ELECTRONIC RETAIL EFFECTS ON AIRPORTS AND REGIONAL DEVELOPMENT A Dissertation Presented to The Academic Faculty by Peter James Hylton In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the School of City and Regional Planning Georgia Institute of Technology August 2018 COPYRIGHT © 2018 BY PETER HYLTON ELECTRONIC RETAIL EFFECTS ON AIRPORTS AND REGIONAL DEVELOPMENT Approved by: Dr. Catherine L. Ross, Advisor Dr. Nancey Green Leigh School of City and Regional Planning School of City and Regional Planning Georgia Institute of Technology Georgia Institute of Technology Dr. Subhro Guhathakurta Mr. Michael J. Bednarz School of City and Regional Planning Air Cargo Business Development Georgia Institute of Technology Port Authority of New York and New Jersey Dr. Alan Erera School of Industrial & Systems Engineering Georgia Institute of Technology Date Approved: May 25, 2018 DEDICATION To my parents iii ACKNOWLEDGEMENTS A successful dissertation requires the insights, guidance, support, and feedback of many people. Those who have assisted my studies are far too numerous to thank by name, yet I would nonetheless like to highlight a few. My advisor, Catherine Ross, has tirelessly assisted, encouraged, and advanced my work during my entire graduate studies at Georgia Tech and particularly during the dissertation process. I am very thankful for her support and guidance. I also would like to extend a major thanks to my dissertation committee members: Michael Bednarz, Nancey Green Leigh, Subhro Guhathakurta, and Alan Erera. Their guidance advanced my work far beyond my original expectations. I owe a great deal to the transportation, aviation, and logistics professionals around the country who freely shared their experience and time with me in interviews, surveys, and informal feedback. A larger community helped me complete my studies, including other professors and my comprehensive exam committee members, namely Tim Welch and Atalay Atasu. My colleagues past and present at the Center for Quality Growth and Regional Development (CQGRD) have also made my time at Georgia Tech a joy, including Sarah, Amit, David, Angie, Audrey, Arthi, Tim, Alex, Carey, Elizabeth, Robby, Zan, Anna, Abi, Sigal, Laura, Richard, Pooja, and Fangru. I’m happy to have gotten to know the other PhD students in the School of City and Regional Planning. I cannot wait to see what the future has in store for each of them. For funding my studies, I would like to thank my advisor, Catherine Ross, as well as the U.S. Department of Transportation’s Eisenhower Transportation Fellowship Program and the Airport Cooperative Research Program’s Graduate Research Award Program. Finally, I thank my family and friends for their endless support. iv TABLE OF CONTENTS ACKNOWLEDGEMENTS iv LIST OF TABLES viii LIST OF FIGURES x LIST OF SYMBOLS AND ABBREVIATIONS xiv SUMMARY xv Chapter 1. Introduction 1 1.1 Problem Statement 1 1.2 Research Questions 4 1.3 Study Objectives 6 1.4 Expected Contribution to Planning Theory and Practice 8 1.4.1 Transportation Planning 9 1.4.2 Airport Planning 9 1.4.3 Land Use Planning 10 1.4.4 Economic Development Planning 10 CHAPTER 2. Literature Review 12 2.1 Introduction 12 2.2 Regional Development Theory 13 2.3 Geography of Logistics Activity 18 2.4 e-Fulfillment Networks 20 2.5 Determinants of FC Location 24 2.6 Airport Effects on Air Cargo Carrier Networks 29 2.7 Logistics in Airport Planning 32 2.7.1 E-Fulfillment in Airport Planning 32 2.8 Research Gaps 37 2.8.1 No Previous Distinction between e-Fulfillment and B&M Retail in Warehouse Location 39 2.8.2 Extent of Association between Air Connectivity and Logistics Activity 39 2.8.3 State of Airport Planning for e-Fulfillment 40 CHAPTER 3. Conceptual Model 41 3.1 Introduction 41 3.2 Primary Actors in the Conceptual Model 42 3.3 Macro-Scale Conditions 43 3.4 Planning Implications 44 CHAPTER 4. Methodology 52 4.1 Introduction 52 4.2 Analysis 1 – Location Model 53 4.2.1 Select Airports and Airport Regions 53 v 4.2.2 Select Retailers 54 4.2.3 Gather Data 56 4.2.4 Calculate Variables 56 4.2.5 Conduct Regressions 60 4.2.6 Assess Hypotheses 64 4.3 Analysis 2 – Shipper Survey 64 4.3.1 Shipper Survey 65 4.3.2 Logistics Interviews 70 4.4 Analysis 3. Airport Planning Benchmarking 71 4.4.1 Selection of Airports for Document Reviews 72 4.4.2 Selection of Airports for Interviews 76 4.4.3 Analytical Categories 76 CHAPTER 5. Location Model 80 5.1 Introduction 80 5.2 Spatial Analysis 80 5.3 Correlations 83 5.4 Location Models 86 5.4.1 DC Location Models 86 5.4.2 FC Location Models 93 5.5 Conclusions from the Location Models 100 CHAPTER 6. e-Fulfillment Networks 103 6.1 Introduction 103 6.2 Respondents 105 6.3 Results Summary 108 6.4 Detailed Responses 111 6.4.1 Part A: Facility Operations 111 6.4.2 Part B: What Does Your Facility Need from a Region? 