Exclusive – U.S. Infrastructure Investment Deal - Sweet words, little action

In order to start eliminating the worst grievances, Brandon Fried, the Executive Director of The Airforwarders Association, proposes a Cargo Support Fund, complementing the government’s Investment scheme. This is also because Washington’s program has not yet led to infrastructural improvements at any of the U.S. airports, according to Mr. Fried’s sobering testimony. Instead of forcefully implementing the initial program, however, the Biden administration has now launched a second package worth USD 700 million to improve port and inland infrastructure and make supply chains more resilient. Is this simply another paper tiger?
     
CFG: Brandon, does the Airforwarders Association see any first improvements in the infrastructure of U.S. airports, particularly the cargo infrastructure, resulting from the program?

BF: Unfortunately, not at this point, and we do not expect to see any significant cargo area improvements anytime soon. While airports forecast a need for USD 115 billion for improvements, the infrastructure law only granted USD 25 billion. This means that airports will most likely use those limited funds to focus on passenger-related facilities, security, and safety, without any meaningful air cargo area investment.
Without the funds, on-airport cargo facilities will have insufficient financial capacity to accommodate forecasted growth. Roads leading to, from, and within the airport cargo areas will be extremely congested, causing failing levels of service.
Carbon emissions will increase substantially while cargo throughput efficiency will decrease, thus making shipping by air slower and more expensive for the consumer. Also, timely shipments of time-sensitive products including pharmaceuticals, perishables, and urgent supply chain parts, will be threatened.

CFG: What exactly are the reasons for little progress?

BF: Until the pandemic, major airports focused on passenger-related construction programs and for seemingly valid reasons. It is critical to note that the allocated funds for all airports have always been largely consumed for higher prioritized projects focusing on passenger terminals, services and amenities, security, and safety.
While this is all appropriate, the remaining funds available for cargo and logistics facilities and operations will be insufficient to meet the needs of airports, airlines, and their partners who have lost billions of dollars over the past three years.
In fact, the aeronautical infrastructure, cargo access roads, and facilities at many airports have not seen any significant improvements in almost fifty years. During that period, trucks grew in length, and airfreight (through e-commerce) became a more routine delivery option, creating higher shipment volumes resulting in trucking congestion due to antiquated roadways, insufficient parking areas, and outdated terminal buildings. So, when the pandemic caused consumer demand and airfreight volumes to spike, the airports, with drastically reduced revenues, were unprepared to handle the onslaught of shipments.

CFG: Many U.S. airports with poor infrastructure should be lining up in Washington to get funds approved to fast upgrade their facilities. Is this so or are they hesitant and waiting to see what happens?

BF: Most airports are trying to understand precisely what funds will be available and how those dollars should be prioritized. But it is important to understand that the funds that we are discussing go beyond airports, just as some of the causes for congestion extend beyond physical enhancements. There are substantial needs for technology and communications improvements, additional staffing, training, and regulation review and modification.
A judicious use of discretionary funding will also encourage greater private investment, particularly for elements of new development that offer limited return on investment. This is a critical element of what we are requesting, since this will help control costs to all industry stakeholders, with an eventual pass-through to shippers and eventually consumers.

CFG: The program provides for investments amounting to USD 25 billion in airports to address repair and maintenance backlogs, reduce congestion and greenhouse gas emissions. Has your organization drawn up a list of priorities, i.e. at which airports there is the most urgent need for action to improve the cargo infrastructure and why, including a cost overview?

BF: While many airports are experiencing significant truck congestion delays, our industry-wide survey, as well as the inputs from our planning committee clearly indicate that our primary focus should be on the major gateways. These include Los Angeles (LAX), Chicago (ORD), New York (JFK), Seattle (SEA), Boston (BOS), and Miami (MIA).
We anticipate a target figure of USD 3 to USD 5 billion would serve as a substantial stimulus to provide investment as well as create enhanced throughput and cost savings throughout the entire logistics chain.
It is important to recognize that we are recommending a national panel of experts to review and prioritize requests from the state on airport-specific allocations.
Evaluation of the requests would be based on very clear evaluation criteria that would be universally applied

CFG: Where does your organization see the greatest need for action?

BF: Our joint white paper calls for these immediate action steps:

• Provide direct financial support to development initiatives which would involve the creation of a State or Federal “Air Cargo Support Fund” dedicated to air cargo facility and infrastructure development and modernization.
• Develop and introduce a universal digital electronic application that would provide a single window platform for all stakeholders to have cargo status visibility.
• Review and upgrade airport cargo worker compensation to improve worker retention and service levels, reducing turnover and training time, and minimizing processing and handling errors, which would help to offset a portion of the increased compensation costs.
• Institute an industry wide training program to appropriately educate new staff and entrants in the multiple elements of air cargo operations and the importance of the role that each employee plays in maintaining the overall efficiency of the system.
• Modernize the U.S. security badging process by creating a national database for all properly vetted air cargo stakeholders, wherein workers could easily transfer from port to port, mitigating emergency staffing shortages at some level. This national system would also reduce part of the workload on the federal processing system, freeing budget and staff to address operating rather than administrative issues.
• Implement consistent policy interpretation and enforcement to ensure consistent interpretation and enforcement by TSA and CBP at every location over which they have jurisdictional oversight.

CFG: Finally, is the current inflation eating up a larger share of the program's funding, so that the total amount pledged by the government ends up being significantly reduced?

BF: It is difficult to answer that. From a purely logical perspective, it would make sense to infer that the accelerating inflation will reduce the real dollars that are available. However, the variables are substantial: the projects are largely unknown, the timing in many instances is yet to be determined, and the split between public and private stakeholder investment can vary substantially.

CFG: Brandon Fried, thank you for your insights.

Heiner Siegmund


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