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» HAS Newsroom
Houston Airport System
August 11, 2006
On any given night, when most consumers are fast asleep, a parade of various cargo-moving large-haul vehicles take over the streets of Houston as they transport any number of products from across the globe into the fourth-largest city in the United States.
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These vehicles are part of a larger network that extends past the borders of cities, states, nations, countries and continents – a global network that operates on the principle of supply and demand and that incorporates everything from air, sea, rail and road transportation systems into the movement of cargo from one destination to another.
However well-executed and choreographed, this transportation network – which also takes place during the day – is one that most consumers do not even know exists. Most shoppers take for granted the fact that a majority of the articles they purchase at local retail stores are part of a global cargo network.
For the cargo community, however, taking any part of this transportation infrastructure for granted is not an option. |
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© Houston Airport System
Anything from spatulas to construction vehicles move through cargo warehouses. |
A delay of minutes, hours or days could amount to millions of dollars in lost revenue; not to mention the potential for the loss of big business.
“Having the right infrastructure in place could make the difference between locating a site or not locating a site,” said Kaith Morris, community affairs manager for the logistics group of the world’s largest retailer, Wal-Mart.
Morris stressed that timeliness and reliability are the most important factors in stocking their shelves. The retailer utilizes a computer-based inventory system that identifies items being sold and that helps them make decisions about what products need to be replenished.
Rather than waiting for an item to be depleted before reordering, Wal-Mart replenishes its merchandise on a constant basis; almost simultaneously with the scanning of the item at the register.
In order to run such an operation the retailer depends on its suppliers to deliver the goods when they are needed.
“We don’t want to be in the position where the customer comes in and can’t find the item because it is not available,” Morris said.
For that reason cutting costs and saving time are almost synonymous with running a supplier operation.
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Ted Jeude, director of operations for Foxconn Communications & Network Solutions Business Group in Houston, is very familiar with this concept. The former Compaq director of operations, for 14 years, was recruited by the Taiwan-based Foxconn roughly two years ago to streamline and improve the production process of the shipper’s Houston operation.
Foxconn is the largest manufacturer of connectors for use in PCs in Taiwan, and a leading manufacturer of connectors and cable assemblies in the world. The company, which has a market capitalization of $32 billion, also manufactures enclosures, primarily for desktop PCs and PC servers.
Since 2004, the company has seen business at its Houston operation increase exponentially. |
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Ted Jeude is certain increased air service to Houston would benefit the cargo comunity across the globe. |
“The business has grown in excess of 400 percent in less than two years,” Jeude pointed out. |
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Today, more than 600 employees abound in Foxconn’s 300,000 square-foot Houston facility – two years ago that number was only 200. A major portion of this growth rate is due to the restructuring of production achieved by Jeude. The director oversees the 150,000 square foot electronics-related side of the local operation.
Before, cargo imports from China used to take up to four days to arrive in Houston. Today, through improved air and freight-forwarding services implemented by Jeude, these shipments take between 32 to 48 hours.
Currently, imports from China are delivered via cargo aircraft to Dallas and then trucked down to Foxconn in Houston. Exports destined for Asia are trucked up to Dallas and then flown out to their final destinations.
 
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With cargo moving through Dallas and then to Houston, insutry insiders believe valuable transportation cycle time is being wasted in the delivery of goods to local retail stores that then make these items available to the U.S. consumer market.
Yet Jeude is certain additional time can be salvaged from this cycle.
“Cycle time to get products to and from Dallas adds almost another 24 hours to the process,” he said. “Our business is not in Dallas. Direct air service to Houston would cut 24 hours out of this cycle.”
Foxconn and Jeude are pushing for increased international air service to and from Houston’s largest airport, George Bush Intercontinental (IAH). With already existing service to 76 international destinations, IAH is the fourth-fastest growing airport in the world and the seventh-largest international gateway in the United States.
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Of particular interest to the cargo community is having more direct air service to Houston from Asia. This market is one of the fastest-growing in the world and feeds local operations in Houston via alternate routes at the present time.
The airport’s cargo area can park up to 20 wide body aircraft simultaneously and can handle more than 500,000 metric tons of air cargo annually. In addition, IAH has plans to significantly increase its cargo facilities and its international air cargo service network to and from Houston over the next several years.
