New Air Cargo Facility Boosts Revenue, Reputation at Birmingham-Shuttlesworth Int’l

A $31 million facility completed this summer at Birmingham-Shuttlesworth International (BHM) is helping the Alabama airport accommodate fast-growing demand for cargo support and position it for even more cargo-related growth.

Kuehne + Nagel (K+N), an international shipping and logistics company, is leasing the building from the Birmingham Airport Authority, initially for five years. The company wanted a more convenient location for transporting imported car parts destined for a sprawling Mercedes-Benz manufacturing plant in Tuscaloosa, AL.

BHM fit the bill because it’s only about 60 miles from the plant, a much shorter drive than trucking in cargo that previously was flown into Hartsfield-Jackson Atlanta International Airport, explains Marcelo Lima, the airport authority’s vice president of Planning and Development.

CHA Consulting Inc. designed the 53,000-square-foot facility and managed the project, after also developing the master plan that defined BHM’s cargo infrastructure needs.

The $31 million project was funded entirely with airport revenue. The two primary expenses were construction of a one-story, metal-clad building for about $15 million and approximately $14 million to expand and improve a 10-acre apron on the southeast quadrant of the airfield that was added about 20 years ago for a cargo facility that never was built.

“We didn’t need any state or federal funding because when Ron Matthieu, chief executive officer of the airport authority, came on board, we restructured all or our debt, which saved about $30 million in interest payments,” Lima explains.

The airport, which handled slightly more than 3 million passengers in 2023, also recently cut expenses by rebidding custodial services on a national level, which freed up more revenue for the project. In addition, it boosted revenue by renegotiating airline landing and terminal rent fees and reworking fee agreements with rental car agencies, Lima shares.

Domino Effect

The impetus for building a new cargo facility stemmed from the need to relocate a taxiway about 100 feet to the east because it’s too close to the airport’s main runway. But doing so would impose on a cargo facility currently leased by United Parcel Service (UPS), forcing the relocation of its operations. As such, it made sense to build a new air cargo facility, adjacent to the apron already built for that purpose decades ago, specifically for UPS, explains Paul Puckli, vice president of market development for aviation at CHA.

The taxiway relocation was put on hold due to lack of FAA funding at the time. And as CHA began developing plans for a new UPS facility around late 2021 and into early 2022, the Airport Authority’s business development team started receiving calls from other freight companies that wanted air cargo facilities at BHM.

“K+N quickly rose to the top,” Lima recalls. “It made more sense for them to fly into our airport, but we didn’t have the facilities.

“So we asked UPS straight up if they could work with the facilities they have now and talk about building a new facility later,” he continues. “They agreed to do that, and we then turned our attention to K+N’s needs.”

To get a better handle on exactly what a state-of-the-art cargo facility is like, Airport Authority officials and the CHA team traveled to Rickenbacker International Airport in Columbus, OH.

“They have a very robust cargo operation there,” Lima says. “They gave us a wonderful tour, which was very helpful in determining what we did and didn’t need for our facility.”

That prompted about a three-month pause while CHA redesigned the building, pivoting from a structure initially intended to handle small parcels for UPS to one that will handle large freight containers.

“One of the facilities we toured at Rickenbacker was exactly what was needed and provided the foundation for our design,” Puckli comments. 

Daunting Deadline

Around that time, the project’s completion deadline was only 300 days away. That was a challenge, given how long it takes to construct such a large structure, much less obtain building materials amid supply-chain disruptions caused by the COVID-19 pandemic, Lima notes.

The solution was a two-pronged approach: Using a pre-engineered metal building system, which reduced construction time, and issuing a bid for building materials as soon as the design process was far enough along to allow it, rather than waiting until plans were complete.

Larry Kalousek, a CHA planner who managed the construction project, estimates that construction would have likely taken about six months longer if the project had been bid out as a single bid package, primarily because of the inherently long lead time needed to manufacture the pre-engineered building components.

“The process of manufacturing the steel started before we even completed the design, and the panels were shipped to the building site just in time,” Lima reports. “Without that, we never would’ve met the deadline.

“It was nerve-wracking,” he adds. “I have a clock on my desk that counts down to zero, and I had it set to count down to the project deadline. Everyone who came to my office could see it. We took this very seriously.”

