Kuehne+Nagel, the world’s largest airfreight forwarder by revenue and volume, is establishing a cargo transfer facility at Birmingham-Shuttlesworth International Airport in Alabama to support the expansion of its private air service and avoid freight congestion plaguing most large airports. One customer that potentially could enjoy substantial improvements in supply chain efficiency from the arrangement is Mercedes-Benz.
The move represents the company’s first presence in Alabama and its first air logistics station at a secondary airport in North America. It is the latest example of freight forwarding companies shifting business to more reliable, cargo-friendly regional airports that enable speedier deliveries.
The Swiss logistics provider announced last week that it will begin operating international cargo flights to Birmingham on April 2. It initially will process shipments at an airfield hangar owned by Kaiser Aircraft Industries and move early next year into a dedicated air cargo facility after it is built.
Flights are operated by contract carriers such as Atlas Air and Cargolux. The company is essentially functioning as a private-label airline without physically operating aircraft.
Kuehne+Nagel (CXE: KNIN) said the twice-weekly flights from Stuttgart, Germany, will primarily serve customers in the automotive, aerospace and pharmaceutical industries — three of the six primary industries the company has focused on for generating higher yields. The route will continue to Chicago O’Hare International Airport.
Birmingham-Shuttlesworth airport (BHM) is centrally located in the Southeast, which is rapidly growing as a U.S. manufacturing region, 150 miles west of Atlanta. Mercedes-Benz, Honda, Hyundai, Mazda and Toyota have assembly plants in Alabama, all supported by a local supplier base. Airbus manufactures aircraft in Mobile, Alabama.
Kuehne+Nagel notably did not select Huntsville airport in northern Alabama for its new air hub. Huntsville was a pioneer among second-tier airports in the U.S. in attracting direct freighter service when Panalpina, acquired by Danish logistics giant DSV in 2019, launched its Dixie Jet product between the northern Alabama city and Luxembourg in 1990. DSV and Hong Kong-based Kerry Logistics each direct several flights per week to Huntsville.
K+N handles a lot of airfreight for the Mercedes-Benz (DXE: MBG) plant in Vance, Alabama, that makes SUVs, according to logistics experts in the state. Mercedes last year also opened a lithium-ion battery factory in nearby Bibb County and began producing all-electric models. Vance is about 34 miles from BHM. Until now K+N has been using Atlanta-Hartsfield International Airport for its Mercedes shipments. BHM is much closer to the Mercedes plant, providing the company faster transit and more flexibility.
“Birmingham’s proximity to other major hubs that are experiencing congestion due to heavy activity provides an opportunity where we have more flexibility to improve service for our customers who need faster recovery time. We believe Birmingham is a great location because it is an international airport and has the infrastructure to handle large freighters,” said Juergen Gentzke, regional vice president for Kuehne+Nagel, in an email message.
He declined to discuss whether Mercedes was a major influence in starting the new airfreight service, but the automaker is headquartered in Stuttgart and has had a longstanding relationship with K+N. Mercedes also produces engines, axles and transmissions in Stuttgart.
The Birmingham Airport Authority has identified air cargo as a new area of economic development. Most cargo activity at the airport comes from parcel carriers FedEx, UPS and FedEx feeder airline Mountain Air Cargo. Kuehne+Nagel represents Birmingham’s first international, heavy-freight scheduled service.
Officials last year completed design work on a new $25 million air cargo facility. Construction crews are scheduled to break ground on the 53,000-square-foot cross-dock center in May. Work is expected to take about 10 months.
K+N will lease the entire building, which includes a temperature-controlled area, for six years. It has contracted with Alliance Ground International, a fast-growing airport services company based in Miami, to take care of all-cargo aircraft on the ramp, loading and unloading, and cargo preparation.
The airport authority built a 500,000-square-foot ramp nearly 20 years ago with the intent of eventually having a dedicated cargo facility. In 2007, the main runway was extended from 10,000 to 12,000 feet to allow a fully loaded, fully fueled Boeing 747 cargo jet to take off. More recently, it purchased property and demolished buildings adjacent to the apron to make room for the cargo expansion and built an access road to the site.
The case for cargo-centric airports
Many secondary airports have attracted new cargo business from freight transport providers looking for faster, cheaper shipment processing than is available at big airports where passengers are the focus. Good infrastructure, customer service, longer operating hours and priority clearance from customs authorities make it easier to pick up inbound shipments at second-tier airports, freight transportation specialists say.
Logistics companies can lease airside cargo terminals at second-tier airports, giving them direct control over their freight compared to using a third party for disassembling and preparing loads for pickup. Cargo bottlenecks are common at major passenger gateways where many terminals are outdated, lack modern technology, have limited truck access and dock doors, and haven’t adopted appointment systems.
At cargo-focused airports, arriving freight can be broken down and rolled onto trucks for delivery to customers within a few hours. Freight retrieval at big airports can take a day — and often several days — as shorthanded ground handling agents have to locate and consolidate shipments for dozens of freight forwarders before they can be released.
Chicago Rockford International Airport last month unveiled a long-term lease with cargo handler Menzies Aviation to operate a new cargo facility as it experiences demand from mega-forwarders like Maersk Air Cargo and DB Schenker for efficient logistics service.
Last year, Crane Worldwide Logistics launched a major air charter program and routed many flights to less crowded Cincinnati/Northern Kentucky International Airport, where Amazon and DHL have air hubs. Maersk Air Cargo, a pure airline with a forwarding arm, is heavily utilizing Greenville-Spartanburg International Airport in South Carolina to support BMW and other customers. Other airports geared for all-cargo operations, or investing in cargo infrastructure, include Rickenbacker International Airport in Columbus, Ohio, Pittsburgh International Airport and San Bernardino International Airport in California.
Meanwhile, Danish logistics powerhouse DSV is preparing a new freighter hub at Phoenix-Mesa Gateway Airport, about 30 miles from Phoenix Sky Harbor International Airport, to serve the semiconductor industry.
Other common selling points for these airports are lower fees and fuel prices and shorter taxi time from runway to ramp.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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