Airports Council International North America Air Cargo Committee Meeting

Airports Council International North America Air Cargo Committee Meeting 2011 ACI-NA Annual Conference October, 2011 Contact: Economic Affairs and Research Tel: 202-293-8500 Email: EconomicAffairs@aci-na.org

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Agenda Opening Remarks Working Group Updates Associate Participation Survey Air Cargo Guide Air Cargo Facilities and Security Survey Lunch Break Industry Overview Key Issues of Today s Air Cargo Industry Air Cargo Security Update 2012 Work Plan 2012 Participation Plan Acknowledgement of Outgoing Leadership

Airports Council International North America 2011 Associate Participation Survey Preliminary Results 2011 Air Cargo Committee October, 2011 Contact: Economic Affairs and Research Tel: 202-293-8500 Email: EconomicAffairs@aci-na.org

Survey Background It s ACI-NA goal to promote participation among its Associate and Airport members in exchanging ideas and understanding the critical issues faced by the industry The survey was launched mid-year 2011 and is an ongoing effort by the Air Cargo Committee to fully understand and address the needs of both Associates and Airport members and how cooperation can be enhanced.

Survey Sample Air Cargo Committee Member Types Responses % of Member Types Air Cargo Committee Member Types Total Airports 16 9.3% 172 Associates 13 13.1% 99 Not all airports or associates member answered the survey completely; corresponding slides reflect this Results based on Survey Sample

Average Impact Rating Industry Critical Issues Least 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Airports Associates Greatest Other: Weak economy Lack of long-term funding sources Lack of trained cargo managers Results based on Survey Sample

Uncompensated Consulting Services Airport Desires Reference based information (sharing research) Proven strategies Product/service demonstrations Mailing list of airports and freight forwarders Associate Providence General market intelligence and analysis Market insights from industry stakeholders Inquiries on specific projects from airports Results based on Survey Sample

Frequency of Communication 9 8 7 6 5 4 3 2 1 0 How often Airports reach out to Associates Only when required Bi-monthly Quarterly Topics Discussed: Operational processes Market information/trends Security Ground handling Contacts and leads Market rates and charges Results based on Survey Sample

Monthly Call Participation Number of Attendees Why Attendees do not attend 12 Airport Members Associates Members 5 Airport Members Associates Members 10 4 8 6 4 3 2 2 1 0 Yes No 0 Work conflicts Time of calls Didn't know about them Limited value Results based on Survey Sample

Suggested Improvements Airport Increased cargo operator participation ie. freight forwarders, airlines, custom brokers More airport participation of various sizes Airport update; understanding what other airports are doing Associate Greater organization and leadership from ACI-NA; too heavily reliant on few airport consultants More airport participation of various sizes More real-time intelligence from various industry markets Joint collaboration with other Committees with crossover interests More interactive roundtable discussions Results based on Survey Sample

Questions Contact: Economic Affairs and Research Tel: 202-293-8500 Email: EconomicAffairs@aci-na.org www.aci-na.org

Last Completed in 2005 Air Cargo Guide

Airports Council International North America 2011 Air Cargo Facilities and Security Survey 2011 ACI-NA Air Cargo Committee Air Cargo Committee Meeting October, 2011

Survey Background It is ACI-NA s goal to promote the development of a balanced air cargo security program that provides the necessary level of security enhancements while minimizing the negative operational and cost impacts to air cargo transport. The Working Group revised, pre-tested with selected airports, and launched the Air Cargo Facilities and Security Survey in April and allowed five months for data collection. The survey was last updated in 2003 and identified the tremendous range of airports operating environments relating to security.

2010 ACI North American Final Cargo Rankings Rank City Airport Code Total Cargo (metric tonnes) % CHG from 2009 1 Memphis TN MEM 3,916,811 5.9 2 Anchorage AK ANC 2,646,695 36.6 3 Louisville KY SDF 2,166,656 11.2 4 Miami FL MIA 1,835,797 17.9 5 Los Angeles CA LAX 1,747,629 15.8 6 Chicago IL ORD 1,376,552 31.4 7 New York NY JFK 1,344,126 17.5 8 Indianapolis IN IND 1,012,589 7.2 9 Newark NJ EWR 855,594 9.8 10 Atlanta GA ATL 659,129 17.1 11 Dallas/Fort Worth TX DFW 645,426 12.1 12 Oakland CA OAK 510,947 4.0 13 Toronto ON YYZ 482,486 11.8 14 San Francisco CA SFO 426,725 4.6 15 Houston TX IAH 423,483 13.6 16 Philadelphia PA PHL 419,702 (3.2) 17 Cincinnati OH CVG 371,297 178.9 18 Ontario CA ONT 355,932.4 19 Washington DC IAD 332,275 13.5 20 Seattle WA SEA 283,425 4.9 Based on ACI-NA Traffic Statistics available at http://www.aci-na.org/content/airport-traffic-reports

