Thinking BIG at the Ted Stevens Anchorage International Airport
Constructing new facilities to improve the world-class airport
The Ted Stevens Anchorage International Airport is the number two airport in the United States for landed weight of cargo aircraft (Memphis, Tennessee is number one) and is one of the top five airports in the world for cargo throughput. In addition to its massive cargo operations, the airport serves more than 5 million passengers a year and is the world’s largest and busiest floatplane base.
Additional Warehouse and Cargo Transfer Space
So there’s a lot going on at the airport, with no plans to slow down. In fact, several projects are underway or being planned at Ted Stevens Anchorage International Airport that will allow for increased cargo activity.
The state published a public notice in November of a fifty-five-year lease agreement proposal from UPS for 1.35 million square feet of space. Authorized uses for the land include development, construction, operation, and maintenance of a flight operations building; warehousing and sorting operations; the build-up and break-down of freight; air cargo transfer; aircraft parking and maintenance for UPS’ growing 747-8 fleet; ground handling and support maintenance; associated equipment storage and maintenance; aircraft de-icing; vehicle parking; and office support. The value of the lease over the fifty-five-year period is approximately $110 million.
A UPS spokesman stated the proposed lease agreement would support future growth and efficiency for the transportation company, though no plans had been finalized as of early February.
Competitor FedEx is also looking at land options at the airport. In August airport officials announced FedEx is interested in leasing approximately 1 million square feet south of its current warehouse to build a 98,000-square-foot domestic operations center that would house administrative offices and allow for additional truck and aircraft parking. This project has an estimated cost of $57 million, and as of publication a timeline for that project had not been released.
Additionally, 6A-XL Aviation Alaska has proposed two cargo transfer facilities at the airport: one is a 500,000-square-foot quick transfer air cargo warehouse facility on the west side of the north-south runway and the other is a 300,000-square-foot building on the north end of the airport near Point Woronzof. Each building has an estimated cost of $170 million.
It is always exciting for Alaska businesses to have access to additional services and options, so many are looking forward to the Alaska Cargo & Cold Storage project, which Airport Manager Jim Szczesniak says “will benefit the Alaska perishables industry.” It’s a $200 million project to build a 700,000-square-foot cold cargo warehouse. “This project will allow for efficient distribution of seafood, flowers, and other agricultural products to markets all over the globe,” Szczesniak says.
For instance, the peony industry in Alaska has seen significant growth in the last couple years. UAF horticulturist researcher Patricia Holloway stated in an article by Jan Jacob Mekes published in Floral Daily, “There are 136 growers in Alaska shipping peonies mostly as domestic exports to other states but also to Canada, and trial shipments to Vietnam, Taiwan, Singapore, et cetera.”
Many of those growers, located across the state from the Interior to the Kenai Peninsula, are members of the Alaska Peony Growers Association, which helps members “promote their farms in the world marketplace and highlight the unique growing conditions found here.”
According to the association, Alaska’s cool growing seasons and soils produce flowers with large buds and vibrant colors that are in high demand. In addition, peonies flower in Alaska during a time of year when they aren’t flowering anywhere else in the world. “Our bloom period of late June through August and into September makes it possible to supply these highly desirable flowers to market when there is little direct competition. Alaska’s position as a hub for cargo transfer allows our fresh flowers to be air freighted to US, European, and Asian markets,” the association states.
Holland reinforced the value of Alaska as an international cargo hub. “No grower here assumes we have a monopoly on this late season. However, many of the northern regions do not have the accessible transportation links that Alaska has—the third largest air cargo hub in the world. That makes a big difference when transporting a perishable product,” she said in Floral Daily.
Peonies aren’t the only flower that blooms late in the year with potential as an Alaska export—others include lily-of-the-valley, lilacs, and spiraea shrubs, according to Holland—so there is literally a ton of potential for the industry in Alaska. Developments at the airport support this burgeoning industry, which will likely in turn bolster airport operations, a favorable cycle for the industry, the airport, and the state’s economy in general.
