Philadelphia International Airport is embarking on an expansion of cargo services over the next five to 10 years, in an effort to capture a bigger piece of the market for shipping goods like pharmaceuticals, e-commerce orders and perishable products.
PHL executives announced those plans Tuesday, having secured a key approval this spring from the Federal Aviation Administration related to land development. The regulatory sign-off means the airport can build new cargo-related facilities and expand the airfield on 150 acres.
That amount of available space sets PHL apart as it seeks to compete for cargo business.
“There are no other airports on the East Coast that offer a greenfield site where you are starting from scratch, and where depending on the types of facilities that you build, it can match the business model of a lot of different types of companies,” said Stephanie Wear, PHL’s director of air service development and cargo services.
The airport’s plan to develop one million square feet of cargo facilities will create an anticipated 28,000 jobs over a decade, Wear said.
PHL started taking steps to strengthen its cargo capabilities several years ago. A 2017 study the airport commissioned showed that the catchment area around PHL — a 400-mile radius — generated $53 billion a year in air cargo activity, but that PHL grabbed only 9% of it. The pandemic, which depressed passenger air travel, further illustrated the case for a new revenue stream.
“Cargo has been growing year over year, and has proven to be incredibly resilient, even in the face of a global pandemic,” said CEO Chellie Cameron. “When we look at the numbers from 2020, we saw a 2.6% increase in cargo over 2019, and that’s in spite of passenger levels going down by more than 64%.”
So far this year, total cargo at the airport, measured in tons, is up 7.4%.
An enhanced cargo operation will also translate into an estimated $1 billion in annual economic impact for the region, Cameron said. That figure doesn’t include the impact on construction activity on the site, she said, which the airport hasn’t quantified yet.
The airport has invested $90 million to ready the site. Cameron said she hopes PHL could obtain at least $50 million in federal and state funding to help pay for runway extension.
PHL will also look for private partners to develop the facilities. “It could be a carrier that decides to come in and establish a large, medium or small operation here,” Cameron said. “Or it could be a developer that decides to come in and put up buildings” and lease them.
Currently 11 air carriers have cargo capability at PHL, a combination of cargo-only carriers and passenger airlines. Their routes fan across the United States, and into Europe, as well as Doha, Qatar.
To be more competitive in the logistics industry, Wear said that PHL also needs to build out connections to Asia and other international destinations.
At the same time, Cameron pointed out, international passenger flights are often more financially successful when also carrying cargo in the belly of the plane. Having improved cargo facilities at PHL could be the “tipping point” that convinces Asian air carriers and others to come to Philadelphia, she said.