Air Cargo Facility Planning and Development—Final Report (2015)

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Page 2-1 CHAPTER 2: LITERATURE REVIEW—AIRPORT AIR CARGO FACILITY PLANNING AND DEVELOPMENT CHAPTER OVERVIEW This literature review identifies current trends and state-of-the-art research in airport strategic planning and airport master planning with a focus on air cargo facility planning and development. Through this review, several themes emerged which will dictate the direction of future research trends in this field. First, the process used in airport strategic planning and master planning in the U.S. and internationally has been criticized by leading academicians for lacking the flexibility and adaptability required to deal with the uncertainties at airports, which has led to significant over- or under-estimating aviation activity which has in turn lead to over- or under-building airport facilities. Several alternative airport strategic planning and master planning approaches have been developed and further research is required in this area to ensure that future airport facilities are better able to meet future aviation needs. Second, rapidly changing regulations in aviation security and environmental sustainability, in addition to changes in technology, commodity types, and demand have resulted in rapid changes in the air cargo industry, underscoring the need for flexibility and adaptability in air cargo facility planning. Third, while the passenger transport industry has been extensively studied, there is a relative dearth of research specifically on the air cargo industry as it relates to airport planning and development. In order to improve the efficiency and financial viability of this industry, further research should focus on a more systematic way for airports to collect and utilize air cargo data. This process could, therefore, lead to more accurate forecasts and ultimately, a more targeted air cargo facility planning process. INTRODUCTION This literature review was conducted as part of the effort to identify current trends and state-of- the-art research in airport strategic planning and airport master planning with a focus on air cargo facility planning and development. This information will be utilized to develop guidelines for air cargo facility planning and development at airports. These guidelines will assist airport operators in making effective business policies and development decisions that meet the industry’s current and future technological, operational, and security challenges in a cost-effective, efficient, and environmentally sustainable manner. As part of the Literature Review, over 40 papers, books, and articles were reviewed. This paper extracts the major trends in air cargo facility planning and development which emerged from the literature review, focusing on two levels of analysis. First, the macro level of airport planning is explored and pertinent literature which discusses alternative approaches to airport planning is reviewed. Second, the micro level of airport air cargo facility planning is discussed and the trends which have emerged regarding airport the process of air cargo facility planning, design, and development; air cargo security; environmental and regulatory issues; and operational and financial considerations are highlighted. AIRPORT PLANNING PROCESS Airport Master Planning (AMP) is the process in which a Master Plan is developed for the airport which identifies the short-, medium-, and long-term development plans for the airport. Table 2-1 provides an overview of study objectives and the major findings of the airport planning literature that was reviewed which addressed the process and techniques of airport strategic planning and master planning. In the U.S.,

Page 2-2 the FAA has developed guidelines for the master planning process which involves a specific formalized process as detailed in the FAA’s Advisory Circular 150/5070-6B, Airport Master Plans, May 1, 2007. Internationally, airport planners utilize manuals by the International Civil Aviation Organization (ICAO), as well as books and journal articles about airport planning by leading academicians and practitioners. In general, the guidelines used by the FAA, the ICAO, and the International Air Transport Association (IATA) are fundamentally the same (IATA, 2004; ICAO, 1987; de Neufville and Odoni, 2003). The primary focus in an AMP is often on the development of the plans rather than the decision-making process. The key steps in the AMP process are: • Identify existing conditions; • Develop aviation forecasts; • Determine facility requirements; • Develop and evaluate alternatives; • Develop the best development alternative into a detailed Master Plan; and • Present the findings in a report and Airport Layout Plan (ALP). The AMP approach has come under increasing criticism by academicians and practitioners alike because it is not able to deal with the many future uncertainties inherent with airports. The primary method that uncertainty is handled in AMPs is through aviation demand forecasting. Aviation demand forecasts can include projections for the number of passengers, tons of goods shipped, or number of air transport movements. In the AMP, the forecasts are compared with the existing conditions at an airport, and a determination is made about whether there will be a need for new or expanded facilities. Thus, forecasting directly determines the proposed airport development included in Master Plans. Forecasting has come under increasing criticism, however, because of its potential to under- or over-estimate demand, which can lead to airports either over-building or under-building their facilities. Kwakkel, Walker and Marchau (2010) found that forecasts fail as a result of either forecaster bias or uncertainty. Forecaster bias can occur if forecasters have an inherent desire to make the project appear as favorable as possible due to a political agenda or because the forecaster is a promoter of the project. Uncertainty can result in forecasting failure if forecasters use faulty assumptions to make their forecasts or fail to take into account economic, public policy or political factors that can affect forecasts. The increased privatization of the aviation industry, increased competition between airports to attract carriers, and the increased volatility in air traffic demand have been cited as factors leading to increased uncertainty in forecasting. (Kwakkel, Walker, and Marchau, 2010) In addition to the uncertainties that make aviation demand forecasting highly problematic, Kwakkel et al. (2010) indicated that aviation demand forecasting often relies on only a single demand forecast, which increases the likelihood of severely underestimating the range within which future aviation demand might develop. In addition to uncertainties inherent in forecasting, there are other uncertainties that are present in developing plans for long-term development at an airport. These uncertainties include regulatory changes, technological developments, and demographic changes (Kwakkel et al., 2010).

