John F. Kennedy International Airport is one of the major gateways in the United States for international air cargo shipments. While passenger enplanements at JFK continue to set new records, cargo movements have been somewhat flat or declining over the past years. Seeking to understand why and determine ways to grow the industry, the New York City Economic Development Corporation and the Port Authority of New York and New Jersey commissioned Landrum & Brown to evaluate JFK’s competitive position. While the study was specific to JFK, the lessons learned may well be applicable to other airports seeking to grow cargo business.
Leverage your existing assets
Many factors go into making a successful cargo airport. To obtain a competitive advantage, an airport must have good physical infrastructure and human capital. The airport must offer a wide array of services, including specialized cargo handling. The airport must provide good access to local, regional, national and international markets. The list could go on and on. However, the JFK Study pointed out the difficulty of building the intricate web of business relationships and services from scratch. The expertise that exists with respect to cargo handling and shipment is an airport’s biggest asset from which to build more business.
Over time, these businesses have developed expertise in transporting all types of cargo, including the most exotic. To capitalize on this, the Port Authority is moving forward with a private developer to construct a modern animal handling facility. This facility seeks to make JFK the preferred port of entry for horses, birds, breeding livestock and every type of animal shipped by air.
Remove impediments to doing business
The value of asking those involved in air cargo “what can we do to make it easier for you to conduct and to grow your business” can’t be overstated. Public agencies owe the businesses raising concerns a thorough examination of the issues and a response. A good example at JFK is access to the airport for trucks. While there may not be much that can be done in the short term about congestion on area roadways, we heard from trucking companies that the lack of a designated truck route to JFK for industry standard fifty-three foot trailers was hurting JFK’s competiveness. In response, NYCEDC has launched a joint effort with the City Department of Transportation and the Port Authority to explore creating such a route.
In a similar vein, another impediment was the lack of a facility on or near the airport to service trucks bound for JFK. The trucks had no place to lay over or easily obtain fuel and the truck drivers had no place to rest or get food. This summer, JFK will open its “Airport Plaza” a dedicated facility for trucks, where all these services will be available.
Improve and modernize aging facilities
When the air cargo industry was in its infancy, JFK had vast amounts of open space in which cargo facilities could be placed. Four areas were set aside for that purpose. However, the cargo areas grew without the benefit of a master plan or concept and now many of those initial facilities have outlived their useful life. Our air cargo study pointed out the value of providing modern and new facilities so that cargo businesses and airlines can take advantage of the newest technologies for handling cargo and can accommodate the largest passenger and cargo aircraft.
The air cargo study provided a concept plan for reorganizing the cargo areas at JFK and emphasizing a different market for each. Traditional cargo businesses needing tarmac access would be in one area, integrators in another and freight forwarders in a third. The Port Authority has begun a program of demolishing the most obsolete buildings to create additional development parcels on airport. Also, negotiations for a new cargo facility are advancing. This new building will represent the continued commitment of the City and Port Authority to the viability of the JFK cargo market.
Strengthen the local business community
A cohesive business community is also key to a successful air cargo airport. While businesses compete fiercely with one another, they also recognize the need to jointly advocate for their needs to the airport, to the city government and to the broader community in general. JFK has the only dedicated airport chamber of commerce in the nation. Several other organizations are devoted to meeting the needs of the air cargo community, including the JFK Air Cargo Association, JFK Customs Brokers and Freight Forwarders, the Long Island Import Export Association and the Kennedy Airport Airlines Management Committee. EDC and the Port Authority are active participants in these groups.
EDC recently hired a consultant to work with cargo businesses that are located off the airport to explore the concept of forming either an industrial business improvement district or a local business association. This would enable these businesses to speak with one voice for needed services, improvements and enhancements within the Springfield Gardens cargo area adjacent to JFK.
In addition, the City is working to promote and increase the use of the foreign trade zone program that is available to import/export businesses in and around the airport. We hosted a business roundtable at which various city agencies presented an overview of the incentive programs and financing packages available to relocating or expanding businesses. Workforce development and recruitment programs were also highlighted.
Examine and streamline business practices
The air cargo study examined current business practices on-airport, including lease terms and rates and the overall approach to management of air cargo facilities at JFK. In response to industry feedback, the consultant recommended more flexible business and leasing practices to attract more companies to the airport grounds. Also recommended was for air cargo to become a stand-alone business center within the Port Authority’s Aviation Department. In response, the Port Authority has convened a task force to examine these recommendations in more detail and recommend implementation actions to its management team.
Market your airport and its assets
The consultant was also clear in his recommendations that JFK (and EWR, the Port Authority’s sister facility in Newark) lacked a presence at major industry trade shows and conferences. People need to know about your current initiatives. And the best way to do that is to talk to industry peers at these events. Without an active marketing presence, the same old tired information and perceptions of how business is conducted at your airport will stand.
In October 2012, for the first time in years, JFK was represented at The International Air Cargo Association exposition in Atlanta, GA. And Port Authority officials have since attended other air cargo conferences domestically and internationally. Marketing materials are being reviewed and updated. And the increased presence has been noted by those in the industry, with new services being launched or contemplated at JFK.
Macroeconomic factors and forces will, of course, play a major role in determining how successful the above initiatives will be in increasing business at JFK. But showing the cargo community that the host city and the airport operator, in this case NYC and the Port Authority, have a shared vision and commitment to improving the business environment is extremely important. Both entities were willing to have a third party prepare an evaluation and take a critical look at the range of current policy, business and planning practices and devise a strategy to improve each. Correcting long-term deficiencies cannot happen with catchy sound bites and quick fixes and takes a long-term commitment to keep and grow cargo business. Continuous improvement and implementation of new initiatives and facilities is the byword for airports seeking to capture increased market share in today’s economy.
For those interested in the full study, it has been posted on the EDC website www.nycedc.com/jfkaircargostudy. In addition we have developed an infographic that lays out the importance of the air cargo industry to the New York City economy. It can be found at the same location.
Senior Director of Aviation,
New York City Economic Development Corp.