The Alaska Cargo & Cold Storage project will also benefit Alaskans on the import side. “The airport also sees an opportunity to import fresher perishables into the Alaska market,” Szczesniak says. “I’d love for my raspberries to last more than a day after getting them from the store. ANC has multiple flights per day transporting perishables from the Americas to Asia. This facility would allow Alaska to siphon off some of those products and have extremely fresh fruits.”
Become an Industry Sponsor
Altogether, these projects represent approximately $707 million in expansion efforts, all funded privately. “No state or local funds are being used,” Szczesniak says. Construction of the various planned facilities is estimated to provide 1,000 construction, engineering, and design jobs. For ongoing operations, “The industry estimate for full-time employment, once the projects are complete, is 0.5 to 1 [full-time employees] per 1,000 square feet of warehouse space, so that would translate to around 750 to 1,500 jobs,” he says. The Ted Stevens Anchorage International Airport already provides more than 15,000 airport and community jobs—roughly one out ten jobs in Anchorage—with a combined payroll of more than $1 billion.
Timelines for the projects vary, but they are all slated for completion in the next two to three years. Szczesniak says construction for the Alaska Cargo & Cold Storage facility will get underway this year.
Why This Airport?
More than a year ago in October the Ted Stevens Anchorage International Airport issued a Request for Expression of Interest (EOI) to gather feedback about public interest and support for a quick cargo and cold storage facility. “The EOI was a clear message to developers and the industry,” Szczesniak says. “[But] before we could proceed with the formal Request for Quotes and Request for Proposals process, new developers and existing leaseholders were submitting new applications to lease land at applications to lease land at [the airport],” he continues.
Alaska’s value as a cargo airport is well known. One factor is the unbeatable location: Anchorage is less than a nine-hour flight away from 95 percent of major global markets. According to Greg Wolf, executive director of the World Trade Center Anchorage, 80 percent of all cargo flights operating across the Pacific make a technical stop at Anchorage to refuel, change crews, and/or transfer cargo.
Thanks to the late-Senator Ted Stevens, the eponymous airport is uniquely proficient at facilitating the transfer of international cargos. “The Alaska International Airport System has the most liberalized air cargo transfer rights in the United States,” according to the Alaska Department of Transportation & Public Facilities. “As of January 2004, a new law permits air cargo to or from a foreign country to be transferred to another airline in Alaska without being considered to have broken its international journey,” the department continues. The expanded cargo rights have benefited companies at the airport by lowering operating costs, occasionally eliminating beyond-airport flights, increasing market penetration, increasing aircraft utilization, and utilizing code-share agreements to test market conditions without committing aircraft.
But the airport can work even better for its users, and Szczesniak says he’d like to see those transfer rights maximized. One method of doing so is creating the facilities that allow cargo airlines and freight forwarders to perform cargo hub-and-spoke operations. Those rely on sufficient, short-term warehousing space that is convenient and quick to access.
Prior to the currently proposed warehouse space, the nearest warehouse facility was 3.5 miles away from the airport, which can make sense for items being stored for weeks but not for those that just need to land somewhere safe for a few hours before being placed on another plane. The added benefit of cold storage increases the quality and diversity of items that can be shipped out, shipped in, or transferred. For example, Alaska’s seafood industry exports primarily frozen items, but cold storage creates opportunities for more high-value, fresh products to leave the state.
All said, private investment in these facilities at the Ted Stevens Anchorage International Airport benefits all of Alaska. Whether it’s providing an expanded export market for local manufacturers, driving down the cost of importing goods for retailers, generating additional opportunities for Alaska’s major industries, or providing jobs for Alaskans, the entire state will reap the benefits of development over the next few years.
In This Issue
The Corporate 100
Alaska Business has been celebrating the corporations that have a significant impact on Alaska’s economy since 1993. At the time, the corporations weren’t ranked as the list didn’t have specific ranking criteria. Instead, the Alaska Business editorial team held long, detailed, and occasionally passionate discussions about which organizations around the state were providing jobs, owned or leased property, used local vendors, demonstrated a high level of community engagement, and in general enriched Alaska.