Big Apple: Still a beacon of growth
At the core of the ‘Big Apple’ and its air cargo business is New York’s JFK International airport. A feature of the industry landscape for decades, it has nevertheless struggled to keep up with the explosion in demand for cargo moving in and out of the USA’s biggest city. The air freight market through JFK undoubtedly struggled during the industry slowdown that began to be felt in the latter part of 2008, and indeed continues to struggle to some extent now. Moreover, while JFK is certainly one of the nation’s most important gateways, it is an old airport and – being surrounded by a densely populated area – has little land into which it can expand. As Brandon Fried, executive director of the Washington DC-headquartered Airforwarders Association (AfA) – a trade grouping of cargo agents that seeks to serve as “the voice of the air freight forwarding industry” – points out, the Port Authority of New York and New Jersey (PANYNJ) and its dedicated cargo team under Mike Bednarz have done a good job and put a lot of hard work into improving the airport, but there is only so much you can do with an airport with limited scope for land expansion. The same might be said of La Guardia, an older facility that was likened earlier this year by US Vice President Joe Biden to a third-world facility. But it is by no means all doom and gloom. There has been investment in JFK’s cargo facilities, such as the new state-of-the-art ARK animal handling centre that is expected to open soon, while there has also been heavy state spending on improvements at New York’s third airport – Stewart, in New Jersey. And, while in the long-term there is potential for some of JFK’s cargo traffic to gradually siphon off to other regional gateways such as Philadelphia (a two-hour drive from New York and just off the I95 highway), Boston and Washington Dulles – all of which are seeking to develop their long-haul airline networks – JFK remains the number one cargo hub for the region’s freight forwarding community as well as for big airlines seeking to serve the area. While there can be a number of reasons for the sluggishness faced by the world’s busiest airport, like fuel price volatility and consequent shift to other modes of transportation, the main reason was the weakness in the transatlantic market. Says, Michael Bednarz,Manager, Air Cargo Business Development at PANYNJ, “trans-Atlantic market weakness was a key reason that any growth we were hoping to achieve in 2013 was kept stagnant. Having the nation's largest consumer market coupled with our proximity to key Europe and trans-Atlantic markets may give us a logistical advantage. Unfortunately, we were not able to enjoy any gains due to generally weak trade-lane activity. “ Tom Staub, CEO of New York-based multi-modal freight forwarder Interfreight, believes that the nature of the air cargo business has changed not only in New York but, to a large degree, in the surrounding area too. Much of the industry that used to be based in the north-east has moved, he notes, southward toward sources of cheaper labour. Moreover, in terms of air freight, so many more airlines now fly point-to-point to destinations around the north-east – for example, through the gateways of Washington Dulles, Philadelphia and Baltimore – that New York JFK now longer serves as a vital shipping hub for the region. Of course, JFK struggled as a result of the recent industry downturn, but the problem is more structural than that. While it remains “a great airport”, he insists, with the structure of the business changing and the gateway’s own problems of congestion, there are formidable obstacles to forwarders operating at the peak of efficiency through the facility, Staub believes. The problem of congestion on the highways around JFK is well known, as are the difficulties associated with giant trucks and trailers having to navigate through some comparatively narrow streets in order to reach what is a city-based airport.
Staub agrees that The Port Authority has done all it can to work with the carriers bringing in and taking out JFK cargo, “We have a number of initiatives that either have now been completed or are underway. The JFK Airport Travel Plaza had its official grand opening in April 2014. It features a truck stop and convenience center, which includes a variety of services for truckers and soon to open truck parking in the summer of 2014. Having a dedicated parking facility will provide longer-haul truckers with dedicated truck parking and staging options while waiting to pick-up or deliver their shipments to JFK's cargo facilities. The facility operator is also currently developing an electronic communications system, which will allow truckers to communicate with individual cargo facilities”, says Bednarz. Salvatore Stile II, president of New York-based forwarder Alba Wheels Up (actually the largest JFK-based international forwarder and customs broker, he says) is another to see New York JFK possibly suffering at the hands of other regional gateways. Right now, the air cargo market in the USA’s biggest city is “sluggish”, Stile advises, and will remain so for quiet sometime. Due largely to its infrastructure issues and congested roadways, JFK has fallen way behind Memphis, Anchorage, Louisville, Miami, Chicago and Boston airports, to name just a few, he insists. JFK was driven by European cargo, and aggressive marketing by secondary gateways like Dallas/Fort Worth, George Bush Intercontinental, Atlanta Hartsfield-Jackson, Washington Dulles and Boston Logan, and they are now attracting cargo that had flowed through JFK for decades. Most of these secondary gateways began to realise and address growing international trade interests and to take advantage of unused capacity in the holds of passenger aircraft,” Stile observes. But he also insists that, with New York being the nation’s largest and most affluent consumer market, plus boasting a huge network of freight forwarders and customs brokers and trucking companies in situ, the city can recover that lost air cargo business. Another link in the air cargo chain through New York are the numerous cargo general sales agents (GSAs) operating in the local market. John Ryan, who acts as the freight sales agent for a major scheduled airline’s flights through JFK remains positive. He has continued to sell cargo space both in and out of the gateway without too many problems but, of course, not all carriers have fared so well. Ryan points to many of the airlines operating into Europe as struggling both with demand for capacity and for the yields that are available. The Middle East market continues to do well, though, he says. But there is light at the end of the tunnel. “We are beginning to see some increases in international cargo for both John F. Kennedy and Newark Liberty International Airports. While JFK's results were higher, Newark had almost 4% growth in international cargo in March and is nearly at the breakeven point for the March year-to-date period. Several carriers have introduced new service to JFK. To highlight a few, Kalitta begin twice-weekly B747-400 freighter service between JFK and Amsterdam in March while Ukraine International Airlines begin JFK passenger service to Kiev. Looking ahead, China Southern will begin passenger service between Guangzhou and JFK this summer. Cathay Pacific which operates four passenger flights daily as well as daily freighter service between Hong Kong and JFK also began daily passenger service between Hong Kong and Newark Liberty International Airport in March. This is good news for The Port Authority as new additions in freighter and belly capacity boosts the strength, reach, and attractiveness of our regional air cargo gateway”, says a confident Bednarz. The problems of congestion and saturation notwithstanding, New York still enjoys the prime status in the world commerce.