Speedy Construction

The building includes a steel superstructure, concrete-block walls and a metal roof. General contractor Stone Building Co. bolted the pre-built steel wall panels onto the superstructure’s steel girts (horizontal beam-like structures).

The massive facility includes about 50,000 square feet of warehouse space and about 3,000 square feet devoted to offices, a mezzanine, conference and break rooms, restrooms, locker rooms and so forth. It also has 17 loading dock bays, with five airside bay doors, two airside roll-up doors and two landside roll-up doors.

The new cargo facility provides 50,000 square feet of warehouse space.

The building is not air-conditioned because the large doors are open most of the time. Instead, the warehouse space has eight industrial-size, 16-foot-diameter ceiling fans from Big Ass Fans, a brand owned by Delta T LLC.

“They keep things bearable for the staff,” Puckli says.

To provide as much daylight as possible, the design features transom windows, made from translucent polycarbonate panels, along the top of the walls. This enhances the work environment and conserves energy, which reduces electric bills, notes Kalousek.

The design also includes a stormwater filtration system inside a 300-foot-long concrete vault under the apron. It collects stormwater from the apron, then filters out sediment and other debris before discharging it into an existing underground storm sewer system that eventually discharges into a local creek. It also serves as a stormwater detention mechanism during heavy rainstorms. 

Sealing the Deal

The Airport Authority offered K+N financial incentives to entice the international shipper to sign a lease agreement. For example, the new tenant receives a 50% reduction in landing fees for the first three years, and the lease rate for the facility was cut in half for the first two years. That means the Airport Authority will collect around $394,560 for each of the first two years of the lease and $789,135 for each of the last three years.

“Being able to provide the incentives allowed K+N to feel more comfortable with expanding their operations into BHM and, ultimately, that led to them finalizing the deal with us,” Lima says. “It provided them with the cost break they needed for their expansion, and it demonstrated our commitment to their future growth, as well as ours.”

The airport already is experiencing significant growth in cargo operations since K+N began flying in and out of BHM in April 2023. The company was able to start operating at the airport before its facility was ready because Authority officials worked out a rental agreement with a maintenance, repair and overhaul company that had excess hangar space available.

Before K+N arrived at BHM, the airport typically handled 18,000 to 20,000 tons of cargo annually. But from April 2023 to March 2024, that number jumped to 27,781 tons of cargo—nearly a 30% increase.

Right Place, Right Infrastructure

Lima notes that BHM is Alabama’s largest and busiest airport, and its location is a key factor attracting cargo carriers.

“We’re filling a niche,” he explains, noting that automakers Mercedes-Benz, Honda, Toyota and Hyundai operate manufacturing plants in Alabama, not to mention numerous auto-industry parts suppliers. “The automotive industry is focused on expanding in the southern states, plus we’re close to an interstate highway and are centrally located.”

In addition, BHM’s 12,000-foot main runway is long enough to accommodate larger cargo planes and features a full instrument landing system. The 1,400-acre airport also has available land for building more cargo facilities.

Furthermore, Lima notes that BHM can move cargo faster and cheaper and help operators stay on schedule because larger, more congested airports in urban areas have traffic-clogged highways that slow down truck transportation.

“It’s just easier to operate at an airport our size,” he remarks.

Puckli reports that the new K+N facility already is paying dividends for the Airport Authority and the region—and other airports should take note of how BHM made it all happen.

“In just a short few months, the facility has become an economic engine for the Birmingham region and a model for other regional airports to expand their cargo capabilities to serve shippers looking for alternatives to better manage their supply chain shipping options,” he says.

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Building Momentum

More projects are on the horizon at BHM. The taxiway relocation remains on the drawing board, though it’s not expected to happen for three to four years. And the master development plan created by CHA envisions more air cargo facilities on 20 acres of land just south of the K+N facility.

UPS is expected to move forward with a new facility there, and K+N could expand its operations at the airport, too, Lima reports.

“Other companies that want to export goods are contacting us, too,” he adds. “Now that we have the capability, companies are taking note. Having the assets and a partner like K+N really opens the door for all kinds of new business.

“We expect to continue to grow as long as demand is there. It’s really an exciting time for our airport.”