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Mercury Air Group Throws its Hat in the Ring for LAX Cargo Expansion

Business continues to be booming at Mercury Air Cargo, with its latest addition, EVA Air from Taiwan, having returned back under the Mercury banner after a 5-year hiatus. However, while the cargo business is thriving, space constraints at the Los Angeles International Airport (LAX) continue to grow.

“We’re running quite full and unfortunately, there’s no additional space at this airport,” said chief operating officer and executive vice president John Peery. “The compression is starting to hit everyone in regards to cargo needs,” he said.

Peery has long petitioned for expansion of the airport’s cargo facilities, but a glimmer of hope may be on the horizon: in August 2018, airport officials will be releasing a Request for Proposals (RFP) for parties to build the first of several cargo facilities at the airport just south of Century Boulevard.

The Century Cargo Redevelopment project calls for a two-story, 450,000 square-foot facility to replace 200,000 square feet of current cargo space (spread amongst several buildings) on the airfield.

It is the first planned cargo facility at a major U.S. airport to call for more than a single story, according to an article on the development, and the project is estimated to cost anywhere from $325 million to $450 million.  The cost involved with the project depends largely on whoever is selected to build the project.  Mercury Air Group and its partners (Burns & McDonald for the design and build and UBS as the financial wing) is one of a handful of parties that have so far been qualified by LAWA to bid for the contract.

LAX occupies just 3,500 acres, making it one of the smallest of the nation’s major airports. Compare that to Hartsfield Jackson Airport in Atlanta, which occupies 4,700 acres. The 2.1 million square feet of cargo space at LAX is spread among 29 facilities across 194 acres. The scattered nature of the cargo facilities, combined with the limited space, have led to congestion and delays in cargo movement.

The airport is tracking 2.16 million metric tons of cargo in 2017, but “according to IATA [International Air Transport Association], there should not be over 2 million due to facilities’ capacities,” Peery said.

The cargo tonnage is an 8 percent increase up from 1.94 million metric tons in 2016. The increase ranks LAX 13th globally and 4th nationally in terms of cargo capacity processing. Hong Kong was the number one global cargo airport and Memphis International (where Federal Express is based) was the top-ranked in the U.S. and No. 2 globally.

The amount of cargo moving through the airport continues to grow: LAX handled more than 565,000 metric tons in the first quarter of 2018, up 4.1 percent from the previous year.

One of the main reasons for the increase in cargo is an increase in online commerce, and also the increasing use of larger aircraft. Larger aircraft can not only fly more passengers, but more cargo can fit into the belly of the plane.  

Mercury Air Cargo operates approximately a quarter of all cargo moving through LAX, according to Joseph Czyzyk, chief executive of Mercury Air Group. Mercury also operates the largest refrigerated facility at LAX.

Czyzyk pointed out that the airport has not built any new cargo facilities since the early 1990s, and some of the buildings date back to the launch of LAX in the early 1950s.

“Most of the facilities cannot easily accommodate today’s larger aircraft and many are converted hangars with only one entrance/exit and space that extends way back from that point,” Czyzyk said. “That causes major logjams in cargo movement.”

He compared this setup to more modern cargo facilities, where there are at least two openings and the facilities themselves are narrower so that cargo doesn’t have to move as far to get to an opening. This reduces the overall time needed to move cargo containers.

“We need to improve efficiency in cargo movement, and that means we need to replace the hodge-podge of buildings for air cargo at the airport with newer buildings able to accommodate larger trucks and aircraft,” Czyzyk said.