Survey Sample ACI-NA Cargo Center Category Responding Airports % of Airports represented by Cargo Center Industry Total (ACI-NA 2010) Large 10 83% 12 Medium 11 48% 23 Small 23 20% 115 Canadian 7 50% 14 Total 51 ACI North American 2010 Final Rankings 1. Large cargo centers 500,000 or more metric tonnes 2. Medium cargo centers 100,000 499,999 metric tonnes 3. Small cargo centers 100,000 or less metric tonnes Results based on Survey Sample

YHZ YMX YQG YUL YWG YYZ YZF ANC ATL DFW EWR JFK LAX MEM MIA ORD SDF BWI CVG DEN IAD MSP PDX PHL SEA SFO SLC STL AUS IWA BOI BTV FAI FLL FWA GSP HSV JAN JAX LGA MHR MSY ORF PIT RNO RSW SAN SMF SWF TPA TUL Number of Third Party Ground Handlers Serving Airport Cargo Operations Canadian Large Medium Small 11 10 9 8 7 6 5 4 3 2 1 0 Airports with zero either has no third party ground handlers or chose to leave blank Results based on Survey Sample

Average Number of All-Cargo Carriers 2007 2008 2009 2010 22 20 18 16 14 12 10 8 6 4 2 0 Large Medium Small Canadian Results Based on Survey Sample

CY2010 Top 20 Cargo Carriers by Cargo Market Share Rank Airline Market Share 1 FedEx 64.27% 2 UPS 26.72% 3 DHL related.50% 4 Lufthansa Airlines.36% 5 United Airlines.29% 6 Airborne Express.28% 7 Atlas Air.25% 8 EVA Airways.24% 9 Continental Airlines.23% 10 Cathay Pacific.22% 11 Asiana Airlines.22% 12 Tampa Cargo.21% 13 American Airlines.20% 14 Korean Airlines.20% 15 China Airlines.18% 16 Delta Airlines.11% 17 US Airways.09% 18 British Airways.07% 19 Japan Airlines.07% 20 Southwest Airlines.05% Results Based on Survey Sample

Type of Cargo Access Control Point Security Systems Installed at Airports Swipe-card Biometrics Cameras Manned 34 41 34 14 Most responding airports have multiple types of security system installed Results Based on Survey Sample

Number of Airports Number of Airport Operating Security Companies 14 12 10 8 6 4 2 0 One Two Three Four > Four Results Based on Survey Sample

Number of Airports Airport Permit Through-The-Fence Cargo Operations Yes No 12 10 Responsibility of Control Gate Access 8 6 4 2 0 Large Medium Small Canadian Airport Facility Operator Contracted Security Airport Police Combination of tenants and airport security SIDA Badged Cargo Employees Results Based on Survey Sample

Type of Vehicles Permitted on the AOA Commercial over-the-road trucks Flatbed Trucks Tugs Vans 48 45 47 41 Most responding airports have multiple types of security system installed Results Based on Survey Sample

Number of Airports Airport Cargo Truck Monitoring System Yes No 18 16 14 12 10 8 6 4 2 Airport Examples An Over-height Vehicles Detention System to identify vehicles over 12 feet 6 inches tall Automated Access Gate controls AVI system Security cameras/cctv SIDA Badge Swipe 0 Large Medium Small Canadian Results Based on Survey Sample

New Security Requirements Affecting Cargo Facilities Increased costs Loss of usable square feet Loss of storage None 30% 31% 14% 24% Other Comments: Loss of staging space Periodic delays awaiting screening Results Based on Survey Sample

Airport Operating Cargo Screening Technologies Advanced Technology X-ray 17% 7% 14% 3% 22% Decompression chamber Explosives Trace Detection (ETD) 25% 13% Explosives Detection System (EDS) Physical search with verification of manifest or other packing document TSA operated canines Other Detection Equipment: Airport-Operated canines County Police Canine units Any other detection equipment accepted by TSA National Explosives Detection Canine Team Program (NEDCTP Dogs) Results Based on Survey Sample

Number of Cargo Facilities by Tenant Type 60 Multi-Tenant Single Tenant 50 40 30 20 10 0 Large Medium Small Canadian Results Based on Survey Sample

Number of Airports Number of Airport Planning Expansion Yes No 24 22 20 18 16 14 12 10 8 6 4 2 0 Large Medium Small Canadian Estimated Completion 10 Planned 1 Approved Completion date range from 2012-2025 Results Based on Survey Sample

Questions Contact: Economic Affairs and Research Tel: 202-293-8500 Email: EconomicAffairs@aci-na.org www.aci-na.org

Thank You to Our Sponsors: Lunch PM Break Exhibition Hall Reception www.aci-na.org

Mike Webber Since 2001, Michael Webber has been the President of Webber Air Cargo, Inc., principally serving airport management and civil aviation authorities. Although North America remains his biggest market, Webber has completed multiple projects in Africa, Asia, Latin America and the Middle East. He is an on-call consultant to IATA for whom he has completed cargo projects for several airlines. He is based in the Kansas City area.

