While Denver International Airport hits record passenger levels, the promise of an equally lucrative air cargo business seems out of the airport’s grasp.
Denver isn’t located near major population centers or ocean ports, nor does it have the strong manufacturing base required to support air cargo.
Yet just six years ago, civic and industry leaders gathered at DIA to break ground for a new cargo facility and to celebrate the airport’s promising future as a regional air cargo powerhouse.
WorldPort was once described by its developer as the most ambitious private-public partnership in the air cargo industry nationwide. At final build-out, it could have provided 750,000 square feet of space and employed 1,500.
Neither has happened. The volume of air cargo that passed through DIA has decreased – from more than 1 billion pounds in 2000 to 682.8 million pounds in 2005, and the much ballyhooed WorldPort is still just 55,000 square feet.
“I think many people saw this as the beginning of the fulfillment of the dream of DIA as an economic engine,” said Tom Clark, executive vice president of the Metro Denver Economic Development Corp. “I don’t really know what happened.”
Denver’s high-tech industry foundered in 2000, and the Sept. 11 terrorist attacks brought air travel of all kinds – and the nation’s economy – to an abrupt halt. When air cargo carriers ramped up again, they did so from airports closest to U.S. ocean ports and densely populated areas.
DIA – and WorldPort – were left behind. “After 9/11, the economics just weren’t there,” said Jerry Kanter, DIA’s business development manager.
Denver-based Fulenwider, Prather and Thompson LLC developed WorldPort with a New York partner, then sold its share to Lehman Bros. about five years ago.
“Pretty big players were pretty confident that it was going to work,” said Chris Thompson of Fulenwider, “and it’s frustrating that (WorldPort) hasn’t become a cargo hub. There was the perception that cargo was going to grow based on the high-tech economy, and it didn’t.
“We were inexperienced in it. I think that’s probably our last venture into it.”
Although international air freight is expected to climb 7 percent this year, air cargo continues to decline at DIA. About 218 million pounds passed through the airport between January and April 2006, down 8.2 percent from the same period of 2005.
FedEx, UPS, DHL and ground handler Integrated Airline Services Inc. are DIA’s major cargo tenants. In addition to providing next-day delivery service for its own clients, FedEx has a contract to carry mail for the U.S. Postal Service. More of that mail is now sent by truck, however, because moving mail by truck can cost one-tenth the price of transporting it by air.
Denver’s location in the heart of the sparsely populated West counts against DIA when companies weigh the options of using it for air cargo.
Last year, FedEx and UPS did 28 percent of all pilot hiring at major U.S. airlines, according to The Wall Street Journal. But many of their flights departed and landed at major cargo hubs in Memphis, Tenn.; Louisville, Ky.; and Indianapolis.
Each is within one day’s drive of 200 million of the nation’s 300 million residents. By comparison, fewer than 15 million people live within a day’s drive or 500 miles of Denver.
“Denver has never been a large cargo market,” said DIA spokesman Chuck Cannon. “We hope it will grow, but we’re never going to be a Memphis or Louisville.”
An airport’s proximity to a large population base is one of the most important drivers of air cargo traffic, said Walt Rakowich, president and chief operating officer of Denver-based ProLogis, which builds distribution facilities worldwide and has a market capitalization of nearly $13 billion.
Goods transported by air are generally high-priced, such as electronics, and must be delivered quickly. “Otherwise the inventory cost associated with those goods begins to eat the companies alive,” Rakowich said.
Even the mountains work against Denver.
“The Rocky Mountains create a bit of a barrier to (grow) west,” Rakowich said. “There are structural impediments, if you will, population-wise, to ever growing into a massive cargo port.”
For many years, DIA has looked to Asia for growth, as economies in China and India expand. Without a nonstop flight, however, significant Asian air cargo growth doesn’t seem probable.
Smoldering plans for a cargo hub near tiny Front Range Airport, 6 miles southeast of DIA, may be what Clark calls “the wild card” in metro Denver’s air cargo future, however.
The TransPort center is well located to handle goods transported by rail, trucked in on Interstate 70 and flown into Front Range Airport. The framework development plan for the project is undergoing a review by the Aurora Planning Department.
If the development is successful, “air cargo becomes more of an element of our economy because it will have the gravitational pull of those other freight operations,” Clark said.
As passenger and retail traffic at DIA grows and the long-term leases now held by FedEx and UPS expire, he said, “my guess is that they will move” to Front Range Airport.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
