Fresh off a number of awards and despite facing global headwinds, the Edmonton International Airport (YEG) is looking forward to continued growth for its cargo business in 2023, even though it isn't a major contributor to the bottom line.
"Cargo doesn't buy coffees, park cars, or spend money at duty-free, so it doesn't have the same revenue impact," explained Mammen Tharakan, director of e-commerce, cargo, aviation real estate, and business development at YEG. "But our raison d'être is to drive economic prosperity for the region, and air cargo is a major contributor to that mission."
Air cargo is usually not a revenue driver for airports in general, but it does help to diversify revenue, Tharakan explained. "There's a much larger multiplier effect with cargo than with passengers," he said. "Having this robust cargo ecosystem supports and attracts the stakeholders who do business at the airport."
In 2021, YEG moved 48,000 tonnes of cargo — equivalent to between 11 million and 22 million typical e-commerce packages — which is a 4.5% increase over 2020 and marks the third straight year of growth. This year, the airport is on track to surpass those figures, recording 38,000 tonnes as of the end of September, ahead of the typically very busy fourth quarter. "I'm optimistic that we'll see double-digit growth for the year," Tharakan said.
That growth is being driven by e-commerce and has been "for quite some time," Tharakan said. About 80% of all cross-border e-commerce moves by air because it is the only way to meet the aggressive delivery timelines that customers have come to expect. "That shift from the 'palletization' to the 'parcelization' of cargo does provide new avenues of business," he added.
That's important as the airport grapples with economic and geopolitical uncertainty, high fuel prices, and continued supply chain issues. "We're managing the situation very dynamically," Tharakan said.
Despite the "burdensome" cost of investing in cargo infrastructure, it remains a key part of the airport's strategy, Tharakan said.
"It's critical for us because of the positive impacts to the community," he said.
Looking ahead to 2023, Tharakan said the airport is focused on four priorities related to cargo: expanding capacity, building out the air cargo network, driving innovation, and continuing its sustainability efforts.
In terms of physical infrastructure, YEG recently completed the construction of a $36-million, 47,000-square-metre expansion of its cargo apron, enabling it to hold six more wide-body aircraft. There's still work to do to bring that capacity online, Tharakan said, even as the airport continues with the $100-million expansion of its cargo-handling operations.
There's also a need to expand capacity digitally. "There's lots of paper that still exchanges hands today," he said. "We're working with partners to digitize some of those processes and to enhance the connectivity between stakeholders."
Building out the air cargo network with increased frequency from carriers like DHL and FedEx, the launch of nonstop service to Frankfurt (a major cargo hub for Europe), and the upcoming regional cargo service to the North will help drive growth too, Tharakan said.
Drones will be the focus of YEG's cargo innovation efforts. "Our goal is to explore opportunities to work with regulators and partners to expand the range," Tharakan said. Eventually, he hopes to be able to offer BVLoS (beyond visual line of sight) drone delivery services.
The airport has made sustainability a major focus across its operations, and cargo is no exception. Last month, YEG received the Corporate Sustainability Award from The International Air Cargo Association (TIACA) and the Sustainability Award from Ground Handling International Magazine in recognition of its efforts to reduce its carbon footprint and promote sustainability in the air cargo industry.
"We're humbled by the recognition," Tharakan said, adding that several more initiatives are underway.
YEG is part of the inaugural cohort for TIACA's BlueSky Program, a sustainability assessment, validation, and verification scheme to track sustainability progress. It's also the first airport in the world to participate in the IATA Environmental Assessment (IEnvA) certification program.
"Participating in IEnvA will allow us to work closely with IATA to establish what sustainability standards for airports might look like," Tharakan said.
The airport made a number of hydrogen-related announcements this year, and those initiatives will also have an impact on cargo, Tharakan said. "From a sector perspective, it's one of the many tools in the toolkit."
These initiatives and the ongoing global reset that is happening in supply chains provide a unique opportunity for businesses in the region, Tharakan said.
"I do think there's still lots to be discovered about the logistics opportunity in the region."
Correction: The story has been updated to reflect that Mammen Tharakan made reference to parking cars not parking planes when reflecting on cargo's contribution to airport revenue.