Airports Council International North America October 16, 2011 Presented by Michael Webber Webber Air Cargo, Inc.

2010 cargo volumes were largely improved often in double-digits; Top 20 cargo airports are a mix of integrator hubs & regional hubs (10 total) and international gateways; Anchorage largely a function of gas-andgo technical stops; Cincinnati s extraordinary growth is due to full year renewal of DHL hub. Airport 2010 % CHG MEMPHIS TN (MEM) 3 916 811 5.9 ANCHORAGE AK (ANC)** 2 646 695 36.6 LOUISVILLE KY (SDF) 2 166 656 11.2 MIAMI FL (MIA) 1 835 797 17.9 LOS ANGELES CA (LAX) 1 747 629 15.8 CHICAGO IL (ORD) 1 376 552 31.4 NEW YORK NY (JFK) 1 344 126 17.5 INDIANAPOLIS IN (IND) 1 012 589 7.2 NEWARK NJ (EWR) 855 594 9.8 ATLANTA GA (ATL) 659 129 17.1 DALLAS/FORT WORTH TX (DFW) 645 426 12.1 OAKLAND CA (OAK) 510 947 4.0 TORONTO ON (YYZ) 482 486 11.8 SAN FRANCISCO CA (SFO) 426 725 4.6 HOUSTON TX (IAH) 423 483 13.6 PHILADELPHIA PA (PHL) 419 702 (3.2) CINCINNATI OH (CVG) 371 297 178.9 ONTARIO CA (ONT) 355 932 0.4 WASHINGTON, DC (IAD) 332 275 13.5 SEATTLE WA (SEA) 283 425 4.9 Source: Airports Council International North America

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - FedEx US Hub System Memphis Indianapolis Newark Oakland Fort Worth Greensboro FedEx hub system Memphis grew by 57%, while others mostly declined apart from new regional hub Greensboro. Alliance (Ft. Worth) fell by almost 48%, Oakland by about 25% UPS US Hub System 2,500,000 UPS hub system Louisville grew by 42%, while 3 other major hubs declined by roughly 25%. MidAtlantic regional hub (Columbia) fell by about 55%, even as FedEx built up its Greensboro operation. 2,000,000 1,500,000 1,000,000 500,000 - Louisville Dallas/Ft. Worth Philadelphia Ontario Columbia

Memphis had 3.9 million tonnes in 2010, compared with roughly 2.1 million tonnes for Louisville. UPS has no secondary hub comparable in scale to FedEx s IND operation with 1 million tonnes, although RFD is the geographic counterpart; FedEx s regional hubs are about 40% larger (in annual tonnes) than UPS equivalents. Beyond main hubs, both integrators have invested far more in North American trucking than air operations in last decade. 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Source: Airports Council International North America Memphis Louisville Indianapolis Oakland Ontario Greensboro Columbia

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes DHL abandoned its CVG hub in favor of Airborne s Wilmington, OH hub prior to dropping US domestic service and returning to CVG; Former Emery Worldwide hub Dayton was comparable with Newark & DFW in 2000 at over 800 K tonnes but down to only 8K in 2010; Former BAX Global/DB Schenker hub Toledo has already fallen 40% and likely to repeat the Dayton experience soon; Former Airborne hub at Wilmington & Kitty Hawk at Ft. Wayne are vacant. 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 - Source: Airports Council International North America Cincinnati Toledo Dayton

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Miami Los Angeles Chicago New York JFK Of 4 largest gateways, only MIA grew (12%) for decade, while LAX (-14%), JFK (-26%) & ORD (-6%) all had losses. Effect ripples through the system as potential capacity crises were deferred, slowing the need for alternatives. EWR overlaps with JFK market but bleeds off FedEx business as well as unique international carriers. Only IAH enjoyed growth (15%) during decade with energy economy, while SFO fell by more than 50%. 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - Newark Atlanta San Francisco Houston Washington DC

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes Tremendous losses among airports once contemplated as heirs to congested NYC and PHL gateways; UPS regional hub PHL still faces capacity issues due to land constraints; Boston air cargo dropped by 45%, Baltimore by almost 57%, Pittsburgh by 47% and Hartford by almost 30%. Unlike larger gateways, these northeastern airports received very little to no international growth to offset domestic losses. 600,000 500,000 400,000 300,000 200,000 100,000 - Source: Airports Council International North America Philadelphia Boston Hartford Baltimore Manchester Pittsburgh

