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Air cargo hub viable option (10/02)

By Ian Ross If North Bay and Sault Ste.
By Ian Ross

If North Bay and Sault Ste. Marie intend to establish themselves as North American gateways for international cargo flights, it must be a lean and mean operation that is run efficiently with service that is "second to none," says a logistics consultant.

A study prepared by InterVISTAS Consulting Inc. of Vancouver assessed global opportunities, challenges, strengths and weaknesses for North Bay and the Sault becoming North American gateways for air cargo flights from Asia using transpolar routes.

Low airport charges, plenty of incentives and aggressive marketing as a regional distribution centre for inbound air freight were among the findings listed by Mike Tretheway, vice-president of marketing and chief economist for InterVistas.

Based on the consultant's findings, North Bay is approaching the idea "guardedly optimistic," says Rick Evans, the city's economic development manager.

"We're not going to be like Chicago or a huge hub as with the U.S. airports, but there are some solid business opportunities for us to grow in niche markets."

North Bay plans to use the study to develop a business plan to investigate the establishment of a foreign trade zone component where incoming goods could be brought in duty free.

How successful this venture will be will depend on the type of aircraft and freight, says Evans, who was reluctant to disclose potential cargoes due to the extremely competitive nature of the industry.

Such air freight-handling hubs as Mount Hope Airport, near Hamilton, have done "tremendously well" with light cargo and time-sensitive material, such as Purolator and FedEx due to their proximity to the Greater Toronto Area, says Evans

"We can compete on that freight," but North Bay's niche might be in receiving heavy equipment.

The city is also pursuing a flight-specific exemption from the federal government to accept Russian heavy-lift aircraft, which do not meet new operating-noise criteria guidelines that went into effect last April.

Similar aircraft have landed at Jack Garland in years past.

"They've been in here before and they're less noisier than the military aircraft that we've been accustomed to," says Evans. "These types of aircraft are self-unloading and we don't have to invest $200,000 to $300,000 in (ground-handling) equipment."

Gander, Nfld. is home to the only other North American airport available to these aircraft, but the airport does not offer the logistics needed for distribution.

"They need something more central to eastern Canada and our location is perfect for them."

The city plans to establish contact with some international freight forwarders/carriers to determine their level of interest in developing a North Bay hub.

The report prepared by InterVISTAS Consulting indicates there is tremendous growth potential in this sector.
Global air cargo is expected to grow at 6.4 per cent annually, but air polar is a high-risk venture that is "highly and permanently" vulnerable to poaching, and North Bay must target niche markets.

With a 10,000-foot military-length runway at Jack Garland Airport, infrastructure is not an issue, but there are some shortcomings, such as lack of local air traffic controllers, Canada Customs facilities and loading equipment.

"We'll hold off before making any huge investment until we demonstrate some good business opportunities that require groundhandling equipment," says Evans.

Though the Sault is at the northern end of the Interstate 75 corridor, for its airport to accommodate heavy, wide-body aircraft, the city must consider how to finance airport upgrades to lengthen its 6,000-foot runway another 2,200 to 2,500, at a cost of about $10 million per thousand feet.

For additional comment on how to finance any capital costs, the matter has been forwarded to the city's industrial marketing committee, which consists of Sault MP Carmen Provenzano, MPP Tony Martin, city councillors, Sault economic development corporation staff, and representatives from FedNor and from Northern Development and Mines.

"We want reaction from our partners, the province and federal government, as to what level of participation they may have, because it's not something the city can fund," says Joe Sniezek, the City of Sault Ste. Marie's manager of long-range planning.

"We're trying to develop some logistics support in the first phase," says Sniezek, such as the possibility of establishing the Sault as a smaller "sub-hub" for a major courier company.

"We're walking before we run."

InterVISTAS says North Bay and the Sault can offer cost-effective distribution for northern European and Russian air carriers, including target niche markets such as Russian gateway traffic from Asian points such as Taiwan, China, South Korea and India on polar routings.