Houston Intercontintal Readies Facilities for Latin American Cargo Business

Author: 
Jim Faber
Published in: 
January-February
2010

Given its location, George Bush Intercontinental in Houston should be an attractive airport for cargo companies flying goods to and from Latin America. Until recently, though, it didn't have the infrastructure or logistics partners to accommodate the volume of perishable goods such companies typically ship.




Facts & Figures

Project: Refrigerated Cargo Center

Location: George Bush Intercontinental Airport, Houston, TX

Public Partner: Houston Airport System

Owner: Trammell Crow Company

Operator: Tradewinds Cargo Handling

Size: 61,484 sq. ft.

Project Complete: November 2009

The Goal: Attract air cargo business from companies importing and exporting time- and temperature-sensitive goods to/from Latin America.

That all changed in December, with the opening of the Fresh Air Cargo Center. After years of planning and execution, the airport debuted a nearly 61,500-square-foot refrigerated facility on a 10,000-acre parcel developed by the Trammell Crow Company. Nearly half the center - close to 29,000 square feet - was already leased by Tradewinds Cargo Handling.

Miami-based Arrow Cargo flew the center's inaugural flight from Bogota, Colombia on December 10. The airline then flew outbound air cargo from Houston to Rio de Janeiro, Brazil. According to airport officials, Arrow Cargo currently operates three weekly flights between various destinations in Latin America and Houston Intercontinental.

From the beginning, development of the airport's entire East Cargo Area has been a public/private partnership. The Houston Airport System (HAS) built the necessary taxiways, ramps and other airfield infrastructure; private sector developers financed and constructed the air cargo buildings.

"This project is an example of the HAS's innovative use of third-party developers for the improvement and construction of certain airport infrastructure – reducing risk and speeding development," notes HAS communications manager Marlene McClinton.

Eric Potts, interim director of aviation for HAS, referred to the Fresh Air Cargo Center as a "new dawn" for Houston Intercontinental at the facility's recent grand opening.

Geographically Desirable

The new perishable goods cargo center is part of the airport's East Cargo Area project, also developed by Trammell Crow, which opened its first phases in 2003. The new portion takes direct aim at air cargo traffic currently flying into and out of Miami International Airport.








Currently, Miami handles about 80% of all air imports and 78% of air exports between the United States and Latin America, say HAS officials. That translates to $23.4 billion through Miami, compared to $592 million through Houston.

After opening and fully leasing International Air Cargo Centre I in 2004, Trammell Crow looked for further development opportunities at Houston Intercontinental. Company officials approached the airport authority with their sights set on the perishable goods sector.

"The vast majority of all perishable cargo is imported into the United States from other U.S. coastal cities and then trucked to its final destination," explains Jeremy Garner, a vice president with Trammell Crow. "We wondered why IAH wasn't more involved with this trade."

Trammell Crow saw Houston Intercontinental as a "logical choice" for an air cargo center focused on Latin America for reasons beyond its geographic proximity and increasing cultural ties to Latin America. The large local population of 30 million people within 420 miles was also a prime benefit, notes Garner. The airport's status as a hub for Continental Airlines and the potential it offers for transshipments to Asia, Europe and the Middle East figured prominently as well.

Even though a substantial amount of southbound cargo originates in Texas and other surrounding states, the airport had no regularly scheduled cargo flights destined to or from Latin America, notes Garner. Because the majority of the air cargo imported into the United States from Latin America is perishable, Trammell Crow determined the lack of on-airport cooler space was limiting growth of such cargo routes.

High Expectations

Projections for the new cargo center are, in a word, huge.

HAS expects the new facility to generate an additional $7.6 billion in international trade

during its first year. HAS officials estimate that will initially amount to more than $10 million in annual business for the airport. And they expect that figure to grow very rapidly as importers, exporters, producers and other interested parties begin to learn how the new airport center can facilitate faster, fresher deliveries to a large number of American markets.

Steven Bradford, managing director of Trammell Crow's airport facilities development team, is confident Houston Intercontinental will become a "key player" in the global trade network.

Gaining a Foothold

Breaking into the international cargo market for temperature- and time-sensitive goods was a complex process, reports Garner.

Trammell Crow and the airport worked together to market the Fresh Air Cargo Center concept to growers, foreign consulates, freight forwarders, airlines, ground handlers, distributors of perishable goods, wholesalers, grocers, florists and retailers.

During the process, Trammell Crow refined the design of the facility, realizing a large cooler area would be needed to attract Latin American cargo business, Garner recalls.

Because of the complexity in the supply chain for international perishables, the airport and Trammell Crow had to identify and build relationships with participants in each link of the chain before constructing the cooler.

In purposeful sequence, Trammell Crow constructed the shell of the building, identified a major cargo airline that was interested in flying to and from South America (Arrow Cargo) and found a tenant to operate the facility (Tradewinds Cargo Handling).

The lease with Tradewinds for 28,750 square feet of space was executed in August 2009. Final design, permitting and construction of the cooler was completed in just three and one-half months, wrapping up in late November 2009.

Thanks to their remote location, construction of the new cargo center and previous projects in the East Cargo Area didn't impact other operations at the airport, notes HAS' McClinton.

While offering a haven for perishable international cargo is new at Houston Intercontinental, the airport is no stranger to international markets. It is a hub for Continental Airlines and operates more flights to Mexico than any other airport in the country. The wealth of Latin American destinations already offers a ready-made market for time- and temperature-sensitive products as well as critical back-haul cargo needed to make the facility a success, notes McClinton.

The airport is also seeing a steady increase in new global destinations, adding Hong Kong, Doha, Rio de Janeiro, Frankfurt, Edmonton, Montreal, San Salvador, Moscow and Singapore in 2009.

Subcategory: 
Cargo

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