo contributed to 49% of all airline total revenue in 2020 (up 30% from 2019). This trend has continued throughout 2021 and 2022 as cargo revenues have set new records year over year. Until passenger volumes return to their pre-pandemic levels, airlines have had to adapt and transition their emphasis towards the deliverability of air cargo to meet the soaring demands of e-commerce. This has been accomplished in the near term by growth in freighter (pure cargo planes) flight volumes as well as the conversion of many passenger planes into “preighters” (passenger planes that carry freight in the cabin). The long term expectation is growth in the freighter fleet and an emphasis on the diversification of revenues by investing in cargo efficiencies.
AIR CARGO LOGISTICS AND ITS IMPORTANCE IN THE SUPPLY CHAIN
Air cargo assets are facilities that assist with the rapid intermodal movement of goods, particularly goods that are high in value, low in weight, and time sensitive, such as perishables, pharmaceuticals, and electronics. Air cargo facilities are located on, or adjacent to, airport lands and are tenanted by users who require access to the airport for the movement of goods. This accessibility comes with much more stringent security provisions, especially if the warehouse has direct access to the tarmac and airplanes. This real estate is often leased on a “land lease” basis, though it can be a typical building lease with the exception that the tenant pays for the building and ramp space. A cargo facility can be delineated by five specific zones within the asset, as follows:
Image Source: NAIOP
Airside Interface - where goods are loaded and unloaded from planes
Elevating Transfer Vehicle (ETV) or Lift & Run Unit Load Device (ULD) Storage - the equipment and containers used to bundle and safely load and unload planes
Build Up & Breakdown Workstations - of pallets and ULDs for transportation
Bulk Storage - vertical racking and Automated Storage & Retrieval Systems (ASRS)
Landside Truck Interface - where goods are loaded and unloaded from trucks
The average building specifications for modern cargo facilities include: Clear Height 32’; Facility Depth 200’ - 300’; Facility Length 700’; Truck Court 130’; Aircraft Ramp Parking 300’. At some major airports, the industry is now exploring multi-story facilities as well.
WHY EDMONTON FOR AIR CARGO?
The Edmonton International Airport (EIA) has the largest land mass of any airport in Canada, and has activated over $1.3 billion in on-airport development - more than any other airport in North America. You can read about some of these developments in a previous article I wrote entitled: The Edmonton International Airport has Attracted 1.6 Million Square Feet of Commercial Development... Since Last Year!
EIA is also currently in the middle of a $36 million cargo expansion. This project will expand the cargo-area apron, allowing the airport to accommodate more planes at one time; it will install a new hydrant fueling system specific for cargo refueling needs, tying into the 2- two-million litre Shell Aviation Fuel tanks and replacing the truck-based fueling system; and finally the airport’s Fresh Cargo Centre, the cold-storage area, will be expanded in order to facilitate increased movement of perishable goods.
EIA is the only airport in Canada with the globally recognized CEIV Pharma certification from the International Air Transport Association. This means we meet the highest standards in the world for handling temperature-sensitive cargo such as agriculture and food products as well as pharmaceutical and medical cargo.
An emphasis on sustainability initiatives have allowed EIA to become the first airport in the world to decouple growth of the airport from carbon emissions. In fact, the EIA has doubled in size in recent years, but its energy consumption has been cut in half through the integration of BOMA Gold and LEED Gold standards across developments, the inclusion of three cogeneration units to produce its own power to heat buildings, and the world’s largest on-airport solar farm - Airport City Solar - to name a few initiatives.
Beijing to Edmonton flight path is the shortest of any major city in North America
EIA is considered a critical component of the Port Alberta framework which integrates Edmonton’s air, rail, pipeline and trucking capabilities into an inland logistics, manufacturing and cargo hub. As an inland port, the Edmonton Region provides unencumbered access to intermodal rail yards, pipelines, transportation corridors (High Load and CANAMEX), as well as global air cargo access in an environment with favorable regulations and incentives.
EIA is part of the Port Alberta Foreign Trade Zone (FTZ) which provides specific advantages such as lower operating expenses, and on-site customs with efficient clearance.
Last but not least, the EIA is Canada’s closest major airport to Asia by circumpolar routes. By utilizing the curvature of the earth to improve supply chain efficiencies, Edmonton could become a major entry point for all of North America.
The Port of Prince Rupert is North America’s closest port to Asia by three sailing days (36 hours). From Prince Rupert to Edmonton is 1/3 cheaper than the Port of Vancouver to Calgary, and cargo at the Port of Prince Rupert can be offloaded within a day, compared to the substantial delays container ships are experiencing off shore in Vancouver and Lost Angeles.
FUTURE PROJECTIONS FOR AIR CARGO
It is clear to anyone involved in supply chain, logistics, warehousing, or economics that there has been a major shift in the demand for goods and moreover, their swift delivery. The entire retail x industrial framework has been flipped on its head these past two years, as e-commerce became the outlet to service consumer demands. The challenge now, as workers return to the office and projects move forward, is the delays in getting goods to the final customer in an efficient and reliable manner, particularly those perishable or time-sensitive in nature. These increasing demands in climate control and speed of delivery have emphasized the necessity for cargo transportation swiftly by air. This has dominoed into the necessity for air cargo development, and investment into airport real estate, to service this newly prioritized diversity in revenue streams for airports, airlines, and air cargo businesses. There is no expectation that passenger volumes returning to normal levels will take the emphasis off of air cargo. Municipalities now recognize the importance of strong air cargo capacities as a critical component of economic development for a region. Fortunately for Edmonton, EIA was ahead of the game on this trend, and we are poised to become an extremely efficient player in the intermodal supply chain needs of today’s global business leaders. The best thing we can do, is get the word out.