Freight biz strong at RTIA

Northern Nevada’s penchant for landing large distribution and Internet fulfillment centers — highlighted by retail heavyweights such as Amazon, zulily and Urban Outfitters — means record amounts of air cargo are passing through Reno-Tahoe International Airport.

Last year was the best year ever recorded for air cargo volumes at the airport. Carriers moved 138,276,979 pounds of air cargo, a 7.1-percent increase from 2014 cargo totals.

The amount of cargo touching down at the airport has risen steadily for the past six years as the country (and a few years later the northern Nevada region) exited the recession, says Hasaan Azam, manager of air service development and cargo business development for Reno-Tahoe International Airport. The robust year-over-year growth in cargo volume is expected to continue through 2016.

And much of it has to do with the steady rise of large distribution and Internet fulfillment centers locating in northern Nevada. Amazon’s expansion to Lemmon Valley from Fernley last year sparked a flurry of additional cargo activity, and the world’s largest online retailer joins long-standing retail giants such as PetSmart, eBay and Walmart, as well as a host of smaller companies such as Diapers.com, Flowers.com, Benco Dental Supply and Chewy.com, among others.

The impact of the holiday season for these retailers can’t be overstated, either. Cargo volumes typically spike every December, but last December’s gross of 17,907,699 pounds was the single-largest month ever recorded at the airport.

And as the volume of cargo increased, so too have the number of flights into the region and the size of planes hauling air cargo. Azam says UPS used to operate ten flights a week into RTIA, but once it signed a new contract with its biggest customer it added eight flights a week and began using larger planes — as did FedEx. DHL had been operating smaller planes until November of last year, when it began flying larger Boeing 737s. As a result, DHL’s cargo volume was up 60 percent for the month of December.

Brian Kulpin, vice president of marketing and public affairs for Reno-Tahoe International Airport, says most people think of the “Big Three” when it comes to air cargo carriers: UPS, FedEx and DHL. But the airport does substantial business in “belly” cargo — freight that’s carried in the bellies of passenger planes along with passenger luggage.

Oftentimes, Kulpin notes, the ability to carry cargo and an airport’s cargo numbers can sway airlines to add additional flights. Even though passenger counts may not be exceptional, airlines can make the additional flights work because of the added revenue from hauling cargo.

Cargo has been especially important to Southwest, the largest passenger carrier at Reno-Tahoe International Airport, Azam notes. The airline has been making additional revenue running maximum amounts of cargo on early-morning flights leaving Reno. Connections in Las Vegas, and Oakland starting this June, means cargo exiting northern Nevada in the mornings can be relayed to East Coast destinations in a timely manner.

Since airlines handle their own staffing issues, as does the airport’s cargo handling company, the boost in air cargo hasn’t spelled increased employment for the airport — but it has led to a spike in revenues.

The airport charges landing fees per every 1,000 pounds of aircraft that touches its runways, so more cargo and more flights means more revenue for the airport — and that helps keep costs low for all carriers, Kulpin says.

“The fact that we have low operating costs is attractive to airlines like Southwest and Jet Blue,” he says.

In fact, an airport’s cargo volumes often help attract and maintain flights from existing and additional carriers.

“It’s not the sole factor, but whenever you can show you have financially healthy airport, it’s very attractive,” Kulpin says. “When a carrier is moving essentially a $200 million asset to a community, cargo opportunities mean they can make money in that market.”

Adds Azam: “Certain airlines look at the performance of passenger routes, and some take cargo into account when forecasting. That is a huge piece when they are right on cusp, when passenger traffic is just barely making it. They look at revenue for cargo, and that can push them to the other side to get another flight added to a market.”

Cargo numbers typically are an early indicator of passenger traffic and the economic health of a region, Kulpin says. And as air cargo numbers increased, so have the airport’s passenger numbers. Passenger traffic in 2015 saw the best year-over-year annual growth in the last 10 years.

Reno-Tahoe International Airport served 3,432,657 passengers in 2015, a 3.9-percent rise in passenger traffic from the previous year.

“Last year was a fantastic year for us, and we hope it is a sign of what is to come,” Kulpin says. “We are seeing more cargo, but we also are seeing more passengers as well — it is an exciting time for us here at the airport.”

The region’s ability to move large amounts of cargo and freight remains a huge draw for new companies scouting the region.

“We work hand-in-hand with EDAWN when they have customers coming in and want information on cargo shipments,” Kulpin says. “We work hard to attract those companies to the region — we have great rail, we have an interstate, and we have an airport all within a stone’s throw. We are a great transportation hub, and the airport certainly does its part when it comes to cargo.”