DC Velocity - May 2015

transportationreport BY MARK B. SOLOMON, EXECUTIVE EDITOR – NEWS

AIR FREIGHT

DURING A STINT AT THE OLD EMERY WORLDwide from 1987 to 2005, Richard Zablocki can remember times when airfreight forwarders were able to get so physically close to the aircraft they used that they could truck their customers’ cargoes right up to the plane.

For Zablocki and other executives, there was something symbolic about that degree of operational intimacy between airlines and airfreight users. For a large part of the 1980s and through the 1990s, air freight was the devil-may-care diva of the transport modes. The U.S. economy was booming, as were airfreight-centric markets like Japan. Airfreight growth was juiced by surging demand for high-value technology and telecommunications equipment to support buildouts of the Internet and the wireless telecommunications spectrum. The push toward global just-in-time manufacturing convinced many shippers and forwarders that it was better to whisk products to their destinations by air as needed than to invest in expensive buffer inventory that would be prone to obsolescence. Above all, Sept. 11 was just another date on the calendar.

“It was very desirable for a freight forwarder to be located near an airport,” said Zablocki, who today is vice president of trade lane management for Dutch multinational forwarder Ceva Logistics LLC.

The thrill appears to be long gone, however. The 9/11
terrorist attacks ended the practice of airfreight forwarders’
trucks pulling right up to aircraft. In addition, the airfreight
industry is very far removed from its halcyon days of the
roaring ’90s. Middling demand for the past 15 years has
kept rates low. Meanwhile, business costs across the board
have continued to rise. Today, air freight is a luxury many
companies can’t afford, save for emergency situations or
hot product rollouts. As a result, property within three
to five miles of a gateway that would support fast-cycle
distribution patterns doesn’t generate nearly the interest
it used to. Yet close-in rents remain high because of what
are still considered premium locations. At Los Angeles
International Airport (LAX), for example, rents for occu-
pying a facility around three miles away are about double
the rents for a building 10 miles away.

Aside from companies shipping perishable items like flowers, seafood, and produce that can’t be more than five miles from airport property, “demand for airfreight space