Global Logistics: A Key Opportunity for Anchorage
Alaska’s largest city is open for business.

Beautiful downtown Anchorage with the Chugach Mountains as a backdrop.

 By Regan Stewart  

Many outside corporate executives think of Anchorage as small, remote and expensive. A common misunderstanding is that Alaska receives exceptional amounts of snowfall all year and the temperatures are dreadfully cold. Surprisingly, Anchorage weather is relatively mild. Minneapolis, Chicago and Buffalo are colder and get more snow.

Kevin Pearson, vice president of the Anchorage Economic Development Corp., says there are a lot of misperceptions people have about Anchorage and Alaska. “It’s a common myth that we are a cold, dark and distant state.” So, last year AEDC started a global public relations campaign targeting industries such as global logistics, light assembly and distribution, high tech and white collar, back office and the service sector. “People say that Alaska is in the middle of nowhere but, really, it is in the middle of everywhere,” says Pearson.

In addition to a highly educated work force, no state or local taxes on personal income and access to global markets, Anchorage’s most unique asset in the business world is its location relative to global distribution.

During the past 35 years, Alaska’s resource development and economic growth has made it possible for Anchorage to become the financial and commercial center of the 49^th state. More than half of Alaska’s population lives and works in this contemporary city, which is also the transportation hub for the state’s air network, the Ted Stevens Anchorage International Airport, Alaska Highway, Alaska Railroad and Port of Anchorage. 

Centrally Located

By looking at the globe from the top, it is clear that Anchorage is truly the “crossroads to the world,” as the city is now dubbed. Federal Express, United Parcel Service, Northwest Airlines and the U.S. Postal Service have established international cargo sorting and distribution hubs in Anchorage because of the city’s central location to world markets, expedited customs clearance, low landing fees, low fuel flowage fees and accessibility of customs agents in dedicated Foreign Trade Zones.

Anchorage has become an important center for global logistics, as it is now home to the nation’s No. 1 cargo airport for landed cargo weight and ranks third in the world for cargo volume behind Tokyo and Memphis. Many executives have realized that an Anchorage hub could improve a company’s competitive position in the global supply chain by saving time and money. Strategically located nine hours from 95 percent of the industrialized world, flight times from Anchorage to Asian or European destinations are at least two to five hours faster than freight from other U.S. West Coast cities. 

An Anchorage distribution hub could replace several hubs in North America and possibly in Asia. “From an aviation point of view, it is the most central city in the Northern Hemisphere,” says Bob Poe, president and CEO of AEDC. The airport is served by 25 international cargo airlines with 24/7/365 operation and no weather closures and direct service from Anchorage to 45 cities around the globe.

Morton Plumb, director of the Anchorage airport, says that Anchorage is an optimum location for an air cargo hub. The airport is closer to Asia than any other North American international airport and is closer to most of Europe than any West Coast international airport. This advantageous location makes it ideal for international warehousing and distribution of high-value, time-sensitive products.

“There are also attractive lease rates on airport property for companies that are at least 50 percent airport related,” Plumb says.

Anchorage is home to hundreds of business executives, such as pilots, who fly around the world on a frequent basis.

“The time zone advantage enables Anchorage companies to do business with Europe in early morning, Asia in late afternoon and North America during the workday,” says Poe. 

Economic Stability

“In addition to being centrally located, Anchorage has a stable, maturing, diversified economic environment with a steady growth rate of 2 percent to 3 percent per year when compared to other cities,” Poe says, “Furthermore, Anchorage has virtually no taxation.”

“We feel we are an excellent location for the high-tech industry. We are better equipped to target smaller high-tech companies due that taxes here are at the lowest rate in U.S.,” Pearson says. Incentives for attracting these industries include Property Tax Abatement and Foreign Trade Zones. There are not a whole lot of incentives due to the fact that Alaska does not have a state tax, which makes it very advantageous for the small-business owner.

Throughout the past, low taxes and attractive business incentives have contributed to the growth and diversification of Anchorage’s economy. The Alaska New Business Incentive Program is an economic development grant program targeted at companies locating or expanding into new manufacturing or value-added business in Alaska. The program is focused on attracting businesses that will create high-value, year-round jobs. “New business” refers to industries and operations that are new to Alaska, as opposed to “start-up” businesses. The Anchorage Municipal Code provides for tax exemptions pertaining to property and inventory for economic development. New or expanding businesses meeting certain criteria may be granted property tax abatement.

“High tech is still the fastest growing industry despite the dot com bust several years ago,” says Pearson. “We are running out of large tracts of land in Anchorage proper. But there is a lot of vacant office space. And, if people enjoy the outdoors, like to hunt, ski, fish, there is no finer place.”

When the Mayor Mark describes office space locations, he says to lease a Class B+ or Class A space, which is the higher end of corporate rent, is approximately $3.25 per square foot a month. “No other city can compete on that level,” says Begich. Anchorage’s office space is concentrated in the downtown and midtown areas. Anchorage can meet the office space needs of even the most demanding companies. Anchorage also has a number of building sites ranging in size from .5 to 200 acres. 

