MidAmerica Airport eyes cargo business
MidAmerica Airport Director Tim Cantwell in recent years reported to his bosses in his annual performance incentive award letter that not enough cargo went through the airport for him to earn a particular bonus.
But he said he anticipated cargo business would increase in the coming year. It’s a phrase he’s repeated in several recent letters.
While there has been millions of dollars spent on trying to grow cargo business at MidAmerica Airport for more than 10 years, the amount of cargo reported by the airport has dropped off drastically.
Since 2006, more than 8,300 metric tons of cargo has gone through the airport, but only 182 metric tons since 2011, according to information released through a Freedom of Information Act request.
From August 2011 through May 2017, the county-owned airport has spent more than $1.09 million in fees and related costs with consultants John Chang and Larry Taylor of Aziotics, trying to create a trade route to China and increase cargo, according to county documents.
From January 2008 through July 2011, the county spent another $1.6 million on consultant fees, travel and lodging costs trying to gain a foothold in China.
The consultants work with Ningbo, China, to try to establish the cargo route from Latin America to China, using MidAmerica as the connection point. In 2012 Ningbo Lishe International Airport and MidAmerica Airport announced a partnership to help organize freight operations from each airport, assist with trade routes, coordinate marketing efforts, and to assist air carriers start new service.
While passenger service at MidAmerica Airport has increased steadily in recent years, with more than 79,000 people in 2016 people taking flights out of MidAmerica, the efforts to bring a cargo connection to China have not brought about regular business yet.
The efforts to establish a regular cargo business continue as the county has spent at least $89 million (includes $8.3 million in 2016) on airport operations subsidies since 2002.
There have been many steps accomplished to include getting all of the required import qualification approvals at Ningbo to enable direct access for consumer goods through their airport. These are not the same protocols that one sees in the U.S.
Tim Cantwell, MidAmerica Airport director
Cantwell said he did not wish to comment for this article, however, in previous emails with the BND he said the dialogue with Ningbo continues.
“There have been many steps accomplished to include getting all of the required import qualification approvals at Ningbo to enable direct access for consumer goods through their airport,” Cantwell wrote in an email. “These are not the same protocols that one sees in the U.S.”
He said it took three years for MidAmerica to be approved as a U.S. Customs Port of Entry.
“It has taken an effort greater than that to get Ningbo airport qualified for import approvals on a ‘Business to Consumer’ level for products, approvals for their USDA equivalent CIQ (China Inspection and Quarantine Service), don’t quite line up with U.S. requirements,” Cantwell wrote.
The Ningbo airport also is implementing a $1.3 billion construction project and there are “oversight approvals needed for their perishable center and perishable goods processing, a key to our mutual interests in establishing a trade route between (Latin America) and China, through MidAmerica, to allow Midwest perishable products to be exported to China,” Cantwell wrote.
Cantwell has made presentations to shippers in China, and there is weekly dialogue on prospects and all aspects of air cargo, he wrote.
When asked about a timeline for the cargo business, Cantwell wrote, “It would not be internationally polite to demand a timeline that includes our partner.”
Keeping things close to the vest
As these discussions continue, the St. Clair County Public Building Commission in June renewed a contract with Chang.
Jim Nations, a member of the Public Building Commission, said consultants such as Chang are necessary for translation work and for making connections.
“Mr. Chang is not only an industry expert, but he’s also a huge facilitator to minimize the language barriers. Any correspondence we send to our prospects, he translates for us so they get in their language, not in our language. …
“In addition, we have opened doors that we would have been hard pressed to accomplish without his being our escort into the inner sanctums of that process,” Nations said. “Has it shown the result we need? No. Candidly, no. Am I optimistic we’re moving in the right direction? Guardedly.”
He added previous prospects have evaporated.
“We’re as frustrated as anyone around regarding the success of the cargo side of the business,” Nations said. “We’re very pleased with what’s happening on the passenger side, but we haven’t delivered the mail on the cargo side.”
Nations said airport officials have to hold activities close to the vest.
“We have to be exceptionally guarded, because anytime we have historically publicized what we’re trying to do, someone has taken advantage of our thought process to try to duplicate it,” Nations said. “The only way I can see us doing this effectively is to be reasonably guarded of what we’re trying to do, until we have a deal.”
We have to be exceptionally guarded, because anytime we have historically publicized what we’re trying to do, someone has taken advantage of our thought process to try to duplicate it. The only way I can see us doing this effectively is to be reasonably guarded of what we’re trying to do, until we have a deal.
St. Clair County Public Building Commisioner Jim Nations
Nations said he does not know how long it would take for the county’s efforts to show results, but an investment is necessary.
“I know for certain that without making an investment in building that marketplace and creating the awareness, it will never happen,” Nations said. “As we’ve progressed I believe the passenger activities will ultimately become a benefit to our broader perspective in the industry. We have gone from scant activity and with the work Allegiant has done and the airport staff has done, the passenger side has skyrocketed in relationship to all the other airports in Illinois. …
“Without the development work we have put into the passenger service, we would not have succeeded in achieving that. … We had to kiss a lot of frogs down that path to finally make a connection that has really blossomed. I only say that because of the relationship I see to that process to the cargo process.”
Nations said the process is difficult because the parties the county is dealing with aren’t stateside.
“The decision process of the people we are working with is very cautious, it’s very slow, but yet once it finally clicks, then I think it will grow very quickly, because the Chinese traffic in and out of MidAmerica will be the merit badge of success that will then attract other active players in this process,” Nations said.
