SWUTC/11/167261-1 International Air Cargo
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Technical Report Documentation Page 1. Report No. 2. Government Accession No. 3. Recipient's Catalog No. SWUTC/11/167261-1 4. Title and Subtitle 5. Report Date International Air Cargo Operations and Gateways: July 2011 Their Emerging Importance to the State of Texas 6. Performing Organization Code 7. Author(s) 8. Performing Organization Report No. Dr. Leigh B. Boske and Hee Deok Cho Report 167261 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) Center for Transportation Research University of Texas at Austin 11. Contract or Grant No. 1616 Guadalupe, Suite 4.202 10727 Austin, Texas 78701 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered Southwest Region University Transportation Center Texas Transportation Institute Texas A&M University System 14. Sponsoring Agency Code College Station, Texas 77843-3135 15. Supplementary Notes Supported by general revenues from the State of Texas. 16. Abstract Air cargo transport has become particularly important in today’s expanding global economy for the movement of high-value goods such as electronics, computer components, precision equipment, medical supplies, auto parts, and perishables. Air cargo operations allow fast, frequent, and predictable transit as an increasing number of companies out-source manufacturing to remote locations of the world. Decreasing product cycles for high-value, high-technology goods have made fast delivery to markets essential. In addition, local industries have become global traders, who can reach consumers worldwide. This report examines the potential of Texas-based airports, especially Dallas-Ft. Worth International Airport and the Houston Airport System, to emerge as international gateways for global trade in general and trans-Pacific trade in particular. The period covered is 2001 to 2006. The report is composed of four chapters. The first chapter examines global, U.S., and Texas air cargo trends. The second chapter addresses air freight performance and activities at Texas airports. The third chapter discusses the relationship between air cargo/passenger operations and their impacts on local economic development. The final chapter discusses the policy implications for the State of Texas. 17. Key Words 18. Distribution Statement Air Cargo, Cargo Hubs, Trans-Pacific Trade No restrictions. This document is available to the public through NTIS: National Technical Information Service 5285 Port Royal Road Springfield, Virginia 22161 19. Security Classif.(of this report) 20. Security Classif.(of this page) 21. No. of Pages 22. Price Unclassified Unclassified 81 Form DOT F 1700.7 (8-72) Reproduction of completed page authorized International Air Cargo Operations and Gateways: Their Emerging Importance to the State of Texas by Dr. Leigh B. Boske Professor Lyndon B. Johnson School of Public Affairs The University of Texas at Austin & Hee Deok Cho Graduate Research Assistant Lyndon B. Johnson School of Public Affairs The University of Texas at Austin SWUTC/10/167261 July 2011 Sponsored by: Southwest Region University Transportation Center Texas Transportation Institute Texas A&M University System College Station, Texas 77843-3135 iv DISCLAIMER The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the information presented herein. This document is disseminated under the sponsorship of the U.S. Department of Transportation, University Transportation Centers Program, in the interest of information exchange. Mention of trade names or commercial products does not constitute endorsement or recommendation for use. ACKNOWLEDGMENTS The authors wish to acknowledge that support for this research was provided by a grant from the U.S. Department of Transportation, University Transportation Centers Program to the Southwest Region University Transportation Center, which is funded, in part, with general revenue funds from the State of Texas. v vi EXECUTIVE SUMMARY International merchandise trade has experienced rapid growth due to the globalization of manufacturing. Because worldwide economic growth tends to be much more stable than that associated with any individual country, the international air cargo industry has experienced steadier demand for its services than domestic operations. The growth in air freight is particularly evident on trans-Pacific routes linking U.S. origins and destinations with those of China, Japan, and Korea where high-tech manufacturers and time-sensitive shippers are locating their operations to sites accessible to major airports for the transportation of telecommunications equipment, information technology, medical equipment pharmaceuticals, software, and the like. The search for Asian and U.S. air cargo hubs is turning into a high-stakes battle for capturing future air freight flows across the Pacific Ocean. This is driving substantial investments in the surrounding regions of major airports. And the jobs in time-sensitive industries that depend upon air cargo transport tend to be higher-paying than most other industrial sectors. These trends are evident at Dallas-Fort Worth International Airport (DFW). In 2005, international air cargo accounted for 33.6 percent of all cargo at DFW. Asian cargo increased 2000 percent since 1993 and presently makes up nearly two-thirds, or 61 percent, of DFW’s total international cargo of which China accounts for 16.5 percent, Taiwan 20.9 percent, South Korea 10.3 percent, and Japan much of the remainder. In order to attract more air freight traffic, DFW has expanded its air freight facilities. Trammell Crow opened a newly-built 35-acre cargo center, comprised of 395,000 sq. ft. of air cargo, logistics, and freight forwarding office and warehouse space. An additional 350,000 sq. ft. of ramp space, 118,000 sq. ft. of warehouse space and 275,000 sq. ft. of logistics space was recently completed. The Houston Airport System (HAS) represents another example of these growth trends where international air cargo accounts for 42.5 percent of all air cargo. In January 2003, George Bush International Airport (IAH) opened a $140 million cargo facility that attracted United Parcel Service (UPS) and Federal Express (FedEx) to 500,000 sq. ft. of warehouse space. Soon after, Continental Airlines invested $30 million in a new facility to handle Asian and European traffic. HAS and the Shanghai Airport Authority signed a cooperation agreement to promote air cargo trade and economic development between their airport systems and respective regions. And, during 2007, China Airlines Cargo, Korea Air Cargo, EVA Air Cargo, Singapore Airlines, and Continental Airlines launched or announced 42 additional weekly flights from Houston and introduced air cargo service from Houston to Korea, Taipei, and Singapore, among other destinations. This report is composed of four chapters. The first chapter examines international, U.S., and Texas air cargo trends. The second chapter addresses air freight performance and activities at Texas airports. The third chapter discusses the relationship between air cargo operations and regional economic development impacts. And, finally, the last chapter evaluates the potential of future international air cargo and its policy implications for the State of Texas. vii viii TABLE OF CONTENTS CHAPTER 1. GLOBAL AND UNITED STATES AIR CARGO TRENDS.................................. 1 International Air Freight Performance by Service Type ............................................................ 1 U.S. Trans-Pacific Air Freight Performance ............................................................................. 7 Overall Air Freight Performance in Texas ................................................................................ 8 Major Texas International Air Freight Partner Countries .......................................................... 9 CHAPTER 2. AIR FREIGHT PERFORMANCE WITHIN TEXAS ........................................... 13 Overall Air Freight Performance by Service Type .................................................................. 14 Trans-Pacific Air Freight of Texas .......................................................................................... 19 Air Cargo Performance of Dallas-Fort Worth International Airport (DFW) .......................... 21 CHAPTER 3. ECONOMIC IMPACTS OF AIR CARGO ............................................................ 49 Role of the Air Cargo Industry ................................................................................................ 49 Main Players in the Air Cargo Industry ................................................................................... 49 Measurement of Economic Impacts of Airports ...................................................................... 51 Commercial Aviation and the American Economy ................................................................. 52 The Economic Impact of General Aviation in Texas .............................................................. 53 Economic Impact Study of Houston Airport System .............................................................. 55 CHAPTER 4. POTENTIAL OF AIR FREIGHT AND ITS POLICY IMPLICATIONS FOR TEXAS ............................................................................................................................ 57 Regional Air Freight Forecast.................................................................................................. 58 Policy Implications for Texas .................................................................................................