A Trained Work Force

“There are very skilled people who live in Anchorage,” says Pearson. Anchorage’s relatively young workers are highly educated and career oriented. Anchorage has a steady year-round employment base with a summer boost from tourism, fishing and construction activities. Approximately 65 percent of all adult residents have completed a minimum of one to three years of college, placing Anchorage among the top metropolitan areas in educational attainment.

“We grow our own and try to keep our own,” says Mayor Begich. Anchorage companies recruit right out of the state’s university campus system. The trained work force is partly comprised of graduates from the University of Alaska Anchorage and Alaska Pacific University. There is a lot of opportunity for young people in high positions. Anchorage is a rapidly growing business community, which seems to give people a chance.  

Technological Advantages

Alaska is practically an island with its remote appeal. Therefore it must be much more attuned to technology and the Internet than its peers elsewhere. With 85 percent of the population high-speed connected, it is the most wired state in the U.S., “By the end of this year, 99 percent of Alaska’s population, even the smallest village, will have access to Internet. No other state can boast that,” says Begich.

Alaska is well connected technologically for the expanding world of electronic commerce. Anchorage is well connected to the Lower 48 high-capacity fiber optic networks. Anchorage is connected to Fairbanks and Juneau by fiber optic systems and is connected to the rest of Alaska by a satellite network capable of efficiently delivering voice, data and IP services to regional centers and small rural communities. Anchorage offers a complete array of telecom services, including ubiquitous high-speed Internet access provided through both cable modem and DSL (digital subscriber line) infrastructure.

Anchorage is also one of the nation’s most competitive telecom markets. Local exchange and long-distance services are provided at or near nationally averaged prices. Cellular services are comparably priced to wireless service in major Lower 48 markets. Anchorage offers a modern telecommunications infrastructure with competitively priced services that are attractive to corporations, government agencies, businesses and residential customers. Commercial data and high-speed Internet are priced at or near national averaged prices. Dedicated data services are priced at slight premium to Lower 48 markets, however, prices have fallen substantially during the 12 months as a result of competition.

With 40 percent of the Alaska population in Anchorage and 93 different languages spoken here, it’s a very diverse community. “We consider ourselves the center of the state when it comes to finance, medical, air and a variety of services,” says Begich. Eighty percent to 85 percent of Alaska goods come through the water port in conjunction with the airport. “This is a very dynamic city as we are in a new stage of growth,” says Begich. “There is a large expansion of the airport in progress. It is very important that we plan for the growth of the state.”

The airport and what goes on there is critical, the mayor says. As Alaska’s primary transportation, communications, trade, service and finance center, Anchorage is tied to national and international markets for oil, gas and mining. The flow of tourists and air cargo also weigh heavily on the city’s economic performance and development. This is the 17th year of positive economic growth for the city. “Historically the driving force of Anchorage economy was oil and gas. Since the crash of the ‘80s, Anchorage has made a strong effort to diversify its economy. Begich is looking to even further expand the economy.

As the first person born and raised in Alaska and elected mayor, Mark Begich’s mayoral election has flipped the switch on what is happening in Anchorage. “People from here view the city differently than transplants,” says Begich, “This city is young enough that it can fix mistakes early on. We are moving in the right direction because people care about what is happening in Anchorage.” 

A Quality Life

Quality of life is what people and companies look for when relocating. Especially in a financial industry, says the mayor, where you are not moving goods, but moving technology, which doesn’t require being in a huge city. “Logistics has paved the way for this to be an international city,” Begich says. Begich doesn’t believe his town will ever be a Hong Kong or a New York City, but he believes there certainly is a niche. He describes Anchorage as a niche market because logistics has paved the way for people to work in the middle of the wild. “I don’t know of a lot of other cities where people can go salmon fishing on their lunch break in downtown,” Begich says.

Begich says you can do all your trading and commodities in the middle of nowhere. “You can practically walk up your office steps from fishing.” Things that determine the quality of life, such as commute times and cost of living are important. “In 20 minutes you can be in the wilderness, in two hours you can be on a world-class river,” says Begich. The summer days are long, yielding as many as 20 hours, but you need it to see and do everything Alaska has to offer. Getting out of the office at six o’clock and still able to do a three-hour hike is not something a lot of cities can offer.

In a global society, businesses have greater freedom to locate where they want to be rather than where they have to be. Anchorage is primed to accommodate companies seeking to grow and expand their reach, particularly those with global interests. Anchorage offers ample space, infrastructure and business incentives. Cities do compete for business, and the quality of life they can offer people is an important advantage. Visitors have been drawn to Alaska, the “land of the midnight sun,” for many years. Anchorage has a commitment to the environment, the arts and recreational opportunities. Anchorage residents have to share their recreational backyard with the rest of the world. Because they are now considered a world-class destination, they are more aware that the world is their market.

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