The DFW Difference: How the Texas hub became a gateway to Latin America
John Ackerman was reviewing the freight numbers prior to an airport board meeting, but something about the numbers looked fishy. “The increase in cargo volumes was just too high,” recalled Dallas/Fort Worth International Airport (DFW)’s executive vice president for global strategy and development. But after the number crunchers had revisited the data, they confirmed that cargo volumes had, in fact, risen by 21.1 percent year-over-year (y-o-y) in August 2016. The culprit – Amazon.com’s Prime Air. E-commerce had officially arrived at DFW.
Amazon is now throwing up warehouse space near the airport as fast as it can, but it isn’t the only player looking to stake out a piece of the action at the North Texas airport. E-commerce is just one of many broader trends that are pushing DFW from a tier 1.5 airport – DFW’s size and volumes exceed most tier 2 players – to a tier 1-sized player in the North American cargo market. Economies across Latin America seem to be turning the corner. And then there’s air freight’s steady increases, with the general consensus now being that the sector has largely recovered from the latest downturn.
But DFW is one of many airports vying for business, and its past failures and successes show that it takes more than geographic positioning and passenger traffic to get ahead.
For decades now, the majority of perishables cargo coming from Latin America to North America and beyond was funneled through Miami (MIA). The Florida airport went unchallenged for all those years because it boasted an unbeatable combination of infrastructure, location, connectivity and traffic. Also, forwarders are creatures of habit, and nobody wanted to risk losing a shipment of flowers wilting in some second-tier airport.
To this day, few airports command the sort of primacy that MIA wields when it comes to north-south air freight.
“A lot of airports have said we’d like to get a piece of Miami’s business,” Ackerman explained, noting that most failed, including DFW some 15 years prior. “This time around, we said let’s not make that mistake twice, so we decided to focus on our strengths. Miami is incredibly strong connecting South America to Europe, so why don’t we focus instead on Asia and South America?”
It helps that the global trade has evolved significantly since Ackerman’s predecessors first went after MIA’s lunch money back in the early 2000s. E-commerce has revolutionized business to consumer relations, and consumer trends in China have landed DFW at the intersection of some of the fastest growing trade routes on the planet.
Ackerman is quick to point out that it’s not a “competition,” per se, and he’s right in the sense that both airports stand to mutually benefit from growing north-south trade, but that doesn’t stop him from pointing out that some markets are, simply, best served by Dallas.
Ackerman’s secret weapon is his “total landed cost model,” a statistical analysis of the costs of transporting goods through DFW from the perspective of hundreds of different products and scores of markets around the world. “I can sit down with a shipper and say, ‘if you choose DFW you can fly your salmon from DFW to Beijing, here’s how much it will cost you and here’s how long it will take,” Ackerman explained. “That’s been a valuable tool.”
It’s important to have a strong proposition, because “people are creatures of habit,” and these trade lanes are well established. “If I move a shipment of flowers via Miami, and some of the flowers are spoiled, it happens, right? But, if I’m the guy that takes a risk on Dallas, and the flowers turn up spoiled, people are going to ask why I shipped flowers through Dallas. We have to convince people that the risk is worth taking, and then we have to make darn sure that we take really good care of them, and make sure that we’re really able to do a great job.”
