Philadelphia International Airport (PHL) is located right in the middle of the American political capital Washington DC to the south and the financial capital New York to the north. Seven miles from downtown Philadelphia, the airport is easily accessible and convenient to many tourist sites, business centers and cultural centers. The airport is self-sufficient and does not use local tax money. PHL is one of the region’s biggest economic engines, generating $16.8 billion for the economy and supporting 106,000 full-time jobs annually.
However, this major US east coast airport has done very little to expand outbound cargo activity and much of the growth in cargo activity has occurred by accident.
“I think our cargo operations could have grown considerably beyond what they are today. But we simply had no facilities or ability to expand our capacity,” says Jim Tyrrell, chief revenue officer at Philadelphia International Airport.
But even without specific effort and investment, PHL has a good freight track record. Global parcel giant UPS established its operations several years ago in PHL and operates one of the largest hubs in the United States. In fact, two other big names in the express mail industry – FedEx and DHL – also have significant operations at PHL. American Airlines has its hub at the airport and the airline will fly to 11 destinations in Europe this year. Add to that the heavy loads of the world’s leading cargo carriers like Qatar Airways Cargo and Emirates SkyCargo. In February this year, the Dubai-based cargo carrier announced scheduled cargo services linking PHL to key markets.
But it was since 2019 that things started to change for PHL and airport management started to consider serious investment in developing cargo infrastructure at the airport to handle all types of cargo . In 2019, the annual cargo throughput at the airport was over 600,000 tonnes. PHL handled 3.2% more tonnes of freight in 2021 than in 2020, a pandemic-era trend that is only expected to grow as demand increases for people to get their goods faster. For the year 2021, the airport’s annual cargo throughput was 643,138 tonnes of cargo.
“So Philadelphia only gets about 5% of its total revenue from its cargo operations. And again, the only source of that revenue is from landing fees for these cargo planes. So if you think about it, we have about 30 dedicated cargo flights per day, whereas we have over 350 flights per day in total, so, you know, 10% of the business and 5% of the revenue comes from our cargo operations,” Tyrrell says.
A 2017 study found that the airport only captures 9% of a potential $53 billion air cargo opportunity passing through its catchment area. Tyrrell said the airport was unable to take advantage of this opportunity because “we couldn’t accommodate this cargo; we didn’t have the facilities to handle this cargo.”
Has the pandemic really opened PHL management’s eyes to realizing freight’s revenue potential? And did that guide the airport management to go ahead with the big investment?
“Yes and no,” Tyrrell said. “So to be honest, the airport acquired a 135-acre parcel in 2017. We had been working on it for quite some time before. We had a very good idea that we were in a cargo-rich environment, but we didn’t we know how we commissioned a study from a company in 2017. And to our surprise they came back with the results and it showed that $53 billion worth of air cargo goods were being shipped or received in our catchment area every year. $53 billion, that’s a pretty big amount. And it’s less than a four-hour drive from Philadelphia. We’ve only captured 9% of those big numbers. 70% of this cargo approach so close to Philadelphia International Airport and head north to New York airports. It’s a two and a half hour truck ride. Plus, who knows how long the processing time at airports which are really t congested? Well, think about it, if we could capture 20% of that leak. Just think of the benefit not just at the airport, but I think of those regional manufacturers and international reg companies that will save millions of dollars in shipping and processing. Think how beneficial this would be for our region. “The thing is, PHL doesn’t have the facility yet. But it has an ambitious $1.2 billion freight expansion plan. It has set out a short, medium, and long-term vision to create freight that attract shippers and freight forwarders.
PHL wants to change things. It aims to become a preferred air cargo hub on the East Coast of the United States. Rochelle Cameron, the airport’s general manager, wants to make PHL a regional economic engine. “In 2022, we look forward to advancing our air cargo development program, which will establish Philadelphia as a logistics hub and result in thousands of new jobs, further strengthening PHL’s role as a regional economic engine.
Tyrrell says the cargo redevelopment program has a very clear agenda with short, medium and long term goals and is designed in such a way that the annual throughput of cargo at the airport over the years will increase considerably.
The airport now has just under half a million square feet of cargo warehouse space. According to Tyrrell, the majority of this warehouse is not necessarily used for freight throughput. “We are a huge hub for passengers. And a lot of the warehouse space is used to support passenger activity. And that actually led us to develop the phases of our cargo redevelopment program .”
“So our cargo redevelopment program which will allow us to increase the volume of cargo business is currently in the design phase. So the timing of this may not impact volumes over the course of the next year. It might be a bit out of that. But we also have early-stage development plans that will allow us to increase our freight throughput,” he says. warehousing space for cargo handling, the airport is also studying how best to optimize cargo operations and thereby attract new airlines and increase the frequency of main deck operations by airlines existing freight.
“The great thing about diversification is that most of our passenger business takes place between 6 a.m. and 8 p.m. Most of our cargo business takes place outside of those hours. the rest of the day If we can increase our cargo activity, especially that which will take place during the hours when passenger airlines are not flying, this will only maximize the use of this extremely expensive infrastructure that sits unused during those evening hours makes sense for the airport to continue this type of activity,” says Tyrrell, who has worked at the airport for more than 35 years as the head of various departments.
PHL is also anchoring an air cargo community system to integrate various stakeholders at the airport using digital, easy-to-use and secure digital tools to transform cargo operations to meet growing customer demands and meet the expectations of the digital age or global commerce and Commerce. The Airport Cargo Community System (ACCS) is to be implemented and deployed by Kale Logistics Solutions.
“Because we want to be a better partner for our cargo community; we know how important this is not just for the airport, but for the region. We are having great discussions on how we can improve better and make Philadelphia a more efficient logistics center,” Tyrrell explained a few reasons for creating an ACCS at PHL.
An annual throughput of one million tons of freight is neither an unattainable goal nor a distinct one given the direction of PHL’s freight expansion program. It will come as no surprise at all if the airport closes 2022 with a record 700,000 tonnes of cargo.
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