Cargo is already a dominant force at John C. Munro Hamilton International Airport (YHM), and it's about to get even bigger, and more diverse, with the opening of a $12 million warehouse complex.
The 80,000-square-foot cargo center includes 5,000 square feet of cold storage - a new feature that allows the Ontario airport to expand into the lucrative niche of perishable cargo such as fresh fruit, flowers and bio-medical products.
Sitting on the western edge of Toronto's metropolitan region, YHM is the eastern Canadian base for Cargojet, Purolator, Canada Post, DHL and UPS. Last year, more than 75,000 tons of goods passed through the airport. Express and overnight freight traffic accounted for fully 60% of all aircraft movements at YHM in 2014 and generated 40% of its $16 million revenues. In addition, more than 800 of the airport's 1,160 direct employees work in cargo operations.
Project: New Cargo Center
Location: John C. Munro Hamilton (ON) Int'l Airport
Private Airport Operator: TradePort Int'l
Project Cost: $12 million
Funding: $4 million from province of Ontario; $4 million from federal Canadian government; $4 million from TradePort Int'l (private airport operator)
Total Size: 80,000 sq. ft.
Warehouse Space: 70,000 sq. ft.
Office Space: 10,000 sq. ft.
Construction: August 2014 - mid-June 2015
Architect: Chamberlain Architect Services
Construction Manager: Martin-Stewart Contracting
Consultant: Strategic Aviation Solutions Int'l
Common-Use Air Cargo Manager: ACI Air Cargo
Key Benefit: 5,000 sq. ft. of cold storage space allows airport to handle perishable freight
Investing in a proven performer, the Ontario provincial and Canadian federal governments each contributed $4 million to build a new cargo center and help generate jobs. Frank Scremin, the airport's chief executive officer, reports that the project is expected to create an additional 400 direct and indirect hires.
TradePort International, the private for-profit company that operates the city-owned airport, also invested $4 million to fund the project. TradePort is a wholly owned subsidiary of Vantage Airport Group, which is based in Vancouver.
It's Cold in Here
Research helped guide the specific elements of the new facility. A marketing study by the Montreal office of Hong Kong-based Strategic Aviation Solutions International documented market demand for dedicated coolers, which are critical for handling perishable freight.
The study also discovered interest in a "neutral, generic" warehouse. Prior to construction of the new facility, all cargo facilities at YHM were owned or controlled by freight carriers. "There was a real gap in the infrastructure and our ability to penetrate the marketplace," Scremin concedes.
Stanley Wraight, a consultant with Strategic Aviation Solutions, notes that the airport's existing facilities also lacked cross loading docks, which forced freight haulers to assemble shipments out on the ramp, even in the middle of winter. "It became a question of safety and security," he explains.
Designed by Chamberlain Architect Services, YHM's new cargo facility was built on the site of a large 1940s-era hangar and a smaller facility used by Cargojet. Construction began in August 2014 and was completed in mid-June, with Martin-Stewart Contracting managing the building process.
Heeding its consultant's research, YHM included 5,000 square feet of cooler space in the new facility - a first for the airport.
Room to Grow
Cargojet, Canada's largest airfreight carrier, leases half of the overall space in the new cargo center. As its operations grow, the airport can expand the building by another 20,000 square feet to accommodate Cargojet's growth, notes Wraight.
He describes the facility's neutral or common-use side as a big, open box that was designed to accommodate upgrades. A mechanized sorting operation or modular shipping facility are two examples of likely enhancements.
The airport's previous lack of common-use space hampered it from capturing business from companies with infrequent shipments. Now, such companies can fly parcels into YHZ and have an operator handle them as part of a consolidated shipment, Scremin explains. The common-use facility is particularly attractive to e-commerce businesses, because it eliminates the need for them to invest in their own warehouse space.
The airport recently hired ACI Air Cargo, a third-party logistics provider that specializes in air freight, to supply all cargo handling services within the common-use area. As such, it will provide end of runway cargo services and cross docking as well as handling bonded, e-commerce and temperature-controlled air cargo. The company also operates dual bonded facilities at Toronto Pearson International Airport (YYZ) and Montreal-Pierre Elliott Trudeau International Airport.
Turn Up the Volume
While the new facility is expected to generate additional cargo flights, Scremin says that the larger opportunity lies in increasing cargo volume by helping express operators further leverage existing routes out of YHM that are already strong.
Assessing the competitive front, he notes that although YYZ, in nearby Toronto, handles greater volume than YHM, it's primarily due to belly freight and the Toronto airfield has slot restrictions that limit its number of overnight flights. In contrast, YHM is unencumbered by similar constraints.
According to Scremin, express carriers can operate more efficiently and effectively at YHM because the airport's rates and fees are more competitive, and the area is less congested. Even though YYZ also has cooler space, it is not a hub facility dedicated for perishables, he notes.
Wraight adds industry interviews indicate that YHM is ideally located to develop a regional facility, because it sits on the doorstep of the Niagara Peninsula, which is home to much of Canada's orchards, vineyards and berry patches. The area also has a number of major highways with two nearby transborder crossings - one in Buffalo, NY, and another in Detroit, MI.
Handle With Care
Given the high value of some perishable shipments, YHM will have more competition than YYZ in Toronto. With a single pallet of bio-medicine potentially worth $1 million, many major airports are currently developing cargo facilities with cold storage capabilities. Maintaining strict control of temperatures is critical, because some of the pharmaceutical products being shipped contain cultures that can take a year to grow. "The ability to handle these different commodities the way importers and exporters want is a tremendous value added for the airport," Wraight explains.
TradePort approached the project as an opportunity to maximize the airport's existing assets. The new cargo center allows the operator to squeeze additional productivity out of the airfield during the night, when passenger aircraft are less active, Scremin explains.
"This facility will allow us to maintain Hamilton International Airport's dominant presence in the overnight express cargo segment in Canada, and create new opportunities to diversify the types of goods that can be processed through the airport," Scremin concludes.