Carrier turf war turns Sea-Tac into a cargo player
When the conversation turns to U.S. West Coast hubs, most forwarders, carriers and passengers think of LAX, San Francisco or San Diego. But what about Seattle – that place of timber, fish and software? While the Emerald City is known worldwide for such mega-retailers as Starbucks Coffee, Microsoft, Costco and Amazon, those brands are only headquartered in Seattle; their products are shipped worldwide from far-away factories, warehouses and distribution centers. In fact, one might say Seattle’s leading exports are intellectual capital and empty freighters rolling off the Boeing assembly lines.
But Seattle is slowly changing into a relatively robust air cargo hub, with Seattle-Tacoma International Airport (or Sea-Tac, as it is commonly known) seeing new carriers and new faces gracing its runways and corridors.
The Port of Seattle, which runs the airport, said that cargo shipments are on the rise, with a 21.5 percent jump in international freight tonnage from 2013 to 2014 at the airport. Through the end of July this year, cargo volume was up 4.5 percent, year-over-year, compared to the same time frame in 2014. Sea-Tac now ranks 19th in air cargo volume in North America and is the third-largest airport for international cargo on the West Coast, excluding Alaska. This is not the wild Northwest anymore.
So, what’s driving all this cargo growth? In short, Seattle has benefitted from a battle over passenger market share by two major U.S. carriers: Delta Air Lines and Alaska Airlines. Seeking a hub of its own for the lucrative trans-Pacific market, Delta has been expanding its route network out of Sea-Tac and is now engaged in an all-out turf war with Alaska. Delta now operates flights on 25 of the 78 routes that Alaska flies out of Sea-Tac, up from only five in 2012.
On the Asian trade routes, Delta changed the game in Seattle, offering daily flights – all carrying belly cargo – to multiple Asian destinations. As a result, Delta’s cargo tonnage at Sea-Tac is up 19.3 percent, year-to-date, over the same period last year, at about 9,800 tonnes. But Korean Air has just a bit of an edge, with more than 10,000 tonnes, year-to-date, and the largest market share at 19.5 percent, over Delta’s 18.8 percent. Tom Green, senior manager air cargo development for Sea-Tac, said Korean has a daily freighter run into the airport. Other Asian carriers with more than a 10 percent share of the Seattle market include All Nippon Airways, Asiana Airlines and China Airlines.
Last month Alaska Airlines and Hainan announced that the two would become partners in a new frequent-flyer pact. Alaska’s mileage plan members can also accumulate miles on Emirates and Korean Air. “Hainan is flying daily to Beijing and Shanghai – they pioneered the route to Beijing,” Green said. “Hainan added Shanghai in June. Sea-Tac has been very fortunate to add quite a bit of international flights nonstop.” He added that one might easily see 10 to 15 tonnes of belly cargo on each aircraft.
Emirates, likewise, sees potential for cargo growth. The carrier started a second daily nonstop flight between Seattle and Dubai in July. Green said that Emirates is not a huge player for cargo in Seattle – yet. However, Emirates offers Sea-Tac access to it vast network of 777 belly cargo capacity. Boeing is one of the reasons Emirates chose Seattle as a destination, since Emirates is the largest operator of 777s. Emirates expects to carry parts for Boeing, along with software and medical supplies. Green said it wouldn’t surprise him to see other Middle East carriers follow suit because they are seeing Emirates’ success in Seattle.
Sea-Tac’s rise in cargo volume is not limited to just trans-Pacific traffic. European business includes three weekly Cargolux 747-8 freighter flights to Luxembourg. Delta has multiple European destinations, including London, Amsterdam and Paris, daily.
Seattle does import finished consumer and industrial electronics from Germany, and Emirates brings in Middle Eastern bread and consumer goods unique to the area, while consumer electronics and “gadgets” are imported from Asia. However, thanks to the Pacific Northwest’s natural bounty, Green said the perishables trade makes Sea-Tac a net exporter. Unlike many regions that export, the peak season for the Northwest is June through August, rather than the busy holiday season. Seafood, apples and cherries are a large part of the seasonal rise.
“Cherries are very much the definition of a perishable commodity,” Green said. “Asia is a huge buyer. Japan, South Korea, China, Hong Kong – they consider them a luxury and a delicacy.” Additionally, aerospace and high-tech are driving exports out of Sea-Tac. With Boeing based in the Seattle area, it exports replacement parts – the company’s “spares” building neighbors Sea-Tac. On the other side, Boeing imports aerospace parts for its products.
Sea-Tac just finished overhauling its cargo facilities to the tune of US$20 million, expanding hard-stands. Two specific areas had their operating space made larger to accommodate larger aircraft.
“We now have the capacity to have five 747-8Fs simultaneously [on the ground] and we can fit an An-124, where previously it was a one-off operation,” Green said.
So, as long as there are cherries, seafood and airplanes being pumped out of the greater Seattle area, and passengers who want to visit, Sea-Tac will continue to grow, playing an increasingly important role in international and domestic trade.
Get more air cargo insights at the 2015 Cargo Facts Symposium, Oct. 26-28 in Miami. Click here for details.