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes Tremendous losses among airports once contemplated as heirs to congested MIA. Both UPS & FedEx use MIA as gateway to Latin America but FLL is used for S. Florida express operations. Orlando air cargo dropped by 50%, FLL by about 62%, and Charlotte by 38%. By comparison, RDU (-22%) and Tampa (-15%) fared better but from much smaller bases. Still relatively small by comparison, HSV continues to add enviable international service. 300,000 250,000 200,000 150,000 100,000 50,000 - Source: Airports Council International North America Orlando Charlotte Raleigh-Durham Fort Lauderdale Tampa Huntsville

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes Relatively low density of population and manufacturing, so low appeal for air cargo hubs but superior for rail & trucking. Losses in excess of 40% for Denver, Minneapolis and Kansas City, 35% loss for Detroit and 20% loss for St. Louis. Detroit and Minneapolis still vulnerable to cuts by Delta to former Northwest hubs but more compromised by proximity to Chicago and Indianapolis. 500,000 450,000 400,000 Houston 350,000 Denver 300,000 Minneapolis 250,000 Detroit 200,000 San Antonio 150,000 100,000 St. Louis 50,000 Kansas City - Source: Airports Council International North America

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Metric Tonnes Dominance by LAX which often gained by attrition of other regional efforts as freighters abandoned SFO. Still, some transpacific diversification among SFO, and then SEA, YVR & PDX. Integrator gateways at ONT & OAK. Losses of 43% for SLC, 38% for Seattle and 33% for both Phoenix & Portland. San Diego lost only 17% but is an afterthought to both LAX and ONT in Southern California. 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Source: Airports Council International North America Seattle Phoenix Portland Salt Lake City San Diego

Calgary 12% Winnipeg 17% Vancouver 22% Canadian airports fared better than U.S. counterparts with all but YVR enjoying growth, among the top 5. Far more concentrated than U.S. air cargo industry, dominated by Toronto in the East and Vancouver in the West. Cargo Growth: CY 2000-2010 (%) Edmonton 3% Toronto 46% 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0-0.1

Myth of runaway growth at major cargo gateways is not supported by experience of the last decade. Imminent clashes with absolute capacity have been delayed by at least a decade. Cargo screening has not contributed to new delays at major gateways but closer to the opposite with major forwarders & carriers pushing as much throughput as possible through fortress hubs to capitalize investments in technology & training. Calling an airport an aerotropolis is not a business development strategy. Challenges are far more complex than mere branding issues. Unprecedented glut of on-airport air cargo capacity with widespread abandonment of legacy facilities once occupied by Airborne/DHL, BAX Global and Emery both at former hubs and at spoke cities. Demand drivers have changed as manufacturing has fled the U.S. and all-cargo carriers pursued superior growth options abroad while investing heavily in trucking for the U.S. Canada has fared better than the U.S. but remains heavily regulated and therefore hadn t experienced much of the growth that the U.S. has already shed.

Top 5 Key Industry Issues Airport Rising Fuel Cost Security/Regulatory Requirements Lack of AIP Funding Changing Global Distribution Truck Substitution Associate Rising Fuel Cost Security/Regulatory Requirements Changing Global Distribution Truck Substitution Aging Airport Infrastructure Results based on Survey Sample

Chris Bidwell, Vice President of Security and Facilitation TSA postpone cargo screening deadline Other corresponding news

2012 Projects/Deliverable Air Cargo Guide Monthly Calls November 3 rd Ken Ryan, Chicago Rockford Airport December 1 st Bill Goodgion, FedEx Potential Speakers Des Vetannes IATA Michael Steen TIACA Ian Morgan Cargolux Albert Wang Singapore Airport Russell Tom Boeing Brandon Fried AirCargo 2012 Conference Wally Devereaux Southwest Airlines

2012 Committee Steering Group Vice Chair Tom Green, Port of Seattle, Seattle Tacoma International Airport Immediate Past Chair Mike Bednarz, Port Authority of NY and NJ At-Large Member John Parrot, Ted-Stevens Anchorage International Airport Committee Secretary Liying Gu, ACI-NA Chair Warren Jones, Hartsfield-Jackson Atlanta International Airport At-Large Member Chris Matney, Indianapolis Airport Authority Second Vice Chair Cecilia Poster, Pittsburg International Airport Associate Rep. Dan Muscatello, Landrum and Brown At-Large Member (Canadian Rep.) Todd Doherty, Edmonton Regional Airport Authority Committee Secretary Nelson Lam, ACI-NA

2012 Participation Plan Please see handout

Mark Your Calendars www.aci-na.org