Freight Expectations

With the right mix of infrastructure,investment and geography, some local economies are getting a big lift from air cargo.

Not long ago, the village of Obetz, Ohio, consisted of almost nothing but houses and farms. Its 4,500 residents still must drive nearly half an hour to do their grocery shopping, banking or other errands. But in the past few years, the bedroom community has been transformed from a rural suburb of Columbus into a destination in its own right.

Warehouses and industrial parks are springing up from the fields, occupying 4 million square feet and luring workers from all over the Columbus area. The town's daytime population swells to about 35,000, property-tax revenue has doubled since 1996, and there's even a proposal to build a retail center with a supermarket, bank and sit- down restaurants.

What's behind such explosive economic growth there and in neighboring communities? The answer is air cargo--more specifically, the rehabilitation of nearby Rickenbacker Airport from a military base into an all-cargo airport. And it's a phenomenon that's happening around the country.

"Airports have become the new downtown," says John Kasarda, a professor in the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill who uses the term "aerotropolis" to describe cities such as Columbus. Kasarda explains that urban development has evolved through many different transportation-based systems, from seaports to rivers to railroads to highways and now airports.

The recent development in and around airports stems from growth in the air-cargo industry, brought on by larger airplanes, "just-in-time" delivery and the advent of e-commerce via the Internet. As the economy has become more global, companies are manufacturing, storing and distributing goods at cost-efficient points around the world, and using planes to bring all those facets together.

Although consumers generally don't think about how goods are transported when they click to purchase something online, each purchase sets in motion a complicated delivery system, from a warehouse to a truck to an airplane or two, back to a truck and finally to the buyer. Forty-two percent of the value of world trade now goes by air, and the air-express industry has averaged 20 percent growth a year for the past two decades.

For airports, which profit from landing fees and building rentals, air cargo is big business. But the effects of the air cargo economy go far beyond airport boundaries. Often, air cargo will draw industries such as goods distribution, shipping logistics and light manufacturing that benefit from proximity to an airport. Those industries, and the workers employed by them, will lure additional support businesses, such as office buildings and hotels. And those, in turn, will draw more residential amenities, such as homes and supermarkets.

In 1979, Franklin County commissioners took a bit of a gamble with Columbus' Rickenbacker Airport. The military had dramatically scaled back the former Air Force base, and the county decided to invest the necessary funds to draw air cargo industry. Through industrial revenue bonds and county, state and federal funding, more than $72 million was spent on the airport from 1981-91. The investment appeared to pay off in 1985, when Flying Tiger, a major international air forwarder, chose Rickenbacker as a hub. But instead of drawing additional airlines and freight, Flying Tiger was bought by FedEx Corp. in 1988, leaving Rickenbacker Airport nearly dormant and investors worried. "People raised questions as to when they were going to see returns," says Jeff Clark, marketing director for Rickenbacker. "It was an expensive proposition."

Today, those hard times are all but forgotten. Since the area was able to lure a huge Eddie Bauer/Spiegel warehouse in 1993, development at the airport has taken off. The 5,000-acre airport is now the largest publicly owned all-cargo airport in the world, with 6.8 million square feet of new construction since 1992. And that's just the airport itself. In the region southeast of Columbus, now called the "Rickenbacker area," the airport has spawned 13 industrial parks and more than 15,000 jobs. Clark calculates that for every public dollar invested in Rickenbacker, the airport has reaped $3 in direct private investment and $25 in regional impact.

"It's a heck of an asset," says Leslie Weilbacher, vice president of the Greater Columbus Chamber of Commerce. "It's a jewel in our business-development crown."

Not surprisingly, many other municipalities around the country are eyeing their own diamonds in the rough. Although most air cargo comes through the country's largest passenger airports--Hartsfield in Atlanta, JFK in New York and Dallas-Fort Worth--many smaller cities are also looking to cash in.

One needs to look no further than Memphis' newest sports franchise to see the ultimate example of a city that has used air cargo to hit the big leagues. The River City, a declining cotton port just a few decades ago, now processes more air cargo than anyplace else in the world. As the headquarters of FedEx, Memphis has attracted businesses and industry galore, all looking to ship their goods out as fast as possible. Since local officials lured FedEx from Little Rock in 1973, the city has revitalized its downtown, increased its tax base and recently beat out stiff competition from several others for a professional basketball team, with FedEx lending its name to the arena.

With so many large airports taking up so much of the market share, governments might question whether it's too late to jump into the market. But about 200 miles northeast of Memphis, Nashville is showing that late bloomers can also be successful in the air cargo game. Until recently, the airport authority there didn't even manage cargo operations, leaving the job to a local entrepreneur. But when American Airlines pulled its passenger hub out of Nashville in 1995, the airport started to scramble for alternative revenue sources.

Recruiting air cargo companies wasn't a problem--the tiny cargo portion of the airport was already filled to capacity. In 1998, the airport took over cargo operations, immediately securing state and federal funds for a $6.5 million cargo expansion. Completed last October, the new facility is already filled to maximum capacity. More important, the area around the airport is now starting to see the kinds of private warehouse and business development--and the relatively high-paying blue-collar jobs--enjoyed by Columbus and other aerotropoli. The airport already plans for two more major expansions, and does not expect to have much trouble continuing its growth.

Although Nashville has had a relatively easy time attracting the cargo industry, it doesn't mean that every locality will experience the same success. A few features necessary for the air cargo industry, such as long runways and good road and rail transportation, can be built anywhere if cities are willing to invest. But other factors for successful air cargo are extremely area specific. For example, a city needs to be located in the path where cargo is going. "Goods fly around the world just like the rivers of the world," says Michael Gallis, a consultant on regional urban planning. "You're not going to have a giant air cargo center on the upper branch of a stream." Cities also need to be located near interstate highways, because the air cargo and trucking industries are so closely connected.

Nowhere is this more evident than in Kinston, North Carolina, where the state and federal governments have spent $42 million on the Global TransPark, a cargo airport that sits almost completely empty. The state's estimation that the center would employ 55,000 people by 1998 has missed its mark by about 54,700 jobs. The project was Kasarda's brainchild in the early 1990s, embraced fully by then-Governor Jim Martin. The only problem: Kinston is in the middle of tobacco country, about 50 miles from a major interstate.

"It was a political vision that had absolutely no basis in the marketplace," says Jerry Orr, director of the Charlotte-Douglass Airport. "In our economy, the marketplace is everything." The Global TransPark, which Gallis calls "a global joke," even made an appearance on the "NBC Nightly News" segment "The Fleecing of America" as an example of wasteful government spending. "It's not like cutting a ribbon and Disneyland opens," Kasarda responds. "It's a 15-year process." Facing a severe budget shortfall, however, the North Carolina legislature is considering whether to continue funding the project.

Even places that have snared the air cargo industry recognize there are drawbacks. Maintenance and construction are needed almost constantly to keep up with cargo demand. Cargo flights occur mainly during the night, and residents are not usually too keen on the noise from loud jets. Airports often end up stirring up a lot of resentment and doing a lot of soundproofing or relocation of homes, businesses and schools. Also, residents of formerly rural areas sometimes rise up against the growth and congestion brought on by air cargo.

But for cities reaping the benefits of an air cargo economy, those concerns tend to fade to the back burner. "It's worth it," says Columbus' Weilbacher. "A successful cargo airport stimulates substantial economic development, not just for the immediate area, but for the entire region that it serves."