Page 2-3 Table 2-1 Literature Summary – Airport Strategic Planning and Master Planning. Study Study Objective Major Findings Burghouwt (2007) Explores what the consequences of a deregulated EU air transport market are for Airline network development and airport planning. Deregulation has led to changes in the way airlines organize their networks and how airport authorities plan their infrastructure. Burghouwt (2003) Addresses the change in European aviation and the consequences for airline network behavior and describes the new context in which airport planners operate. Airport planning must be flexible in order to cope with a highly unstable market. More research is required to determine what extent European airport authorities have already adopted flexible planning approaches. De Neufville (2001) Explores long-term prospects for airport development into the 21st century. Substantial changes in the years ahead in terms of the level of traffic, its distribution across the country and business sectors, the physical configuration of airports, and their management and way of doing business make it imperative that airport planners utilize a modular, flexible approach to airport systems planning and design. De Neufville (2003) Explains the integration of “real options” analysis in the design of public and private systems and how it will change the way planners deal with uncertainty and risk. Use of “real options” will lead planners to account for fluctuations in the market; understand that uncertainty is not always a risk to be avoided but can present an opportunity to be exploited; adopt a proactive stance toward risk; introduce flexibility into design of systems. De Neufville and Odoni (2003) This book covers the development and management aspects of airports using a dynamic strategic planning (DSP) approach. The success of airports depends on its advantages compared with other airports. DSP is an approach which enables airports to respond flexibly to uncertain future conditions. Karlsson (2003) Explores how airport at Pease International Tradeport utilizes DSP. Even when the need for DSP is evident, it can be difficult for airport planners to know how to apply it in practice. Tools such as decisions analysis and options analysis should be used to ensure that the benefits exceed the costs. Kwakkel (2007) Discusses the challenge of how to deal with uncertainty in Airport Strategic Planning (ASP). AMP and ASP have proven insufficient for handling the uncertainties airport face. Finding new ways to deal with uncertainties surrounding the future is a key issue in air transport research. Van Leeuwen, Oei, Buzing, and Witteveen (2007) Explains the methods of alleviating congestion at peak hour operations. To alleviate this aircraft turn bottlenecks, robustness of the planning of these activities is of paramount importance. The paper presents a new idea to solve a strategic planning problem in a way that allows unforeseen, real-time disruptions to be handled in a straightforward and elegant manner. To that end the authors apply Hunsberger’s decoupling algorithm to a Simple Temporal Network representation of the ground handling domain. Kwakkel (2008) Explains how DSP and Adaptive Policymaking (APM) would have resulted in more robust outcomes that the traditional master planning process Schiphol Airport. Both DSP and APM have a broader perspective on uncertainty than AMP; they look at other factors that could interfere with the success of the plan, in addition to demand uncertainties. Both APM and DSP, instead of predicting what will happen, let part of the uncertainty resolve itself over time and take the necessary actions based on how events unfold. Kwakkel et al. (2010) Examines three adaptive alternatives to AMP: DSP; APM; and Flexible Strategic Planning (FSP) and presents a synthesized approach called Adaptive Airport Strategic Planning (AASP). AASP is a stepwise approach which incorporates pro- active actions that aim at seizing opportunities and taking actions to protect the plan against vulnerabilities. SOURCE: CDM Smith.

Page 2-4 These uncertainties can lead to failure in AMP. Amsterdam’s Airport Schiphol is an example of AMP failing. A Master Plan completed for this airport in 1995 recommended improvements that would accommodate the forecasted increase in commercial service for the planning period from 1995 to 2015. Due to a significant underestimation of demand, however, the airport was not able to accommodate the increased air traffic without exceeding the allowable noise levels, leading to a temporary shutdown of the airport in 1999. In addition, the passenger limit for the airport was reached in 2005, fifteen years before the end of the 20-year planning period. Other AMP failures include Denver International Airport, Boston Logan Airport, and the Montreal Mirabel Airport (Kwakkel et al., 2010). Several alternative planning approaches have recently emerged that may be better able to deal with these uncertainties. Two alternative approaches to Airport Master Planning include: the Dynamic Strategic Planning (DSP) approach and the Adaptive Policy Approach (APA) (Karlsson, 2003; Kwakkel, 2008). DSP is an approach for making flexible plans that can be easily adjusted over time to the actual situation and conditions. The resulting dynamic strategic plan defines a flexible development over several stages; it commits only to a first stage, and then proposes different developments in the second and subsequent stages. DSP allows for flexibility to be built into the plan to make it possible to deal with a range of futures. Although outside the DSP process, Van Leeuwen addressed targeted facility planning to meet peak hour demand (Van Leeuwen et al 2007). Adaptive Policymaking (APM) is an approach for planning under severe uncertainty. It recognizes that in a rapidly changing world, fixed, static policies are likely to fail. An adaptive policy is designed to be incremental, adaptive, and conditional. The APM process is split into two phases: a thinking phase, during which the adaptive policy is developed, and an implementation phase, during which the policy is implemented and the policy adapted, if necessary. Mitigating actions could be developed for vulnerabilities identified during the thinking phase and for uncertain vulnerabilities hedging actions could be taken to make the basic policy more adaptive. Adaptive flexible approaches to airport strategic planning appear to be better equipped to deal with the many uncertainties that airports face. There is not yet a single clear flexible approach that is directly applicable to airport planning. Both APM and DSP are still relatively conceptual, and it might be possible to combine the ideas from both into a single adaptive approach to Airport Strategic Planning (ASP) (Kwakkel, 2008). In a follow-up paper, Kwakkel et al. (2010) further explored the development of an alternative planning approach for long-term development. This paper identified four criteria that the alternative planning approach should meet to enable it to deal better with uncertainties faced by airports. These criteria include: • The planning approach should consider many different types of uncertainties, in addition to demand uncertainties; • The planning approach should consider many different plausible futures; • The resulting plan should be robust across the different futures; and • The resulting plan should be flexible (Kwakkel et al., 2010). In addition to the DSP and APM, Flexible Strategic Planning (FSP) has been suggested as an alternative to traditional AMP by Burghouwt (2007). FSP has many similarities with DSP but includes the concept of proactive planning on the part of the airport. In order to have a flexible strategic plan for an airport, FSP relies on real options, flexibility in planning scenarios, contingency planning, monitoring, experimentation, and diversification. Kwakkel et al. (2010) presents a comparison of the three approaches

