Airline Cargo Management / December 2004
By Larry Luxner
MIAMI — It's 5 a.m., and even though darkness still shrouds Miami International Airport, workers are already swarming around half a dozen aircraft, unloading their precious Latin American cargo.
In one corner, a Tampa Cargo DC-10 freighter is being emptied of exotic flowers from Colombia. Right behind it, a Cielos del Peru MD-11 is unloading fresh Peruvian asparagus, and not far away a LAN aircraft is disgorging fresh Atlantic salmon and tilapia cultivated in the frigid waters of southern Chile.
By 8 a.m., the big jets are already clearing out, heading back to South America loaded with cellphones, PCs, medical instruments and other high-value exports.
This beehive of early-morning cargo activity is the envy of many other U.S. airports hoping to cash in on the growing trade with Latin America. But that's unlikely to happen soon, given MIA's dominance in this lucrative but cut-throat market.
"Atlanta, New Orleans and some cities in Texas have tried to compete with Miami in order to be a U.S. gateway to Latin America, but haven't succeeded because of the distance to most Latin American countries," says Claudio Silva, vice-president of sales for LAN Cargo. "Miami is closer, so from the operational point of view, it's more efficient."
Silva told Airline Cargo Management that his airline — a division of LanChile — flies 3,500 tons of imports from Latin America to MIA weekly, and an average 4,000 tons of exports a week southbound.
"We have some synergies because fly not only freight but also passengers into Miami," he explained. "On those passenger flights, we also utilize belly capacity, so for us, it's cheaper to operate everything into one airport. And Miami, from the passenger perspective, is a more attractive destination for Latin travelers than Atlanta or Chicago."
In 2003, MIA handled 29.6 million domestic and international passengers, a 1.55% drop from the 30.06 million travelers who passed through the airport in 2002. On the other hand, total cargo volume rose by 0.8%, from 1.79 million tons in 2002 to 1.81 million tons in 2003. International cargo alone increased by 5% to 1.39 million tons of cargo valued at $23.1 billion.
The airport itself covers a land area of 3,230 acres; its cargo warehouse space comprises 2.73 million square feet in 17 buildings, with the last building — a 145,000-square-foot warehouse facility — inaugurated by Federal Express just a few months ago.
The new FedEx hub, which can sort up to 6,000 packages per hour or 40,000 packages a day, also includes refrigerated storage space for agricultural products, 52 truck parking spaces and 23 loading bays. It also houses a bonded warehouse with onsite customs-clearance agents.
All told, MIA has poured $500 million into its air cargo infrastructure since 1992.
That investment has paid off handsomely. Last year, MIA ranked first in the United States for international freight, handling 85% of all U.S. cut-flower imports, 65% of all fish imports, 42% of all fruit and vegetable imports and an overall 66% of the 558 million kilograms of perishables shipped via air into the United States.
The competition didn't even come close. New York JFK got a 14% slice of the business in 2003, followed by Los Angeles LAX (8%), Boston Logan (3%) and all other U.S. airports (9%).
Christian Helms, a member of the Luxembourg-based Cool Chain Association, agrees that MIA will maintain its enviable position for awhile as the U.S. air-cargo gateway to and from Latin America — but not forever.
Helms, formerly managing director of HPL Group, said freight operations are gradually moving to more freighter-oriented airports like Huntsville, Ala.
"In Europe, there are a lot of those kinds of airports, where revenues to a big extent are driven by cargo," he said. "The big passenger airports have to look after their passengers first, because that creates more revenue for the airport. Therefore, pure freight operations will move to non-passenger airports, especially since nighttime landings are increasingly being banned because of noise pollution. You can already see this at Heathrow, Frankfurt and other major world airports. I wouldn't be surprised if sooner or later it's going to happen in Miami."
Helms added that secondary airports are increasing in importance because the main passenger airports are either too expensive or too congested for cargo.
"I'm sure MIA will maintain its stronghold on Latin America, but long-term, where will the new freighters go?" he said. "Air freight is projected to grow by 6% a year. I don't think Miami can cope with that, not if passenger traffic grows as well. They simply will have to decline planes. There's only so much capacity available."
Yet that scenario doesn't exactly keep Bunny Schreiber awake at night.
An aviation marketing specialist for the Miami-Dade Aviation Department, which oversees MIA, it's Schreiber's job to lure new cargo business — and she doesn't see much chance of the airport losing its dominant position anytime soon.
"Some airlines have complained about lengthy inspections, and sometimes they're justified. But whenever we've had a complaint that inspections have taken too long, we've rectified them. I don't feel there's any longer or shorter wait here than at any other airport."
Schreiber added: "If you're having trouble clearing fruit and vegetables, it's going to be worse somewhere else, because we have all the mechanisms in place to clear everything — including a perishables committee that consists of federal agents, PPQ, U.S. Customs and Border Protection people."
LanChile's Silva said that's a big factor in his airline's decision to continue operating out of MIA. In fact, between January and July 2004, LanChile was the No. 1 cargo carrier at MIA, with 103,447 tons of cargo and a 9.5% share of the total for that seven-month period.
Running a close second was American Airlines, with 102,312 tons of cargo (or 9.4% of the total) — all of it flown as belly cargo, followed closely by Tampa Cargo (101,433 tons, or 9.3% of the total).
With a fleet of 3 DC 8-71F aircraft, one 767-200 SF (the next three will be delivered before February 2005) and one leased DC-0 30 wide body aircraft, Tampa Cargo serves serves Colombia, Ecuador, Mexico, Peru, Suriname and Venezuela.
According to a company statement, Tampa Cargo has become logistics specialists on perishable goods, general cargo, textiles and livestock.
"Conscious of the importance of quality in cargo transportation, it has pioneered the development of security systems that certify the reliability of shipments, and also it is recognized by its excellent installations that guarantee the perishable cargo and the preservation of the cold chain, thanks to which Tampa Cargo can deliver the products in perfect temperature conditions, whatever its destination," said the company.
Other leading airlines at MIA, ranked by January-July 2004 cargo volume, are UPS, Gemini Air Cargo, Cielos del Peru S.A., Federal Express, Arrow Air, Centurion Air Cargo and Amerijet International.
"A lot of capital has been invested in Miami's warehousing and cooling facilities. It's not easy to move all that infrastructure from here to a different city," Silva said. "Miami also offers better connections to some destinations that don't generate enough traffic for us to operate directly from Chile, for example Guatemala or El Salvador. So we have interline partnerships with other companies that serve those markets."
Schreiber says one of MIA's biggest competitive advantages is that it has sufficient "backhaul" or cargo flying southbound.to justify the northbound routes in the first place.
"Many years ago, Orlando wanted to become the capital for importation of ferns. The problem is, they had nothing for airlines to take back [south]. You can't have empty aircraft flying," she said, adding that "it takes years and years to get a situation where you've got the federal agents, the importers, all the industry people working together, and we already have that in Miami."
If Schreiber is worried that other airports will soon encroach on MIA's turf, she certainly doesn't show it.
"Pittsburgh wanted to get Tampa Cargo to bring one flight a week, and I worked with Pittsburgh to try and help them. They put in a lot of work, but Tampa has not agreed," she said. "Houston recently called to ask how to build a new fumigation facility. When I asked what their capacity was, they told me they can do four trailers at a time. We can do 22. These airports have big ideas about taking away some of our market share, and I tell them, 'any way I can help you, let me know.' I'm that sure they're not going to get very far."