(UPDATED: Oct. 25, 2022 3:05 P.M. ET)
Alabama’s Huntsville International Airport in the past year has attracted new air cargo services controlled by major global logistics companies, solidifying its reputation as a leading cargo hub among lesser-known airports that don’t have massive passenger traffic.
Kerry Logistics is so pleased with the airport’s efficiency processing shipments from Hong Kong for distribution in the eastern half of the U.S. that it has already increased charter flights to four per week after opening an airside terminal there and starting service last August. Meanwhile, Latin American demand for exports from the Tennessee Valley and transshipment cargo from Asia has grown to the point that DSV is leasing an entire cargo aircraft each week for a direct flight to save time trucking goods to fly out of Miami.
The logistics providers essentially function as private-label airlines without physically operating aircraft. By renting an entire cargo jet for a period of time, they can control the customer experience without being at the mercy of airline schedules and space limitations. After two years of constant supply chain disruptions and crowded shipping, many businesses are willing to pay more to ensure access to reliable capacity and speedier delivery.
Hong Kong-based Kerry Logistics selected Huntsville (HSV) as its U.S. airfreight gateway because of its location — most of the Eastern Seaboard and Midwest is within a one-day truck drive — and delay-free cargo transfers. The company, which is publicly traded but controlled by Chinese parcel delivery giant S.F. Express, plans to enter into long-term leases with carriers to expand its controlled freighter network to Hanoi, Vietnam, next month with three weekly flights to Huntsville, followed by an equal number of dedicated flights from mainland China, Kevin Bulger, COO for U.S. freight forwarding division Kerry Apex, told FreightWaves.
Huntsville is ranked No. 18 for international air cargo volume in the U.S. It has two long runways that can handle large aircraft and 2.3 million square feet of air cargo ramp space for freighter parking.
Huntsville’s advantage is “speed to market. We handle the freight in our own warehouse with no congestion. It’s proven this gateway can compete with others,” Bulger said.
Western Global Airlines, of Estero, Florida, operates the flights on Kerry Logistics’ behalf with tri-engine MD-11s, but the new routes could also be covered by Western’s Boeing 747-400 cargo jets or other providers, Bulger said.
The current program primarily supports delivery of electronics from Asia to the U.S.
Although airfreight demand out of Asia has softened in recent months, ongoing ocean shipping delays and limited air transport options are driving more shippers to logistics providers that can guarantee space, Bulger said.
“It’s giving people more options within a controlled network. The key is stability,” he said.
Several factors, including location, make Huntsville an attractive air cargo hub.
Like other secondary airports focused on cargo, Huntsville doesn’t have huge amounts of passenger flights competing for air traffic control, runway access, ground services and U.S. Customs personnel. At the facility, shipments speed through customs clearance. Logistics companies with their own flow centers and flights also don’t have to wait for third-party handlers to process their shipments. Huntsville’s Jetplex Industrial Park is a registered foreign trade zone. Major interstate highways and the Port of Huntsville’s intermodal rail terminal serviced by Norfolk Southern railroad are in close proximity, facilitating freight connections for shippers in a multistate area. And the airport also is centered among several automotive manufacturers in the Southeast, including Volkswagen, Toyota, Nissan, General Motors and BMW, that can be reached by truck within hours.
DSV’s Miami bypass
DSV, the fifth-largest logistics services provider in the world by gross revenue and a top five airfreight intermediary, in late May began offering service every Monday from HSV, to Sao Paulo. LATAM Airlines, the largest airline group and cargo carrier in South America, is operating the Boeing 767 freighter for Hovedstaden, Denmark-headquartered DSV.
(The partners increased the services frequency to three times per week in late October in response to customer interest.)
The new service, dubbed the LATAM Star, builds on DSV’s growing charter network, providing a full loop air transport that connects South America with DSV’s Asia routes. DSV already operates four cargo flights under contract with Atlas Air (NASDAQ: AAWW) from Miami to Sao Paulo’s Viracopos International Airport, but there is no backhaul to the U.S. under DSV’s direction. After exchanging cargo in Sao Paulo, the LATAM freighter continues to Bogota, Colombia, where it picks up flowers, seafood and other goods and then delivers the entire load to Miami. Local distributors take the flowers and DSV arranges truck transport back to Huntsville for all the other products.
“We’re now bringing in direct airlift into Huntsville rather than trucking it down into Miami, in essence cutting off at least a day’s transit time,” said Mads Ravn, executive vice president of air and sea for the U.S., in an interview. Until recently, DSV had to truck all its customers’ products to Miami to utilize the commercial capacity of multiple carriers operating to Brazil.
Agricultural, automotive, technology and chemical products are among U.S. exports in high demand in Latin America, Ravn said. Brazil is one of the top 10 export destinations for Alabama products, according to the Alabama Department of Commerce.
The new South American program is also based on increased volumes of high-tech components from Asia transiting through Huntsville on DSV controlled flights and continuing to factories in Brazil. Atlas Air flies Boeing 747 freighters two times per week from Hong Kong to Huntsville. One flight goes through Seoul, South Korea. Another flight is nonstop from Hong Kong. Both flights continue to Miami. Atlas operates a third DSV flight on a Hanoi-Huntsville-Miami route. Some shipments are offloaded and distributed in Alabama and Georgia and the rest is transshipped to Brazil on the LATAM flight or by Atlas Air via Miami.
DSV leases 130,000 square feet of warehouse space, including temperature-controlled storage for pharmaceuticals and perishable items, on the HSV tarmac to process its air shipments.
“What we’re also trying to do is stop sending everything by truck into Miami as trucking has become more and more expensive because of gas prices and the lack of drivers. Trucking has become an extremely expensive component. By stopping it in Huntsville we’re taking advantage of the fact we have the ability to fill a plane rather than spending another day and thousands of dollars trucking it to Miami,” said Ravn.
Ravn said the freight forwarder hopes to expand the number of departures to South America in the future.
Bulger said Kerry Logistics’ shipments bound for Latin America are currently relayed to Miami by truck for transfer to other commercial carriers but suggested the new DSV service could open the door to a future partnership with LATAM.
HSV was one of the earliest second-tier airports in the U.S. to attract a direct all-cargo carrier when Panalpina, acquired by DSV in 2019, launched its Dixie Jet airfreight service between the northern Alabama city and Luxembourg in 1990. DSV currently offers that service three times per week with the support of Cargolux, which flies Boeing 747 cargo jets. LATAM previously provided service between Huntsville and Bogota, but it was discontinued when DSV took over Panalpina.
LATAM is growing its 767 freighter fleet to capture more business opportunities like the one presented by DSV. The cargo division currently operates 13 767 cargo jets and is sending several older passenger aircraft to repair facilities to be converted into freighters. Along with the purchase of a production freighter from Boeing this fall, it could have up to 22 of the medium widebody freighters in its fleet by the end of next year.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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