Is there any aspect of the supply chain not challenged or changed radically by the pandemic?
Aviation industry executive John Carver says COVID-19 exposed shortcomings in the air cargo industry — its over-reliance on major airports and the need to modernize and grow. For decades, he said, airports invested in passenger services and security improvements, not cargo.
“Even the big (airports) like LAX, Miami, and JFK hadn’t put any money into their capital improvement programs for modernization or upgrading cargo buildings,” Carver told me. “When COVID hit, it put a huge spotlight on all that because the only thing keeping airplanes in the air was cargo.”
The Wall Street Journal recently looked at COVID’s impact on air cargo: When increased demand for shipped goods gummed up operations at major airports, logistics firms looked to secondary airports that could handle freight but weren’t overrun by customers. Examples include smaller, regional airports in Greenville-Spartanburg, South Carolina, and Rockford, Illinois.
“[Freight] forwarders say they can move cargo through the smaller airports more quickly, cheaply, and reliably than they can through the big gateways that handle millions of tons of freight a year,” The Journal said.
Carver, who is CEO of Burrell Aviation, said he knew about The Journal article, though it didn’t mention his company. “People thought I had ghostwritten it,” he said, jokingly. “They thought it was so perfectly written for our business.”
Burrell Aviation, an investment firm based in Aspen, Colorado, is on a development spree. The firm has plans underway to modernize cargo operations at airports in as many as several dozen smaller cities, anticipating that more freight customers will want to bypass overcrowded major airports.
Carver said Burrell looked at 400 airports, whittled its list to 150, and then targeted 50 suitable for cargo, logistics, cold storage, and other uses for domestic and international flights. He said the company now has 23 airports in its portfolio and 10 more on the way, with deals announced in places like Lincoln, Nebraska; Colorado Springs, Colorado; and Baton Rouge, Louisiana.
In all, Burrell and capital partners will have about $750 million to invest at airports, including $300 million in current projects. The firm will make its money by leasing the airport land, building the infrastructure, and then leasing to customers. Airports are happy to get on board because they want the business activity and job growth, so they are eager marketing partners. When Burrell announced its $65 million Lincoln Airport cargo facility project in January, the mayor and governor both sounded thrilled.
Carver said Burrell is on track to start construction on its first facility this summer and be ready for operations by summer 2025. He’s confident firms like DHL and FedEx will sign on. The cargo industry grew 10% a year during COVID and will continue expanding 4% a year off that bigger base, so the need for handling space is much larger than it was pre-COVID.
“The idea is to be able to bring a full solution to the industry, whether it’s the cargo world or the DHLs,” he said. “A lot of our activity is now with the cargo airlines, who are looking at alternatives to major hub airports. We’re trying to make it as easy as possible for them to come to one of our airports.”
Read the complete Issue 28 of ChainMail here.
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