Page 2-5 for adaptive planning and presents the design for an improved approach for Airport System Planning (ASP) by combining the strengths of the different approaches. The new approach, which is called Adaptive Airport Strategic Planning (AASP) includes the following steps: • Step 1: Stage Setting – Analyze the existing conditions of an airport, specifying project objectives, constraints, and available policy options. • Step 2: Assembling the Basic Policy – Specify the basic policy and identifying the conditions necessary for the policy to succeed. • Step 3: Robustness – Identify vulnerabilities and opportunities associated with the basic policy and specifying actions to take in anticipation or response to them. These actions include mitigating actions, hedging actions, seizing actions, and shaping actions. • Step 4: Contingency Planning – Expand the policy via contingency planning, in which the basic policy is further enhanced by including adaptive elements. Critical values (triggers) of variables (signposts) are identified beyond which actions should be implemented to ensure that a policy keeps moving in the right direction and at the proper speed. Demand is one variable that should be monitored and actions can be taken to ensure that changes in the plan occur as demand changes. • Step 5: Implementation - Actions to be taken immediately are implemented and a monitoring system (from Step 4) is established. Signpost information related to triggers is collected, policy actions are started, altered, stopped, or expanded. A method of testing a new planning approach and comparing its performance with the traditional Airport Master Planning approach needs to be developed before a new approach is adapted. This area is recommended for subsequent research (Kwakkel, 2008). AIRPORT AIR CARGO FACILITY PLANNING AND DESIGN PROCESS The Literature Review included a review of research pertaining to best practices, recent innovations, and future trends specifically in airport air cargo facility planning and design. The literature review, which is summarized in Table 2-2, focused on the following key topics related to airport air cargo: • Air cargo facility design standards • Land use and access requirements • Financial considerations and operational issues • Security • Environmental issues

Page 2-6 Table 2-2 Literature Summary—Air Cargo Facility Planning and Design Process. Study Study Objective Major Findings Air Cargo Facility Design Standards Ashford et al. (2011) This chapter presents the elements to be considered in design of air freight terminals. Design of cargo facilities should provide a large degree of flexibility due to ongoing changes in traffic and technology. Ballis (2007) This paper presents an overview of airport cargo facility design and describes analytical methods used in various air cargo terminal design aspects. The sizing and planning of the air freight terminal should take into account many design parameters, starting from the specific requirements of its users and market demand forecasts and seasonal, daily, and hourly fluctuation estimations, followed by a systematic terminal operation analysis that may be performed by analytical methods or by simulation. Biggs (2009) This report provides methods and data required to conduct user surveys at airports. Chapter 10, Cargo Surveys, focuses on typical target populations for air cargo, such as air cargo operators and freight forwarders, and key factors relevant to cargo surveys. Air cargo surveys may be required when the available data sources do not provide the level of information needed for air cargo facility planning. Waybill data are a superior data source for analysis, but freight forwarding companies are reluctant to provide this information. Kazda and Caves (2007) The author provides an overview of air cargo, including requirements for air cargo terminal design. DHL is presented as a case study in how they planned their cargo facility. There are numerous factors which dictate the size of air cargo terminals including the amount of freight delivered at one time, the expected dwell time, the density of the freight, the size of equipment, the degree of automation, and the role of the terminal. Due to continual changes in the way air cargo is handled, flexibility in facility planning is critical. Chen and Chou (2006) This article proposes a novel procedure for designing air cargo terminals, based on the balanced scorecard (BSC) methodology, and applies this procedure in a case study of air cargo terminals. The BSC methodology involves employees, shareholders, and customers. The BSC framework can be used to identify financial, customer, and internal process design requirements for air cargo terminals. Key performance indicators that are important in designing terminals include: the availability and efficiency of material-handling equipment, the utilization and turnover rate of the storage positions and space, and the process operating efficiency.

Page 2-7 Table 2-2 (continued) Literature Summary—Air Cargo Facility Planning and Design Process. Study Study Objective Major Findings Puget Sound Regional Council and Landrum & Brown (2006) This study reviewed the ability of the Puget Sound Region to handle air cargo and to determine how the regional air system can be best utilized to address air cargo needs over the next 20 years. Planning for air cargo should take into account regional goals and strategies that can function with the separate airport and industry management structures that currently exist. Land Use and Access Requirements Frawley et al. (2011) The purpose of this study was to identify challenges and solutions to providing landside freight access to airports. Good planning and coordination among involved agencies lead to the best landside freight access to airports. Wayfinding and proper roadway design are vital elements of good landside freight access to airports. Frawley et al. (2011) This research report identifies the issues, barriers, physical bottlenecks (e.g., infrastructure needs), and solutions (including funding mechanisms) concerning landside access to airports in Texas. Key characteristics in providing good landside freight access to airports include wayfinding, signage, and minimizing the comingling of freight and passenger traffic in areas near the passenger terminals. A variety of funding opportunities exist through public, private, and shared sources to improve access to airports. Financial Considerations Golicic, S.L. et al. (2003) This paper describes the use of a market opportunity analysis (MOA) to gauge the feasibility of smaller airports expanding their air cargo operations. This analysis suggests that MOAs will reduce risks and more successfully target marketing and planning efforts. Hertwig and Rau (2010) This book presents an overview of the air cargo industry, available risk management theories and practices, and their applications. Capacity options and financial intermediation are presented as more innovative approaches for capacity risk management. Obstacles to successful implementation of risk management methods are identified and potential solutions discussed. Operational Issues Fok et al. (2004) This paper describes the authors work in using mathematical optimization to assist air cargo load planning for one of the world’s top 10 air cargo carriers. Using the Cargo Load Plan and Analysis System (CLPA), a Web-based application for air cargo load analysis and planning, the authors were able to develop an optimized plan within less than one minute.

