LAX Increasingly Coming Up Plane Short on Cargo

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More and more planes are landing at Los Angeles International Airport these days, and they’re arriving with more and more passengers.

But they’re also delivering less and less cargo. While the number of passengers and flights both grew nearly 5 percent last year, the amount of cargo entering and leaving the airport fell by more than 4 percent. Those trends continued in January, with more flights and passengers, and nearly 6 percent less cargo.

Beth Siapkas, president of the Los Angeles Air Cargo Association, said she can explain the downward cargo trend in two words: “ocean freight.”

As importers and exporters try to cut costs, many have stopped shipping through the air and are instead opting for slower, cheaper shipping on the high seas, said Siapkas, a business development manager in the Torrance office of Portland, Ore., firm OIA Global Logistics.

“Most of my customers are going with ocean freight simply because it is much, much cheaper,” she said. “Ocean freight is probably 10 to 20 percent of the cost of air freight. When you compare the capacity of a 20-foot (shipping) container, then calculate that into air freight, the cost would be astronomical.”

Some goods have always been shipped air freight, either because they would spoil during a lengthy ocean voyage – think fresh flowers – or because they are high-value items shipped in small quantities – think diamonds. But before the recession, other types of goods, such as clothing, textiles and even frozen seafood, all of which can be shipped ocean freight, were also imported through the air.

Roger Clarke, president of Wilmington freight-forwarder Williams Clarke Co. Inc., said that’s because importers needed to meet demand and could pay the premium to do so. Many of his clients import frozen food, heavy products that are more economically shipped in refrigerated shipping containers than by air.

“But at one time, we had a whole charter flight full of frozen seafood,” he said. “We only did that because with ocean shipping, (the importer) couldn’t get it here fast enough to meet the demand.”

Los Angeles isn’t alone, other U.S. airports saw their numbers slide last year as well. The amount of cargo at New York’s John F. Kennedy International Airport dropped about a half-percent, Chicago’s O’Hare International Airport nearly 4 percent and Dallas-Fort Worth International Airport more than 8 percent. Worldwide, the volume of air freight fell about a half-percent in 2011, according to the International Air Transport Association.

Planning ahead

Karen Kane, a women’s apparel maker in Los Angeles, still imports some European fabrics and other goods via air freight, but the company ships more over the ocean today than it did a few years ago, said Jocelyn Caruso, the company’s vice president of operations.

“Air freight was much more affordable, but with the jump in oil prices, it’s become very expensive,” Caruso said.

David Porter, an air cargo consultant in Long Beach, said fuel price increases have hit air freight harder because jet fuel is more expensive than the less-refined fuel used by cargo ships. Also, fuel makes up a smaller percentage of the costs of ocean shipping.

But price isn’t the only consideration. A cargo ship takes between 10 and 22 days to steam from Asia to Los Angeles. Adding in time for cargo processing on both sides of the Pacific Ocean, an L.A. company needs to plan for 25 days between goods leaving a factory in China and arriving at a warehouse here. The same goods can get from factory to warehouse in three days using air freight.

The extra transit time provides a big savings, but it requires coordinating with factories, planning orders further in advance and managing cash flow while goods make their way to market.

Making that transition can take a while, Siapkas said.

“It’s definitely taken a good 12 months for some companies to switch from last-minute shipping to better production management and planning their lead time,” she said.

That transition time, along with contracts that tied some importers to air freight for as much as a year, explains why LAX saw strong cargo growth in 2010 and only last year started seeing a decline.

LAX spokeswoman Nancy Castles said the airport is looking into the decline in cargo traffic, but doesn’t know whether the trend is cause for concern.

She said one explanation is that the amount of air cargo moving between Los Angeles and Japan plummeted after the earthquake and tsunami that struck nearly a year ago. Beyond that, though, airport officials are analyzing trade statistics to pinpoint other causes.

But Castles also noted that the airport tracks only the tonnage of freight passing through LAX, not the value of goods. It’s possible that tonnage is declining as the airport brings in fewer, more valuable goods.

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