114 6.4.3 Part C: Outbound Transportation 123 6.5 Interviews 131 6.5.1 Logistics Strategy 132 6.5.2 Regional Factors 134 6.5.3 Outbound Transportation 139 6.6 Conclusions from the Shipper Surveys and Logistician Interviews 140 CHAPTER 7. Airport Planning Benchmarking 142 7.1 Introduction 142 7.2 Document Review 142 7.2.1 Hartsfield-Jackson Atlanta International Airport (ATL) 148 7.2.2 Columbia Metropolitan Airport (CAE) 153 7.2.3 Charlotte Douglas International Airport (CLT) 160 7.2.4 Cincinnati/Northern Kentucky International Airport (CVG) 167 7.2.5 Dallas/Fort Worth International Airport (DFW) 172 7.2.6 John F. Kennedy International Airport (JFK) 178 7.2.7 Piedmont Triad International Airport (GSO) 184 7.2.8 Rickenbacker International Airport (LCK) 192 vi 7.2.9 Minneapolis – St. Paul International Airport (MSP) 199 7.2.10 Phoenix Sky Harbor International Airport (PHX) 202 7.2.11 Document Review Results 208 7.3 Interviews 210 7.3.1 E-fulfillment Influence 211 7.3.2 Forecasting 215 7.3.3 Investments and Policies 217 7.3.4 Land Development 219 7.4 Conclusions from Airport Planning Benchmarking 219 CHAPTER 8. Integrated Analysis 221 8.1 Introduction 221 8.2 Conceptual Model 221 8.3 Responses to Research Questions 226 8.4 Implications for Regional Development 229 8.4.1 Suitable Regions 229 8.4.2 Growth of E-retail 234 8.4.3 Land Use 239 8.4.4 Employment 242 8.4.5 Surface Transportation 244 8.5 Future Research 244 8.5.1 Do e-retailers’ logistics strategies and networks’ size affect the importance that individual facility managers assign to airports and integrator air hubs? 245 8.5.2 Why do regional expenses influence FC location less than DC location? 246 8.5.3 What strategies should local and state governments employ to attract e- fulfillment activity? 246 8.5.4 Can airport planners induce shippers to participate in planning? 247 8.5.5 Which freight community members should participate in airport planning to adequately understand e-fulfillment? 247 CHAPTER 9. Conclusions 248 9.1 Introduction 248 9.2 Major Results 248 9.3 Policy Recommendations 251 9.3.1 Recommendations for Airport Planners 252 9.3.2 Recommendations for Urban Planners 262 9.3.3 A Way Ahead 267 Appendix A. Shipper Survey 269 Appendix B. Selection of Airports for Document Review 274 References 277 vii LIST OF TABLES Table 1 Factors affecting warehouse location. 27 Table 2 Effects on air connectivity. 31 Table 3 Research gaps. 38 Table 4 Variables in the location model. 57 Table 5 Location model specifications. 62 Table 6 Results of Brown-Forsythe Test. 68 Table 7 Assumptions of non-parametric tests. 70 Table 8 Interview list. 71 Table 9 Airports selected for document review. 75 Table 10 Forecasting approaches' potential sensitivity to e-fulfillment. 78 Table 11 Pearson correlation coefficients among variables in location model. 85 Table 12 Results of DC location Models 1A and 1B. 90 Table 13 Results of FC location Models 2A and 2B. 97 Table 14 Comparison of model results to theoretical predictions. 100 Table 15 Summary of location model results. 101 Table 16 Statistical results. 110 Table 17 Rating descriptions. 143 Table 18 Summary of document reviews (part 1). 145 Table 19 Summary of document reviews (part 2). 146 Table 20 Summary of document reviews (part 3). 147 Table 21 Phenomena considered in LCK’s aggressive growth scenarios. 196 Table 22 Variables to estimate counties' logistics suitability. 230 viii Table 23 Assessment of forecasting approaches for e-retail cargo. 255 Table 24 Selection of candidate airports. 274 ix LIST OF FIGURES Figure 1 E-retail growth (annual sales, USA). 2 Figure 2 Dynamics in the relationship between e-fulfillment and airports. 13 Figure 3 Logistics networks for B&M retail (top) and e-retail (bottom). 21 Figure 4 Conceptual framework. 41 Figure 5 Planning implications. 45 Figure 6 Implications for freight planning. 47 Figure 7 Land use model. 48 Figure 8 Implications for airport planning. 50 Figure 9 Implications for economic development planning. 51 Figure 10 Research methodology. 52 Figure 11 Typical characteristics of modern DCs. 55 Figure 12 Document review selection process. 73 Figure 13 Airports for document review. 76 Figure 14 Details of metro areas. 81 Figure 15 Airport regions, FCs, and DCs. 83 Figure 16 OLS assumptions for Model 1A. 91 Figure 17 OLS assumptions for Model 1B. 92 Figure 18 OLS assumptions for Model 2A. 98 Figure 19 OLS assumptions for Model 2B. 99 Figure 20 Survey respondents by retail sector.