Page 2-8 Table 2-2 (continued) Literature Summary—Air Cargo Facility Planning and Design Process. Study Study Objective Major Findings Operational Issues Kiso and Deljanin (2009) This paper examines the airfreight sector in terms of its structure, organization, its role in the supply chains, its constraints and future prospects. The emphasis on multimodal transport operations and on greater integration of transport with other logistical services will dominate freight developments in the next two decades. Petersen (2007) This paper presents a macro- overview of the state of the air cargo industry and a comprehensive summary of how each component along the air cargo supply chain works. Challenges faced by the industry and areas for future research also are provided. The author recommends further research in the following areas: studying the planning process of the cargo network; developing air cargo revenue management; developing a better understanding for collaboration along the air cargo supply chain; and designing more efficient warehouse and ground handling systems. Security Considerations Buzdugan, Maria (2005) This thesis presents an overview of the potential risks and best security practices identified within several international, regional and national initiatives, including the “authorized economic operator” and “secure supply chain” mechanisms. An internationally agreed approach is necessary in order to adequately respond to the international nature of air cargo security risks. It will most likely take years to establish and properly implement adequate international standards and install the required monitoring systems. Central management and integrity in implementation is critical to ensuring the success of a uniform air cargo security system. Department of Homeland Security, Office of Inspector General (2009) This report addresses the effectiveness of the Transportation Security Administration’s (TSA) efforts to secure air cargo while it is handled or transported on the ground, before being shipped on passenger aircraft. The report made six recommendations to the TSA that, when implemented, would strengthen the security of air cargo during ground transportation. Elias (2005) This paper summarizes the security- related findings and recommendations of the 9/11 Commission, which included vulnerabilities in air cargo. The 9/11 Commission issued several recommendations designed to strengthen aviation security including intensifying efforts to identify, track, and screen potentially dangerous cargo and deploying hardened cargo containers on passenger aircraft. SOURCE: CDM Smith. Air Cargo Facility Design Standards Business trends over the past two decades have resulted in an increase in air cargo demand. Efficient inventory management requires ‘just- in- time’ manufacturing or quick response to consumer needs. There is also increased use of global outsourcing. Manufacturing and product fulfillment supply chains need to be agile to change the type, volume, and mix of products in short time frames. Consequently, air cargo represents an increasingly significant share and value of the transport market. In

Page 2-9 addition to mail, express, and emergency cargoes, air transportation is being used for perishable commodities, such as seafood, flowers, pharmaceuticals, and just-in-time deliveries. The following issues related to airport air cargo facility planning and design were identified during the literature review: There is a need for airport planning practitioners to better understand methods for conducting specific air cargo planning studies and collecting air cargo data. Air cargo activity requires dedicated air cargo terminals, warehouses, and apron facilities on airports, in addition to dedicated road systems. Biggs (2009) stresses the importance in collecting air cargo data in order to prepare forecasts required to determine future airport facility requirements and to ensure the sufficiency of the roadways for the resulting truck traffic, both on airport and connecting to major highways throughout the region. Air cargo data that are required for air cargo forecasting includes the following: • Weight or volume of cargo and mail • Ultimate origin and destination • Times at origin and destination • Commodity type or value • Flight information • Truck trip characteristics While this information is available on air cargo waybills, it is highly valued by the shippers and forwarders, guarded by privacy rules, and not released easily. One data source is the Cargo Network Services Corporation, which provides air cargo waybill data for a fee. Other data sources that may be available include municipal and state agencies that conduct truck surveys and interviews. In addition, there are an increasing number of automated truck pseudo-tracking systems, such as the I-75/AVION system which utilize intelligent tags that track trucks and their contents along a corridor. If these data sources are not available, airport facility planners may need to collect data through a survey. With the increasing importance of access to air cargo in the world economy, there is a need to improve research in the conduct of air cargo studies and the collection of air cargo data to provide input into air cargo facilities planning and development. ACRP Report 26: Guidebook for Conducting Airport User Surveys provides a brief chapter on collecting cargo related data. To date, the most common survey method for air cargo is similar to stakeholder interviews. Although shippers and forwarders may be reluctant to release detailed information on air cargo shipments, or air cargo traffic and commodity type at their facility, it is possible to construct a survey in the form of an interview. As an alternative method, it may be possible to conduct truck driver interviews at a roadside location near the cargo facility. This survey method was adopted for an extensive survey performed at Toronto Pearson International Airport in 2005. In general, there is a relative lack of information regarding the design of these facilities where flexibility is essential. The most accurate design process is likely to be developed by utilizing information regarding the mix and flow characteristics of the cargo, the predicted aircraft fleet mix, handling practice, and surface transport characteristics. Even when simulation software is utilized to design the facility, it often can be a misleading process and can to lead to significantly incorrect conclusions when unforeseen events occur, such as changes in technology, commodity types or handling procedures. Ashford et al. (2011) provide design criteria for a freight terminal based on an estimated amount of cargo processed per

Page 2-10 month. Utilizing formulas, design requirements are calculated for total area, landside truck doors, build- up/breakdown positions, pallet staging rack, bins, and bypass doors. For master planning, less rigorous methods of cargo terminal sizing are often used, with the overall area computed from annual tonnage throughout. For the foreseeable future, it is recommended by Ashford that the design of air cargo facilities should provide a large degree of flexibility to account for uncertainty in demand and technology (Ashford et al., 2011). Ashford et al. (2011) and Puget Sound Regional Council et al. (2006) identified the changes in technology, commodity types, and demand which have resulted in rapid changes to the air cargo industry. These changes include the following: • Diverse Containers – The freight industry has undergone a conversion to the use of unitized loads which range in size and capacity and now include refrigerated units (containerization). • Demand for High-Speed Logistics – The changes in manufacturing and shipping are resulting in the creation of new high-speed logistics facilities that can effectively integrate the transport and production segments of industries. The facilities can handle throughput and sortation, kitting (minor assembly), and returns, as well as traditional operations. These buildings are of multi- story design, and can be situated on the airport, including adjacent to the aircraft apron to further reduce handling costs and conserve space. These facilities can also be located off-airport. • E-commerce – E-commerce is a growing market segment that increases the demand for air cargo, particularly integrated carriers, and is expected to do so in the future because they require overnight delivery. However, an increase in second- and third-day delivery will limit the growth in overnight deliveries. The Forrester Group, a transportation research organization, and many manufacturers estimate that about seven percent of internet purchases are returned, creating reverse logistics demand in air cargo (Forrester, 2008). • Aircraft Technology – There has been a rapid and widespread introduction and adoption of wide- bodied aircraft capable of accepting large unit load devices (ULDs). In addition, modern freighters are more fuel efficient and have a greater range. These aircraft include B777F, B747- 8F, and B787 Dreamliner Passenger Aircraft. The development of the Airbus A380 will affect international gateway airports’ runway and taxiway systems and passenger terminals. Airbus has not yet developed a freighter version of the aircraft. • Increase in Air Passengers – According to the 2011 Boeing Current Market Outlook, global forecasts indicate that the world passenger market will more than double over the next twenty years. In order to meet passenger demands, there will be pressure on airports to make changes to how they handle air cargo. • Increase in Trucking – Trucking has also grown as an important component of air cargo transport. Many air cargo facilities operate as truck terminals yet there have been few requirements to report truck-to-truck traffic at airports. Information regarding truck-to-truck traffic needs to be better collected to enable airports to plan for new development. In addition, airports must address the fact that an air cargo facility is an inter-modal facility, and must be designed to accommodate trucking, or see that some of this activity is relocated off-airport. • Increase in Integrated Carriers – The trend toward integrated carriers will continue, combining air with truck, rail, and sea transport.

