The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
In Alaska, the aviation sector is crucial. Small, isolated communities that have no road networks or are hundreds of miles from coastal ports rely on airplanes for travel and for cargo deliveries. Most of that cargo is transshipped though Ted Stevens Anchorage International Airport (ANC).
What makes ANC one of the busiest cargo airports in the world is its geographic advantage. It has an equidistant position along the great circle between Asia and the Lower 48. This makes it an important component in international trade. By trading off cost-inducing fuel for revenue-earning cargo, most of the air freighters inbound from Asia will stop and refuel at ANC.
Imports generated from e-commerce activity and medical supplies to fight the COVID-19 pandemic have kept ANC busy throughout the spring and summer after most of China’s production facilities came back online. Of course, travel bans and the collapse of vacation and business travel meant that many passenger flights to and from Asia were canceled. Alaska requires all arriving passengers to either quarantine for 14 days or await negative COVID-19 test results. This has hurt Alaska’s cruise industry since many vacationers prefer to either fly in or out of the state as part of a single-leg cruise. In the midst of the COVID-19 pandemic, it is air cargo traffic that keeps ANC in the same league as the super-hubs at Memphis, Tennessee, (for FedEx) and Louisville, Kentucky, (for UPS).
Still, ANC has a unique yet limiting way of reaching the top ranks. A lot of air cargo is simply “landed” as part of an air carrier’s “gas-and-go” layover. A significant amount of cargo from the incoming planes is taken off for the benefit of Alaska consumers. Yet very little Alaska-produced or value-added cargo is loaded onto the planes. This is certainly not the case in Memphis and Louisville, which are leveraged by nearby vendors engaging in just-in-time deliveries along their global supply chains.
Diversifying beyond landed air cargo has been a decades-long goal of advocates for Alaska’s economic development and diversification. A recent announcement by Alaska’s congressional delegation of a $21 million discretionary grant to construct a 190,000-square-foot cold storage facility at ANC may be a good step in that direction. The grant was made through the Better Utilizing Investment to Leverage Development (BUILD) fund and awarded to the Alaska Energy Authority to oversee the project. This follows a $25 million BUILD grant awarded to the Port of Alaska in November 2019 to help complete its new cement and fuel terminal scheduled over 2021. This also benefits ANC because about half of its aviation fuel is imported on tanker vessels and delivered to it through a pipeline system managed at the Port of Alaska.
Offering ample cold storage gives air carriers the option to lay-over cargo and transfer it to other cargo planes in order to leverage their particular network of destinations. Transportation analysts will recognize this operation as interlining of foreign air cargo. ANC is particularly well suited for this operation because of its unique air cargo transfer options (which would be akin to illegal cabotage at Lower 48 airports if the transfer were made to a foreign air carrier). These unique operations were granted to ANC in the late 1990s through the pioneering work of the late Sen. Ted Stevens while he chaired the U.S. Senate Appropriations Committee.
While these air cargo liberalizations benefit Alaska, they are a rare example of unilateral trade liberalization for the benefit of all foreign air carriers passing through ANC.
Commentary: A strategy for tactics?
Commentary: Playing the spot market