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Miami-Dade is weighing an unsolicited offer to fill an air cargo gap made public last month amidst a global air shipping boom. The developer asks to multiply cargo capacity at a new vertical hub at landlocked Miami International Airport and pay for it all.
If this sounds too good to be true, it might be. Details have yet to be unveiled and, if the county follows its rules, they might not be public until after the mayor and commission react by soliciting offers for a similar but not necessarily identical plan.
As Miami Today’s Gabriela Henriquez Stoikow wrote last week in revealing the offer by CCR Group working with Airis International Holdings to create the Vertically Integrated Cargo Community, they would lease 29.4 MIA acres and build a five-level cargo hub “to optimize cargo operations on a restructured land area with new logistic technologies within a vertical platform.”
The report on the effort followed by weeks a county committee call for more air cargo muscle, revealing that commissioners had been listening to pleas by cargo airlines to upgrade outmoded and inefficient facilities at Miami International Airport.
That call for commission aid followed a path outlined in an air cargo facility analysis last year by Montreal-based Airports Council International, then headed by former Miami-Dade aviation director Angela Gittens.
The report said that “…airports have been consistently late in anticipating and meeting air cargo facility demand. This delay created a very predictable infrastructure crisis. In case after case, a shortage of efficient, properly located, air cargo facilities is preceded by a carrier or carriers expressing a serious unmet need for greater and more efficient space.
“Efficiency is the key – a cargo facility should be the right size and configuration for the potential market.” the report said. “Today, there is a shortage of air cargo infrastructure and facilities at many airports.”
As the airports council report appeared, global data showed rapid growth in air cargo spending. November data from the US Bureau of Labor Statistics showed costs of arriving US air freight from abroad up 27.6% for the 12 months ended Oct. 31 and export air freight rising 13.5%.
Miami International Airport is one of the nation’s top cargo hubs. In 2018 MIA ranked fourth in the US, carrying 2.31 million cargo tons. Only Memphis, dominated by Federal Express and handling 4.91 million; Louisville, dominated by UPS with 2.75 million; and Los Angeles with 2.33 million handled more cargo.
Moreover, by 2020 Miami International had added tonnage and stature, rising to third by handling 2.33 million tons as Los Angeles slipped behind with 2.32 million.
These figures preceded a recent logistics nightmare as 60-some cargo ships anchored off overwhelmed West Coast ports waiting to unload, a huge supply chain disruption. That drove up sea cargo prices and made even rising air cargo costs less pricy, commanding a three times higher cost for air compared to an earlier 12.5 times premium.
The sea shipping gap may again expand, affecting air-versus-sea cargo choices. But Miami International could benefit long term from any decisions to lessen dependence on China’s goods in favor of nearer choices in Latin America, where Miami has a natural advantage. And trend lines to date favor other air cargo growth here as well – if MIA can handle it.
CCR and Airis wrote that cargo operations use 34.9% of MIA’s operable land but yield only 6.6% of its revenue. “This disparity presents a straightforward opportunity to increase the revenue per acre metric for MIA,” the firms said.
Depending on their plan’s details, five levels for cargo could skyrocket capacity while trimming actual land use, freeing more for passenger growth. But that plan remains under wraps.
Unfortunately, the devil is in the details of unsolicited proposals. While cargo demand should keep rising here, requiring added capacity, it’s unknown if this plan’s structure would be the best response.
Some commissioners may look at a $1.1 billion plan as a gift of money the county doesn’t have to spend. But it’s clear developers wouldn’t offer to spend without a route to reap far more – extra money that would stay with the county if it alone could match the proposed plan.
Also, the would-be developers might not be the best at executing the proposal, but whenever the county calls for competitive bids the original proposer – who has a long head start in planning – almost always wins. The county must ascertain before seeking bids that the proposers could do the job.
As we have noted about all unsolicited county proposals, recall the adage “act in haste, repent at leisure” when analyzing the vertical cargo idea. The offering seems to meet a major need at an airport that is already a cargo king. But the county should take full advantage of its own rules and have the proposer pay for county-ordered impartial outside advice before committing to seek competitive proposals.
The county has only one chance to do this right. Think it through. Involve the industry, from shippers to airlines. Is this what they need? Run the numbers.
This offering might be perfect. It might meet everyone’s needs. But when it sounds too good to be true, at least check it out.