Page 2-11 • Use of Electronic Data Interchange (EDI) – With the use of EDI, the communication, tracking, and tracing of documents by the shippers has been facilitated and much of the paper trail has been eliminated. Also, most consignments can be cleared through customs before arrival. • Building Technology – As a result of the rising cost of maintaining inventory and the shortage of on-airport property at some airports, modern cargo facilities are being designed to emphasize speed of transition rather than warehousing. Cargo buildings are now taller to handle highly mechanized equipment with sufficient depth and adequate airside and landside doors. New proposals include multi-level facilities to minimize the facilities’ ground footprint such as Hong Kong Air Cargo Terminals Limited (HACTL) and British Airways cargo terminal at London Heathrow. • Security Changes – Since 9/11 there has been an accelerated shift to the use of freighters. In addition, there have been numerous security changes in the industry to implement anti-terrorism requirements. These changes include restrictions of the “known shipper” rule which have made it more difficult for shippers and forwarders to utilize different business partners and grow their business. Forwarders now hold shipments as long as they can before a flight, resulting in a large number of trucks arriving at the airport in a two- or three-hour time frame. At some airports, cargo complexes now have separate parking areas for trucks and cars and many perform checks of the driver and cargo manifest at the cargo area entrance. There has been the development of several operating guidelines and technological innovations that have made air cargo facilities more secure. In addition, personal and vehicle access to the aircraft operating area is continuously being examined and limitations on who is eligible for access is in flux. Changes in these policies would affect several of the integrated carriers. Security issues and trends are further discussed in the “Security” section of this paper. The air cargo industry has undergone a period of rapid growth, which has slowed down recently with the economic recession. However, air cargo remains a highly dynamic industry and individual airports’ demand variations can be dramatic. Therefore, the design and development of air cargo facilities should be flexible to take into account any modifications of design parameters due to changes in demand and technology. Air Cargo Related Land Use and Access Requirements Several studies have been conducted to investigate issues related to landside freight access to airports. These studies included two conducted by William Frawley et al. for the Texas Transportation Institute, Texas Department of Transportation, and Federal Highway Administration (FHWA) which identified the issues, barriers, infrastructure needs, and solutions concerning landside freight access to airports (Frawley, 2011). The major issues that were identified and the possible solutions presented include in Table 2-3.

Page 2-12 Table 2-3 Landside Freight Access to Airports—Issues and Solutions. Issue Solution System/Roadway Design: Roads in the vicinity of airports need to be designed for large trucks, including requisite turn radii at driveway and highway intersections. Airport authorities and local transportation agencies need to consider truck-specific issues when planning airport roadways. Traffic: Problems occur when airport access roads have numerous intersections, entrances, and exits and traffic weaves among lanes to enter and exit the access roads. During airport planning and design, exits, entrances, and other intersections should be designed to take into account truck traffic and minimize the comingling of truck and automobile traffic. In addition, signage along the access road should provide the clearest access routing to freight areas. Wayfinding: Truck drivers may be unfamiliar with routes to an airport. Therefore, good signage is necessary to provide accurate directions with enough advance notice to allow drivers to make lane changes in advance of exits and intersections. Solution: Signage should be in place to direct freight traffic to air cargo areas so that trucks do not mix with passenger traffic. Adjacent land uses along connector roads: Significant truck volumes can pose problems on roads with frequent intersections, especially those used by pedestrians. Older, inner city airports have road connections to access-controlled highways that are typically abutted by a variety of land uses, including residential, retail, office, industrial, and hotel. The primary obstacle to improving compatibility of land use with truck traffic near airports is the inability to manage the existing land uses along the approaching roadways. Another obstacle is often the lack of adequate alternative truck routes. One solution to this problem is to designate truck routes along certain roads and to prohibit truck traffic on others. Traffic Control: High levels of unprotected left turns by trucks at intersections between airport-grounds driveways and arterials on the surrounding roadway network can create serious traffic problems. Truck-specific traffic issues should be addressed during the planning stage for the airport Cargo Facility Site Location: The location of freight facilities at an airport may face competing interests. Issues relating to site selection for a freight center may include land availability on airport property, surrounding land uses, and the provision of safe and efficient landside access. In addition, as freight activity and truck volumes increase, truck queues and storage can pose a challenge. Coordination with transportation planning agencies should be undertaken to identify which roads may realistically be improved or extended to serve freight traffic in specific areas. Roadway characteristics to be considered include intersection geometrics, lane widths, requirement for turns across traffic lanes, and pavement structure. Airports that have limited on-site land may consider smaller facilities on the airport property and encourage shippers to use larger facilities at nearby off- airport locations. SOURCE: Frawley, 211. Financial/Operational Considerations The air cargo industry has had poor financial performance over the past five years. When cargo carriers perform poorly financially it may ultimately affect airport revenues with decreases in landing fees as frequency of operations and tonnages decline. Carriers may also cease operations at an airport and terminate lease agreements. Although recent trends indicate productivity and efficiency have been increasing, these positive gains have been negated by sudden increases in operating costs, especially fuel and increasing security

