Marketing Anchorage for Air-to-Sea Cargo Transport
Supply chain bottlenecks at West Coast ports are an opportunity for Anchorage to once again try to position itself as an attractive detour. The latest initiative is called the Anchorage Pacific Air-to-Sea Service, or ANC PASS, a joint effort of the Anchorage Economic Development Corporation (AEDC) and Ted Stevens Anchorage International Airport (ANC). The idea is that air cargo from Asia can be loaded onto ships in Anchorage for transport to Tacoma, Washington.
Reliability of Airplanes, Low Cost of Ships
AEDC President and CEO Bill Popp describes the mixture of modes as a “middle product,” faster and less prone to dockside slowdowns than trans-Pacific cargo ships but cheaper than flying freight all the way from Asia to final destinations in North America.
To back up the sales pitch, AEDC and ANC hired Naniq Global Logistics to study the feasibility of an air-to-sea option. Popp says the hard data is something previous efforts lacked, such as the “Christmas Comes to Anchorage” intermodal initiative from a decade ago. “That one never really got off the ground,” he says, but with the new study, “You can give that to somebody in the logistics field and they can say ‘Yup this actually makes sense.’ It’s a much more robust report that we produced now.”
The state-owned airport spent $100,000 on the Naniq study, according to ANC manager Jim Szczesniak. The study points to a comparable air-to-sea channel from Asia to Europe, using Middle East ports as a trans-shipment hub.
The results will be used to convince customers not to use slow boats or to resort to pure air freight. According to Popp, the study “demonstrated significant savings compared to one-to-three-day air, in terms of cash outlay,” but is also faster than surface transport: “Anywhere from a 6-9 day delivery to 10-15 day delivery were both the optimal and the average that we saw.” That pencils out to anywhere from 30 percent to 50 percent cost savings compared to air freight, point to point.
ANC PASS is positioned as a solution to supply chain headaches that have slowed trans-Pacific shipping to a crawl. “Traditionally you could put something on a container ship from Asia and get it across the Pacific and into the supply chain inside of thirty days pretty reliably, and you could do that affordably,” explains Dave Karp, senior vice president and managing director of Seattle-based logistics firm Saltchuk. “Today, that game is completely changed. It can take seventy-five to eighty days to get something across the Pacific,” he says, and then it would get stuck at the port of Long Beach.
The port of Tacoma has no such bottleneck. Bal Dreyfus, Alaska senior vice president for Matson, says, “We have our own dedicated terminals, we have our own equipment, labor is there. It works.” He says Tacoma cannot be equated to the congested ports of Los Angeles or Long Beach. Dreyfus also expresses no doubt that Anchorage has enough intra-city shipping capacity to truck air cargo across town to the Port of Alaska.
Surface transport has been so congested, according to Popp, “We’re hearing about furniture retailers shipping stuffed furniture via air cargo. Shipping sofas via airplanes! That is one of the least efficient ways you can ship furniture.”
The main marketing targets of ANC PASS are customers who would prefer the low cost of surface transport and the reliability of air cargo. Popp says the current supply chain problems should make that a viable alternative for the foreseeable future.
AEDC’s Bill Popp and ANC manager Jim Szczesniak say ANC PASS can fill shipping containers returning to Tacoma with freight flown from Asia.
The best part about ANC PASS, its backers say, is that containers are being shipped to Tacoma anyway, completely empty. The pipeline of goods delivered by Matson, TOTE Maritime, and Lynden to the Port of Alaska flows one way. The ships that make the deliveries return to their point of origin without anything of value.
Szczesniak explains, “It takes 151 747s to fill those containers on a weekly basis, so it’s a substantial amount of capacity that’s available to send stuff back.”
Those 747s would be able to unload more freight in Anchorage, if they didn’t have to continue to their final destinations. “Take a look at a flight where the airplane goes from Asia to Anchorage, Anchorage to Chicago,” says Szczesniak. “An aircraft can do that round trip basically three times per week and inject about 300 tons into the supply chain. If that aircraft was positioned here to use the ANC PASS, it could go Asia-Anchorage and do that six times per week, and so it would have the ability to inject about 600 tons into the supply chain.”
While cargo is passing through Anchorage, from the airport to the docks, local workers might have a chance to handle it. That’s the long-held dream of “value added.” Szczesniak says, “We can get some additive manufacturing, final assembly of products because, again, you’re getting all this stuff coming in from Asia and getting off the plane.” In this respect, ANC PASS isn’t just a “relief valve” for near-term supply chain problems but also a long-term play for the Anchorage economy.
It’s not going to happen overnight, says Popp, but ANC PASS can be up and running as soon as customers sign on.
“If somebody wanted to start this next week, we could do it,” says Karp. “The weak link right now is the air piece because we’re in peak holiday season. All the aircraft are pretty much committed.” Karp estimates a routine program would take two weeks to start up, once customers are converted to the idea. And it requires little investment on the part of ANC or the Port of Alaska.
“That’s the beauty of it,” Karp says. “We can do it one airplane at a time.”
This year the Alaska Railroad is celebrating 100 years of transportation people and cargo around Alaska. While the railroad is one of the states oldest transporters, it certainly isn’t the only one, and in this issue of Alaska Business we also check in on the Marine Highway, Span Alaska, and the White Pass & Yukon Route. For those interested in Southeast, our focus on that region provides updates on Kensington Mine, Tongass FCU, the troll fishery, and Juneau’s growing landfill.