ANC sees continued growth as operators invest in infrastructure

Approximately 7.8 billion lbs of cargo passed through Ted Stevens Anchorage International Airport (ANC) in 2021, an increase of 25% over the previous record 6.2 billion lbs in 2020. Of that total, 2.1 billion lbs were enplaned, 2 billion lbs were deplaned and 3.7 billion transited through ANC. From 2000 to 2021, approximately 70% of the material handled at ANC was considered "in transit," per the chart below. However, that number has fallen closer to 50% since 2018. The primary reason for the high percentage of in-transit data is that ANC is strategically positioned between the North American and Asian markets, but also gets a boost from some unique regulations. Since January 2004, mail and air cargo traveling to or from a foreign country can be transferred to a different airline in Alaska without being considered to have interrupted an international trip and therefore is not subject to customs and other trade requirements. We will likely continue to see volume growth at ANC. FedEx Express recently announced plans to invest $200 million in a new sorting facility at the airport to help speed last-mile deliveries. This is after UPS invested an estimated $110 million in late 2019 for its 1.35 million-square-foot expansion. ANC also reports that an additional five major cargo expansion projects are currently underway. Bureau of Transportation Statistics Form 41 data show 4.2 billion lbs of domestic freight and mail was carried to or from Alaska by domestic carriers in 2021. UPS led the way, carrying just shy of 920 million lbs of freight and mail, followed by Atlas Air (866 million lbs) and FedEx (670 million lbs). However, when we focus on mail only, we see a different picture, with Alaska-based carriers leading the way: Everts Air Cargo (41.6 million lbs), followed by Alaska Airlines (36.9 million lbs), and Northern Air Cargo (27.4 million lbs). Alaska Airlines' investment in Alaska Alaska Airlines’ infrastructure improvement plan, the “2020 Great Land Investment Plan” was put on hold due to the COVID-19 pandemic but has since been rebranded and is estimated to reach completion in 2025. The carrier has already spent $50 million on its new, state-of-the-art maintenance facility at ANC, while the remaining $50 million will go into finishing upgrades and expansions on the rest of the twelve terminal facilities Alaska owns and operates across the state. There is no direct mention of improvements to Alaska Airlines' cargo facilities in the plan but since most of the passenger terminals listed are utilized for both passengers and cargo, we speculate the investment will have a positive impact on Alaska Airlines' cargo handling capabilities. The announcement that Alaska will convert two 737-800s into freighter configuration will certainly have a positive impact on the carrier’s Alaskan network. These two aircraft will join three Boeing 737-700 cargo aircraft in 2023, bringing Alaska Airlines' dedicated Alaskan freighter fleet to five aircraft. Alaska has yet to name the airframes that will be converted or where these conversions will occur but has indicated to CargoFacts that they will come from their existing passenger fleet. There is concern among smaller operators that Alaska Airlines will try to muscle smaller carriers out of some of the Alaskan markets with this fleet expansion. However, a recent Alaska Journal of Commerce article suggests that Alaska's added capacity will likely be utilized to help reduce the significant backlog of bypass mail and will have a minimal impact on the rest of the market. Bypass Mail While the U.S. Postal Service’s Bypass Mail program is not widely known outside Alaska, its origins date back to 1972. Due to the lack of roads in Alaska, the majority of everyday supplies must travel by air. When the USPS' infrastructure became overwhelmed by the volumes in Alaska in the early 1970s, the Bypass Mail program was designed to relieve pressure on the network while still providing economic benefits to air carriers. Material eligible for the program was to be delivered and retrieved directly from the air carrier, therefore "bypassing" USPS facilities. To be eligible for acceptance in the bypass mail process, an order must come from a single shipper, be delivered to a single receiver, and weigh a minimum of 1,000 lbs up to a maximum of 50,000 lbs. The only other limitation of this program is that USPS will not accept any building or construction materials. The program has received criticism over the years due to the cost associated and exploited loopholes; critics estimate the cost to American taxpayers to be in the neighborhood of $500 million per year, while others estimate this number to be closer to $100 million. Our own research into USPS’ 2020 financial statements yields an "Alaska bypass" revenue of $32.2 million resulting from 1.264 million shipments for a total of 85.1 million lbs. USPS reports the attributable costs of the Alaska bypass mail program to be $21.8 million over the same period. Airports Council International reports that in 2020 ANC surpassed UPS' hub airport, Louisville International Airport (SDF), to become the world's 4th busiest airport by cargo, and the second busiest in North America. After another year of significant growth in 2021, we are eagerly waiting to see if ANC managed to catch Shanghai Pudong International Airport (PVG) to jump into the top three.

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ANC sees continued growth as operators invest in infrastructure

7.8B lbs of cargo passed through ANC in 2021

More than 1.4B lbs of material flown to and from Hawaii in 2021

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ANC sees continued growth as operators invest in infrastructure

7.8B lbs of cargo passed through ANC in 2021

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More than 1.4B lbs of material flown to and from Hawaii in 2021

E-commerce platforms remain averse to dedicated air capacity amid steadfast growth

Related Posts

Stored freighters dwindling as demand stays high

Cross border e-commerce growth loses steam in key markets

Air Canada Cargo 2021 revenues reach all-time high

More than 1.4B lbs of material flown to and from Hawaii in 2021

E-commerce platforms remain averse to dedicated air capacity amid steadfast growth

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ADA Compliance

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