Contracts with Chang and Taylor have been scaled back in recent years, including working with Taylor on an as-needed basis.
“Primarily we wanted a little more focus and we expressed concerns and Mr. Cantwell has reacted to those and consultants have participated as well,” Nations said.
I honestly don’t know what, if anything, has been done as a result of the investment.
St. Clair County Board Member Fred Boch
St. Clair County Board member Fred Boch, who is a regular attendee of the Public Building Commission meetings, said he wants to know what is being done to attract cargo business.
“They claim you need to be a consultant in the Chinese system to get things established,” Boch said. “I’ve tried to ask what the consultant has done.”
Boch said he wants to measure the performance or effectiveness the consultants.
“I really haven’t gotten an answer, other than we need communications with the Chinese and it takes a while,” Boch said
Boch said the scaled back contract with Chang isn’t performance-based.
“I honestly don’t know what if anything has been done as a result of the investment,” Boch said.
When writing his annual performance incentive award letter, Cantwell discusses how much cargo goes through the airport.
In 2007, Cantwell wrote, “performance improvement is expected with the establishment of international cargo.”
In 2008, six flights from South America came into MidAmerica with a total of 734 metric tons of corn seed. In 2009 there were more than 4,100 tons of flowers came through MidAmerica.
When Cantwell submitted his annual letters in 2010 and 2011 he wrote “major performance improvement is expected with the establishment of international cargo on a regular basis” referring to introduction of services from the largest Latin American carrier, LAN Cargo services, as well as services from Asia.
MidAmerica Airport built a cargo warehouse that was eventually leased to Boeing for its operations. The county-owned airport also helped pay for a warehouse that eventually was leased to North Bay Produce and is paying monthly rent.
In 2010, more than 3,200 tons of flowers arrived, but that operation was discontinued. In 2011 the airport’s cargo warehouse was converted for Boeing’s operations.
In a 2014 letter, when the cargo performance award was zero, Cantwell wrote “cargo operations are anticipated to increase rapidly in 2014.” He wrote the same sentence a year later.
Last year, Cantwell said cargo operations are anticipated to increase rapidly in the second quarter of 2016, and he made the same statement about the second quarter of this year.
Cantwell also is eligible for bonuses based on the amount of passenger traffic and whether new businesses sign two-year leases to operate at the airport, according to airport documents.
Products moving, mostly by truck
North Bay Produce, which began renting an airport-owned warehouse in 2012, is moving millions of cases of fresh produce, among other products, a year through its MidAmerica Airport facility. Most of it, however, is via trucks, Operations Manager Dan Wilson said.
Last year, about 4,000 trucks moved produce in and out of the facility. However, only a handful of airplanes have brought in air freight, Wilson said.
The grower-owned co-operative receives most of its commodities in bulk and then packages them in the facility, so they can be shipped to grocery stores around the country and into Canada within 24 to 36 hours of arrival.
More than 2 million cases of produce shipped out last fiscal year, with 3.2 million expected by the end of fiscal year 2017, Wilson said.
“Tons and tons and millions of cases pass through these doors of MidAmerica that supply our area, United States and Canada,” Wilson said.
Wilson said what the county is spending on efforts to land cargo business isn’t that much when compared to large corporations that have opened up the Chinese market. He gave the example of Apple, which has invested billions in China, such as $5 billion paid to Chinese app developers.
Cargo efforts continue
Until the Public Building Commission receives a different direction, the efforts to bring cargo, to help diversify the airports activities, will continue, Nations said.
“If you only have a one-legged stool, you’re vulnerable to the ups and downs of things that occur. I think we need to build three legs of the stool personally. I see passenger service, I see freight service cargo, and I see economic development,” Nations said.
For cargo to work, there needs to be buyers of products on each side.
“You can’t fly an empty airplane in either direction,” Nations said.
China could transport textiles, computer components, electronics and medicines through MidAmerica, Nations said.
“Look at the money America spends to purchase foreign goods. That’s our market. Finding out how to get that chunk. We don’t need a big bite, we just need a little piece of it to be successful,” Nations said.
Nations said airport officials are striving to make the process work.
“Our geography is a huge benefit to us. Our cost structure we’re operating in at the airport is very attractive. We face some resistance. Nobody wants to be the first egg in the frying pan, and until we get that first pilgrim, it’s a challenge.”
Cargo loads processed by MidAmerica Airport handlers
- 2006 - 0
- 2007 - 0
- 2008 - 734 metric tons (Six flights from South America hauling corn seed)
- 2009 - 4,139 metric tons (Flower/perishable operations)
- 2010 - 3,263 metric tons (Flower/perishable operations)
- 2011 - 0
- 2012 - 0
- 2013 - 0
- 2014 - 0
- 2015 - 98 metric tons (a test by North Bay Produce importing goods from South America)
- 2016 - 28 metric tons (one helicopter exported)
- 2017 - 56 metric tons (two helicopters exported)
- 2006 - 25,513 passengers
- 2009 - 2,247 passengers
- 2010 - 1,058 passengers
- 2011 - 514 passengers
- 2012 - 1,998 passengers
- 2013 - 12,699 passengers
- 2014 - 15,590 passengers
- 2015 - 31,458 passengers
- 2016 - 79,551 passengers
Source: St. Clair County Public Building Commission documents