7b supp
Item No. 7b supp Meeting Date: May 24, 2016 Air Cargo Briefing Seattle-Tacoma International Airport Briefing Highlights Air cargo economics New cargo services for 2016 Positioning Air Cargo for Growth How do we enable industry to grow and create jobs? 2 Air Cargo Economics Sea-Tac Air Cargo Regional Logistics Trade Dependent Jobs Source: Martin Associates, 2014 Air cargo operations support middle class jobs for the region 3 Regional Air Cargo Dynamics Air cargo delivers critical last minute shipments where speed is driving factor 65% of Sea-Tac air cargo is for domestic markets Significant portion is express package and mail 35% of Sea-Tac air cargo is international More than half is exported Seattle-Tacoma International Airport is the Pacific Northwest's air cargo gateway to the world 4 Top 5 Air Cargo Exports Through the Port of Seattle in Metric Tons, 2015 5 Source: wisertrade.org, data from U.S. Census Bureau, Foreign Trade Division. Top 5 Air Cargo Imports Through the Port of Seattle in Metric Tons, 2015 6 Source: wisertrade.org, data from U.S. Census Bureau, Foreign Trade Division. Longer Term Growth Trends Annual Air Cargo Tonnage 340K 332,636 327,239 319,093 320K 292,709 300K 290,847 283,291 283,609 279,893 280K 270,215 260K 240K 220K 200K 2007 2008 2009 2010 2011 2012 2013 2014 2015 Rebounding from recession 7 Seattle Air Cargo Trends International market (Export/Import) Has been a growth engine for cargo over last 4 years +7.1% growth in 2015 Accounts for a record 35% of total air cargo Region is a net exporter driving employment in production industries Indicator of global economic health and trade Trade oriented economy triggers strong performance 8 New Cargo Carriers New Freighter Services Lufthansa Cargo / April 1 / Boeing 777F / Frankfurt / 1 flight weekly ABX / May 10 / Boeing 767F / Daily domestic flight DHL / May 28 / Boeing 767F & 757F / 4 flights daily (20 flights weekly) New Belly Cargo Service Xiamen / Sept 26 / Boeing 787 / Shenzhen / 3 flights weekly Sea-Tac is attracting growth in trade and employment 9 eCommerce Opportunity Domestic, express package, and mail market Showing recent surge in volume Mail saw +10% growth over past 10 months Historically saw a mode shift to trucking over last decade eCommerce delivery speed guarantees are bringing volumes back to air mode eCommerce driving new growth in domestic and mail market 10 Century Agenda Air Cargo Goal 800 750K MT (~8% CAGR) - Accelerated Century Agenda 700 - Need 750K square feet of space 600 Actual Future 500 333K MT (~4.4% CAGR) 490K MT (~4% CAGR) 400 - Original Century Agenda Metric - Need 490K square feet of space Tons 300 (MT,000) 200 100 0 2011 2015 2020 2025 2030 2035 Future growth depends on sufficient airport facility space 11 Facility Challenges Airfield vacancy rate is effectively zero insufficient to meet demand Need real estate options for near term expansion that can support trade industry and job growth Terminal Expansion (future) Disposition of cargo buildings Areas to Accommodate Displaced Facilities Cargo Area (future) dependent on timing of terminal Cargo Warehouse (existing) expansion Sea-Tac air cargo facilities are constrained 12 Space Squeeze Most cargo buildings may remain in current configuration for 10+ years Airfield expansion options limited during that time period Century Agenda growth will add more than 150,000 metric tons in 10 years Airfield may experience gap as demand exceeds supply, or lack of space may stifle growth Finding options for growth is critical 13 Strategy to Support Growth Interim plan increases efficiency of remaining air cargo buildings Leverage return of airfield cargo buildings to Port ownership and control as ground leases expire Terminal Expansion (future) Focus on cargo growth tenants Areas to Accommodate Displaced Facilities Utilize and invest in buildings until Cargo Area (future) Cargo Warehouse (existing) they are disrupted Leverage Port real estate to support air cargo growth 14 Real Estate Strategies for Air Cargo Explore development options on Airfield- adjacent properties Target development to specific air cargo user types Implement flexible design to handle displaced airfield operations in near-term, or secondary users such as freight forwarders thereafter Airport land can support air cargo growth 15 On the Horizon Market airport's cargo capabilities to increase trade capacity and market share Continue work with Long-range Plan (LRP), Sustainable Airport Master Plan (SAMP), and real estate development teams Return for annual update in Spring 2017 Integrate Air Cargo requirements into the SAMP 16
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