© Houston Airport System
Houston is a major player in the global economic market. Businesses across the globe have found a profitable and reliable business partner in the city's all inclusive air, sea, rail and road transportation network,
“It’s exciting; it reminds me of Compaq in 1984, ‘85 and ’86,” Jeude said of the Houston Airport System’s growth potential. “The growth, the enthusiasm, the can-do-attitude is very exciting.”
Other local cargo operators agree. Freight-forwarders, who transport cargo to and from Houston from Dallas and the rest of the country, mostly by truck, are also very excited about the promise of IAH’s increased air service development projects.
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Panalpina is one of the world’s largest providers of forwarding and logistics services, specializing in international air freight and ocean freight shipments. Two years ago, the freight-forwarder, which operates a global network of some 500 branches in more than 80 countries, inaugurated a $27 million, 33 acre on-airport cargo-handling facility at IAH.
Bill Reddick, Southern area vice president for Panalpina, points out that the reason for this investment was the company’s firm belief in the strength and potential of the Houston air service market. |
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Panalpina is one of the strongest cargo-handling freight-forwarders in the world. |
“We specifically chose the land (at IAH) because we knew what was in the airport’s expansion plans” Reddick said.
Prior to opening their new 450,000 square foot facility, Panalpina had been operating in the Houston market for over 25 years at an 180,000 square foot location.
“We just outgrew it,” Reddick said of the move.
The forwarder’s Houston location is the largest of its operations in North America and one of the company’s largest in the world. From Houston, Panalpina provides worldwide cargo logistics services to any number of international corporations and/or shippers.
The bulk of its business, however, is in serving the oil field industry. Ninety percent of its Houston operation deals with typical oilfield markets in the Middle East, the United Kingdom, West Africa and China, among others.
“The future of air cargo operations at the Houston Airport System will have a direct bearing on our future,” Reddick noted. “The more capacity they get out of here the more we can grow.”
With over 450 employees in Houston, Reddick is certain air cargo carriers around the globe will soon make the energy capital of the world also one of the leading air cargo hubs internationally.
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A few acres down the road from Panalpina’s new facility, another freight-forwarder is also banking on the city’s promising air service development future. This year, Seattle-based Expeditors International inaugurated its own cargo facility at Houston’s largest airport.
The non-asset based company whose motto is “you’d be surprised how far we’ll go for you” opened the doors of its newest 155,000 square foot facility in April of this year. Expeditors’ primary market in Houston is also the oil industry, although it does also have a strong presence in Asia and various other international markets across the board.
“Asia is a large trading partner and it continues to grow,” said David Knowlton, district manager for Expeditors at IAH. |
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© Houston Airport System
David Knowlton believes in the strength of the Houston air service market, |
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Knowlton is particularly interested in seeing more Asian carriers fly into Houston and shares Jeude’s opinion that direct air service to Houston would significantly reduce transportation cycle times.
“Any time saved on moving cargo to and from Asia is a benefit,” he said. “Houston is a booming market and we definitely see it growing.”
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Another cargo-moving business looking to expand at IAH is Pinch Transportation. This family-owned trucking company has been in the market for over 30 years and is currently constructing a $5 million, 100,000 square foot facility down the street from Expeditors.
“We have seen our volume increase and we have seen our customers grow,” said Josh Oren, managing director for Pinch Transportation. “The Expeditors, the Panalpinas are handling so much more tonnage today than they were handling just three to four years ago.”
Unlike freight-forwarders, Pinch Transportation does not move cargo by any other mode than by trucks – the company, which averages an annual profit of $45 million and operates a fleet of over 300 trucks, works alongside freight-forwarders in moving cargo to and from its intended destinations.
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© Pinch Transportation
Later this year Pinch Transportation will open this new facility at IAH.
| Like Knowlton, Reddick and Jeude, Oren is convinced that in the near future Houston will surpass traditional air cargo hubs across the globe as one of the leading international gateways in the world.
“Global Supply chains don’t really make a lot of sense to many people, but when you break it down…it’s really what makes the world tick,” Oren said. “There is certainly no lack of work to do if you are in the transportation industry in Houston.”
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