Monday, July 24, 2017

John F. Kennedy International Airport (KJFK) Cargo Shipments Drop More Than 20%: Rising competition from other airports and shifts in the way goods arrive to the U.S. are causing the decline

The Wall Street Journal
By Melanie Grayce West
July 24, 2017 5:13 p.m. ET

Amid rising competition from other airports and major shifts in the way goods arrive to the U.S., cargo shipments into New York City’s John F. Kennedy International Airport have dropped more than 20% during the past decade, a new report shows.

The downward slide at JFK comes as cargo volume is rising at nearly every other major airport in the U.S., and as the air-cargo market is growing overall, according to a report released on Monday from the Manhattan-based Center for an Urban Future, a nonpartisan policy center.

Air cargo coming in and out of the U.S. is expected to rise at a rate of about 3% a year through 2037, a recent report from the Federal Aviation Administration found.

If New York’s largest airport doesn’t maintain its share of the market, it could lead to continued losses of middle-class jobs, said Matt A.V. Chaban, policy director for the Center for an Urban Future.

The report found there are 34,041 jobs related to JFK’s air-cargo industry now, 26% fewer since the airport hit a 2004 peak in jobs.

Based on preliminary figures from Airports Council International - North America, a trade association, air-cargo shipments in metric tons dropped to 1,264,187 last year from 1,286,484 in 2015.

During the past several years, the Port Authority of New York and New Jersey says it has invested about $10 million in infrastructure development in support of cargo growth at JFK. Moreover, the Port Authority has allocated an additional $50 million towards supporting any future third-party cargo development.

Port Authority officials have noted that cargo tonnage is up 6% so far this year, including a 11.9% increase in May from a year earlier.

JFK also still ranks highest nationally in the value of shipments it receives; $185.5 billion in 2015, according to a 2017 report from the Bureau of Transportation Statistics.

“The pie is getting larger and there are some investments we have been making in our facilities to make sure JFK continues to be an attractive place to do business,” said Huntley Lawrence, aviation director for the Port Authority.

JFK opened to commercial flights 69 years ago and, with Los Angeles International Airport, was the premier international gateway for U.S. travel. JFK handled more cargo than any other airport up until 1990.

Experts say two structural changes have contributed most to the drop in air-cargo shipments to JFK: Increasing trade with Asia and a decline in manufacturing. As the U.S. shifted trade from Europe to Asia, trans-Atlantic shipments began to slow. The Northeast, over several decades, also has lost manufacturing, and deliveries of large equipment have moved to other areas of the country.

In addition, hub airlines have built up international gateways in different cities and increased belly capacity in passenger planes to carry more cargo, according to Brian Clancy, managing director of Logistics Capital & Strategy, a consulting firm based in Arlington, Va.

“As we opened up our markets and allowed more foreign airlines to fly to more cities they naturally spread their network across multiple gateways,” he explained.

Still, the shift away from JFK primarily is driven by shippers looking to optimize costs. Analysts say that there is always a draw to bring goods into New York because it is a huge market—especially for luxury products—but they also point to JFK’s aging facilities. Road tolls and the traffic in and out of the airport on the Van Wyck Expressway are additional barriers that can make other airports more attractive.

Because JFK is a legacy gateway, its facilities, which range from state-of-the-art to Quonset hut, are fully built out. Cargo buildings would need to be rehabilitated or replaced, which is more complicated than starting fresh.

Chicago’s O’Hare International Airport, has seen its cargo shipments rise 38% during the last five years, had open space upon which to build its new $220 million cargo center, the first part of which opened last December.

It is tough to justify erecting new facilities at JFK when it appears “you are dealing with a market that’s in decline,” said Michael Webber, president of Webber Air Cargo Inc., an Austin-based consulting firm. “They need new facilities, though, because it might contribute to stopping the bleeding.”

Officials for the New York City Economic Development Corporation and for the Port Authority say recent investments and policy changes have opened new opportunities for JFK.

In 2014, a new truck stop opened at JFK and, in 2015, the city changed rules that allow for 53-foot trailers to take new routes into the airport.

A year ago, Air France-KLM Cargo opened a new cargo-handling facility there. In late 2016, the city announced a new business-improvement district for the JFK area.

A state-of-the art animal-cargo facility opened earlier this year and is attracting valuable horse and livestock shipments, which travel in cargo planes, rather than in the belly of passenger planes.

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