Page 2-13 costs. In addition, anti-trust fines have hit some carriers at a time when they are not in strong position to pay them. The airlines have also not been able to be as reactive to business cycles and many have expanded capacity too quickly on the upswing of the cycle and cut capacity back too slowly during the downturns. Some cargo airlines have adopted new strategies to improve their profitability. One example is Singapore Airlines (SIA) which has introduced greater flexibility into its freighter schedule to take into account the fact that off-peak traffic was often 20% or so below peak levels. By reducing freighter capacity in the off-peak the airline could use the freed-up capacity for charters. Another strategy that has been employed to improve cargo carrier financial performance has been the utilization of software programs to improve Cargo Revenue Management (CRM) in order to achieve the best rate and density mix of shipments and, therefore, to maximize revenue on each flight. In order to do this it is necessary to forecast the demand at different rates by day for each flight segment up to the time of departure. Sabre of the U.S. has developed the ‘AirVision Cargo Revenue Manager,’ previously known as CargoMax. Its key functions are: • Provides key flight, customer, and booking information; • Forecasts available cargo capacity by market, segment, and equipment type; Day of week; and time of day to help accurately plan cargo loads for maximum revenue; • Ensures acceptance of higher yield shipments through optimal allotment of cargo space to stations or agents and online profitability evaluation; • Increases productivity and supports superior decision-making by supplying efficient data analyses via management reports and performance-monitoring tools; • Identifies revenue streams and potential service failures proactively through interactive flight- monitoring capabilities to improve earnings and service quality; and • Considers booking behavior during optimal overbooking of cargo capacity to capture additional revenue and reduce offloads. Petersen (2007) describes KLM’s revenue management system which utilizes a “margin management” system to optimize the margin of cargo by a) increasing revenues b) decreasing the network costs for handling and c) enhancing load factors in both volume and weight. Fok et al. (2004) also developed a Cargo Load Plan and Analysis System (CLPA), a mathematical optimization system which assists in air cargo load planning. This system, when used by one of the world’s top 10 air cargo carriers, was able to develop an optimized loading plan within one minute. These programs show promise in improving the efficiency of air cargo companies thereby, increasing their financial performance. More research should be done in this area to improve the comprehensiveness of these systems (Morrell, 2011; Petersen, 2007). Security Air cargo security issues affect airline operations and the airport facilities utilized by air cargo carriers. Cargo screening is now mandated for all cargo loaded onto passenger aircraft. These mandates require refitting cargo facilities at airports to accommodate screening equipment and personnel. This section addresses the policies and outcomes of air cargo screening for air cargo transport. Air Cargo Security Related to Passenger Aircraft – In the U.S., the Transportation Security Administration (TSA) is responsible for transport security, which includes air cargo. The legislation that

Page 2-14 mandates the air cargo security regulations is the Implementing the 9/11 Commission Recommendations Act of 2007, also known as the 9/11 Act. The Act directed the Secretary of Homeland Security to establish a system to enable industry to screen 100% of cargo transported on passenger aircraft at a level of security commensurate with the level of security of passenger checked baggage within three years. The legislation set interim milestones for the industry to screen 50% of all cargo shipped on a passenger aircraft within 18 months of enactment, by February 2009 and 100% screening by August 2010. TSA implemented three programs to meet the air cargo screening goals. The first, narrow-body aircraft screening became effective in 2008. This program required that all cargo on narrow-body aircraft must be 100% screened individually before it is netted, containerized, or shrink-wrapped. The second, the Certified Cargo Screening Program (CCSP), allows freight forwarders and shippers to pre-screen cargo. The CCSP allows freight forwarders and shippers to pre-screen cargo, which can be cost-prohibitive for smaller forwarder and shipper firms since scanning equipment can cost between $30,000 and $100,000 (Morrell, 2011). The third program was international collaboration. International collaboration has been initiated with the European Union (EU), Canada, and Australia. By mid-2010 almost all domestic and outbound U.S. cargo on passenger services complied with the Act. TSA is working with international air cargo operators to increase their share of cargo placed on passenger flights that is screened, but 100% screening may not be achieved until August 2013. In the interim, TSA, along with Customs and Border Protection (CBP) and international partners, is utilizing risk-based targeting to increase screening of air cargo. Among the risk-based strategies that are being utilized is the Known Shipper Program. This program established an industry-wide Known Shipper Database (KSDB) for vetting all shipments placed on passenger aircraft. Shipments from parties that do not appear on the database may not be placed aboard passenger aircraft, even if they are screened or inspected physically. This applies to inbound international, as well as domestic flights. Air Cargo Security Related to Freighters – There are currently no statutory or regulatory requirements for screening all-cargo operations. According to industry estimates, the overall percentage of international shipments screened before transport to the U.S. may be as low as 50%. Screening international cargo has several impediments including: shippers’ limited control over their foreign supply chains, the scale and diversity of worldwide supply chains, and diplomatic considerations. In October 2010, two explosive devices being prepared for loading on U.S. bound all-cargo aircraft overseas were found. These incidents heightened concerns over the potential use of air cargo shipments as weapons to attack ground targets and renewed interest requiring that all air cargo, not just the cargo placed on passenger aircraft, be subject to physical screening. New legislation was introduced in both the House and Senate in 2010 that required screening of all cargo transported on all-cargo aircraft, including U.S.-bound international shipments, in a manner similar to the screening requirements for passenger checked baggage. The legislation also included provisions requiring inspections of foreign air cargo shipping facilities that handle U.S.-bound flights and formal security training programs for cargo handlers (H.R. 6410, 111th Congress and S. 3954, 111th Congress). While neither bill was enacted, this issue has not gone away (Elias, 2010). The ICAO and the World Customs Organization (WCO) recently signed a Memorandum of Understanding (MOU) for increased cooperation to protect air cargo from acts of terrorism or other criminal activity and for speeding up the movement of goods by air worldwide. Cooperation between the two organizations is focused on developing electronic advance data, information sharing and exploring

Page 2-15 the application of risk management to cargo for identifying threats and implementing the required security measures, including the vetting of advance-cargo information. More stringent ICAO standards concerning air cargo were enacted on July 1, 2011, which include a new requirement for Member States to establish a supply-chain security process (ICAO and WCO Join Forces to Strengthen Air Cargo Security, 2011). In the U.S. and internationally, the air cargo industry is moving toward requiring greater security measures, which will continue to present economic challenges. If 100% screening were to be required, the economic impact would be considerable. The projected cost of physically screening all air cargo could conceivably total several billion dollars annually. While some of the associated costs may be passed on to shipping customers, many costs will likely be borne by the air cargo industry. In addition, the logistical challenges of screening all air cargo may be significant, resulting in shipping delays and other inefficiencies. The following issues were identified (Elias, 2005) for the Congressional Research Service, as possible areas that may be explored by Congress in the near future regarding air cargo security: • The desirability of risk-based strategies as alternatives to 100% cargo screening and inspection; • The adequacy of off-airport screening under the CCSP in conjunction with various supply chain and air cargo facility security measures; • The costs and benefits of requiring blast resistant cargo containers to protect aircraft from in- flight explosions in cargo holds; • The desirability of having air cargo screened by employees of private firms rather than TSA and CBP employees; and • Cooperative efforts with international partners and stakeholders to improve the security of international air cargo operations. Environmental Many air cargo operators are implementing technological and operational changes to reduce their effects on noise, air quality, energy, and water quality. These changes are summarized in this section. Noise Issues – Noise certification standards for aircraft have been established by the ICAO. These standards have been incorporated into national legislation and are known in the U.S. Federal Aviation Regulations as Stage 2, Stage 3, and Stage 4 standards. Each stage includes new aircraft that are required to meet stricter noise standards. Stage 2 included standards for jet-powered aircraft designed before 1977, including the Boeing 727 and the Douglas DC-9. Unless Stage 2 aircraft have been re-engined to meet later standards, they have been banned by both the U.S. and EU. An alternative is when Stage 2 aircraft have been hushkitted, where a device for reducing noise from an engine is applied; most commonly this term refers to devices which reduce noise emissions from low-bypass turbofan engines, as fitted to older commercial aircraft. Stage 3 aircraft included the Boeing 737-300/400, Boeing 767, and Airbus A319. The deadline for new aircraft to meet the Stage 3 standards was January 1999. More stringent Stage 4 standards were enacted in January 2006 and became applicable to newly certified aircraft and to Stage 3 aircraft for which re-certification to Stage 4 is requested (ICAO, 2010). In 2008, just under 20% of the world fleet did not meet Stage 4 standards. As companies upgrade their aircraft, noise levels will be reduced (Morrell, 2011).

Page 2-16 In addition to utilizing quieter aircraft, air cargo operators have implemented procedures for take- off and landings that minimize noise exposure to more densely populated communities. In addition, night curfews or restricted night operations are found at many airports, particularly in Europe. At some airports in Europe, airports have a quota count system in which there is an overall noise quota of all individual aircraft landings (Morrell, 2011). Because cargo airlines frequently schedule their flights during the overnight hours in order to meet their delivery windows and operate most efficiently, they are disproportionately affected by nighttime noise restrictions. Recently, Frankfurt Airport in Germany has banned night flights as part of a court ruling on a suit brought against the airport by residents and environmental groups opposed to the airport’s expansion. This ban is effective until a higher court hears the case next year. Because Frankfurt is Europe’s largest air cargo hub, air cargo traffic will be greatly affected, particularly freighters operating to China and Central Asia that rely on nighttime flights. Lufthansa Cargo said that the ban would cost it millions in Euros and would result in flights being rearranged or cancelled. It has warned in the past that it might have to sell its entire fleet of 18 MD-11 freighters if night flights are banned. This presumably temporary restriction on nighttime flights will result in a significant restructuring of air freight logistics in Europe. Also, Dubai and the smaller Gulf airports are likely to take some trans-shipment business from Frankfurt (Handy Shipping Guide, 2011). In the U.S., the Airport Noise and Capacity Act of 1990 (ANCA), 49 U.S.C. sec. 47521 et seq., as implemented by 14 C.F.R. Part 161, requires that airports that want to impose mandatory curfews to restrict the hours of Stage 3 aircraft seek the approval of the FAA unless the restriction was already in effect on October 1, 1990, in which case the curfew is “grandfathered” and not subject to the requirements of the ANCA. While airports have sought to impose noise curfews at night, they will not receive FAA approval unless six statutory conditions are met (Lang, 2009). These conditions are: • The restriction is reasonable, non-arbitrary, and nondiscriminatory. • The restriction does not create an undue burden on interstate or foreign commerce. • The restriction is not inconsistent with maintaining the safe and efficient use of the navigable airspace. • The restriction does not conflict with a law or regulation of the U.S. • An adequate opportunity has been provided for public comment on the restriction. • The restriction does not create an undue burden on the national aviation system. Air Quality Issues – Aircraft engines produce emissions that are similar to other emissions resulting from fossil fuel combustion. Unlike other sources, aircraft emissions are unusual in that a significant proportion is emitted at high altitudes. Aircraft emission standards in the U.S. are established by the Environmental Protection Agency (EPA). The FAA is responsible for enforcing these standards. Historically, the EPA has worked with the FAA and the United Nations International Civil Aviation Organization (ICAO) and the FAA in the development of international aircraft standards. Aircraft engines contribute about one percent of the total U.S. mobile source nitrous oxide (NOx) emissions. This level can be as high as four percent in some U.S. airport areas. NOx leads to the formation of ground-level ozone and results in adverse effects to human health, visibility, crop damage, and acid rain. The first EPA standards for NOx were set in 1997 but were not as stringent as ICAO’s standards. The EPA recently

Page 2-17 established standards that are about 16% more stringent than existing NOx standards and will be equivalent to ICAO standards (EPA website, 2011). Increased international attention is being placed on the contribution of aircraft to Global Greenhouse Emissions and their effects on local air quality at ground level. The air cargo contribution to global CO2 emissions in 2002 (on both freighter and passenger flights) amounted to between 0.3% and 0.6%, or between 0.6% and 1.1% if a radiative forcing multiplier of 1.9 is included (Morrell, 2011). The ICAO’s Committee on Aviation Environmental Protection (CAEP) set a target date of 2013 for completing the CO2 standard for aircraft emissions. However, developing a global standard has proved to be contentious and the timetable may be delayed. Aircraft manufacturers are concerned that a poorly designed standard could have unintended consequences for aircraft design and environmental groups are worried that the standard may not be rigorous enough to push the industry to be as fuel efficient as possible (Warwick, 2011). Since emissions levels are related to fuel consumption, the operational and technological innovations that the air cargo industry is implementing to reduce fuel use will also reduce greenhouse gas emissions. These innovations are discussed in the following section. Energy Conservation Issues – With the rise in fuel costs, energy conservation has become very important to the air cargo industry as one way the industry can improve its profitability while reducing its environmental impact. Fuel conservation measures have been implemented by air cargo businesses to reduce energy costs of aircraft, ground vehicles, and air cargo hangars. These measures are described below. Aircraft – Air cargo businesses are replacing their aircraft with more fuel-efficient planes. They also are utilizing more wide-body planes, which carry more cargo and move cargo farther before refueling, reducing fuel consumption and improving overall fuel efficiency. Carriers are implementing operational procedures to reduce fuel utilized in landings and take-offs, as well as on the ground. For example, FedEx utilizes wide-body planes with flight management systems (FMS) which use continuous approach descent, which keeps the plane in idle during the descent and reduces the engine thrust and fuel consumption. Also, FedEx has reduced in-gate auxiliary power unit usage, which has eliminated over 1.5 hours of engine use per flight throughout the fleet, saving approximately one million gallons of jet fuel per month (FedEx, 2011). UPS utilizes lower flight speeds, computer-optimized flight plans, and computer-managed aircraft gate departures and arrivals, and taxi times to reduce fuel consumption. Air cargo carriers are adapting new technological approaches to air traffic control, such as those associated with the “NextGen” program of the FAA, including utilizing global positioning Systems (GPS) and navigation technology to make air travel more efficient and direct, particularly in high-traffic areas (UPS, 2010). The use of alternative fuels for aviation also is being explored. The ICAO organized a workshop on Aviation and Alternative Fuels in February 2009 to explore the use of sustainable alternative fuels for aviation. The ICAO then held a Conference on Aviation and Alternative Fuels in November 2009 which endorsed the use of sustainable alternative fuels for aviation, particularly the use of drop-in fuels in the near future, as an important way to reduce aviation emissions. Drop-in fuel is a substitute for conventional jet fuel, which is completely interchangeable and compatible with conventional jet fuel when blended with conventional jet fuel. A drop-in fuel blend does not require adaptation of the aircraft/engine fuel system or the fuel distribution network, and can be used “as is” on currently flying turbine-powered

Page 2-18 aircraft. The development of sustainable alternative fuels for aviation is facilitated by the ICAO Global Framework for Aviation Alternative Fuels (2009), which is a web-based document that is updated by member States and international organizations when new information is available (ICAO, Air Transport Bureau website, 2011). Ground Vehicles – Air cargo businesses are utilizing energy-efficient ground support vehicles. For example, ground support equipment at FedEx operations at select airports has been converted from internal combustion engine models to electric units and UPS uses bio-diesel fuel in its ground support equipment. Air Cargo Hangars and Warehouses – Several air cargo carriers have integrated environmental sustainability features into their air cargo hangars to reduce their environmental footprint and lower their energy costs. One example is FedEx’s cargo facility at O’Hare Airport. This building features one of the largest “green” roofs at an airport in the world. The roof is approximately 175,000 ft2 and is completely vegetated. In addition to lowering the energy costs of the building by 35% a year, the green roof reduces air pollution, reduces storm water runoff, extends the average life of the roof from 15-20 years to 40-50 years, and reduces airport noise (FedEx, 2011). Both UPS and FedEx utilize solar power in several of its facilities and FedEx utilizes geothermal energy in a facility in Geneva, Switzerland. Additionally, companies are upgrading their lighting fixtures in their facilities with more energy-efficient lamps. Water Quality Issues – UPS has initiated water conservation practices to minimize water use. These practices include dry-washing airplanes using an environmentally friendly enzyme wash agent that reduces the need for rinse water. Companies are also installing low-flow water fixtures in their facilities (UPS, 2011). SUMMARY This literature review examined general trends in airport strategic planning and master planning on a macro level and then researched specific micro-level trends in air cargo operations, planning and development. Many papers reviewed were critical of the current methodologies utilized for airport strategic planning and master planning. These papers presented compelling arguments that strategic planning and master planning as it is undertaken today utilizing guidelines by the FAA and ICAO is too rigid and focused on the development of plans rather than the decision-making process. Because of the uncertainties which exist at airports, a more flexible, adaptive approach to airport strategic planning and master planning should be adopted. In reviewing the literature and research focused on the air cargo industry, specifically, it was apparent that this literature is relatively sparse in comparison to the research that has been done for passenger air transport. The air cargo industry is continually changing with the changes in technology, commodity type and demand. In addition, it will continue to face more economic challenges with the increasing security and environmental regulations. Air cargo companies will have to remain flexible and adaptive to these changes as will airports. In addition, this literature search identified several areas where further research should be conducted to improve the efficiency and financial viability of air cargo companies. These areas include:

Page 2-19 • The collection of air cargo data for use in forecasts required to determine future airport facility requirements; • Operational research to improve the efficiencies of air cargo companies in cargo handling and load planning; • Revenue management system research to increase the revenues of air cargo companies; and • Develop a better understanding of the air cargo supply chain to improve the collaboration between freight forwarders and shippers and optimize cargo movement.