St. Louis strives to create an air freight hub to China
The Kansas City Star
By Randolf Heaster
Mon, Jun. 29, 2009
In the city dubbed the "Gateway to the West," St. Louis movers and shakers are hoping their city will be known as the "Gateway to the Far East" in the 21st century.
Efforts are under way, with support from Missouri's most influential politicians, to create an air freight hub in St. Louis that would generate trade between China and the Midwest. U.S. Sens. Kit Bond and Claire McCaskill have been vocal proponents of the project, and Bond last month lobbied Missouri legislators to provide $12 million for the development of an air cargo facility at Lambert-St. Louis International Airport.
But for skeptics, it may sound like pie-in-the-sky talk from a city whose airport is underutilized and is less than 300 miles from Chicago, one of the busiest air freight hubs in the country.
But it's more than just talk at this point. Since early 2008, several delegations have traveled between China and St. Louis as the two sides have explored the advantages of such a partnership. Just last month, a group of 50 Chinese businesspeople, along with the Chinese Investment Promotion Agency, stopped in St. Louis as part of a U.S. tour.
Also, the Midwest China Hub Commission was formed earlier this year and now has offices in St. Louis and Beijing.
Progress is being made as talks are continuing between St. Louis officials and two Chinese air carriers, said Mike Jones, chairman of the commission.
"We've left the exploratory stage, but we haven't landed on a deal," said Jones, who also is senior policy adviser to the St. Louis County executive. "All the glitz and glamour is over, and now we're slugging it out in the trenches. Our major task in the next six to 12 months is to make the business side of the case."
Regional exports
While imports from China are plentiful, the challenge will be to convince a Chinese airline and businesses that there would be enough freight going back to their country out of St. Louis.
Goods shipped by air usually are of higher value or are perishable, unlike the goods that can be shipped more cheaply by ships, trains and trucks. Some of the Midwestern items that potentially could be exported, according to Jones and others, include semiconductors, medical equipment and other machinery, food and even livestock.
"We have to demonstrate that there is sufficient backhaul freight, stuff on a plane going back to China that can be assembled and flown from St. Louis," Jones said.
And Jones said that is the reason the commission's name includes Midwest instead of St. Louis. Businesses from the middle of the country would have to see the economic benefits of using the St. Louis air freight hub for trade with China as an alternative to Chicago.
"We're not going to replace Chicago O'Hare," Jones said. "But it's a very crowded airport with a lot of delays, and you're always going to have congestion on the highways going out of Chicago. But we think we can create a niche for companies that do business in China. But we'll need the support of companies not only in St. Louis or even Missouri, but the whole middle of the country."
It's an ambitious effort, and one Kansas City trade official said it will be interesting to see if St. Louis can pull it off.
"Businesses on our side of the state would benefit from air cargo service to China from St. Louis. But especially in this economy, getting that kind of volume is a challenge," said Chris Gutierrez, president of Kansas City SmartPort Inc.
Gutierrez said Kansas City economic development officials had talks with the Chinese officials about boosting air cargo service at Kansas City International Airport a few years ago, but it was decided the volumes would not make it worthwhile.
Nevertheless, Jones said Chinese officials and businesspeople now have expressed interest in boosting U.S. imports to their country.
"They understand the trade deficit is a problem, and they also want better-quality goods for their growing middle class," he said.
The St. Louis advantage
Exports from Missouri businesses to China topped $1 billion in 2007 before last year's economic downturn dropped exports to $945 million. Scrap metal, chemicals and machinery top the list of items exported to China from Missouri.
Other Midwestern cities also are seeking to boost air trade with China, but one advantage St. Louis may hold is Lambert-St. Louis International Airport, which has been underutilized since the demise of Trans World Airlines and the downsizing this decade of American Airlines. Lambert did not need much air cargo traffic when it was one of the nation's busiest passenger hubs in the 1980s and 1990s.
After American acquired TWA, turmoil in the airline industry led to the elimination of the St. Louis hub, and Lambert now has a third runway that is underused.
"We wouldn't have had this conversation about an air freight hub with China 15 or even 10 years ago," Jones said.
Bond, who has supported the project and has been part of trade delegation visits to China, said the state legislature helped boost the effort by providing $12 million in funding for an air cargo facility at Lambert in the economic stimulus bill passed last month.
"This project has the potential to provide tremendous economic growth and opportunities for Missouri and states across the Midwest," Bond said in a statement. "This project represents the shift our Midwestern economy needs to embrace now to prevent (it) from being left behind in the wake of the ever-expanding global economy."
Jones believes the China air freight project is so important that he and others have likened it to the construction in the 1860s of St. Louis' Eads Bridge, the first bridge over the Mississippi River that allowed trains to cross. The bridge drove the economic engine that allowed St. Louis and the region to grow and flourish through the 20th century.
An air freight hub in St. Louis could create thousands of new jobs, promoters of the project contend.
"Much of what drove the economy in the middle of the country in the last century is becoming obsolete, like heavy manufacturing," Jones said. "The world's economic paradigm has shifted, so we have to take our best assets and reposition them for the next wave. I believe some city in the Midwest will eventually develop this hub, and I want it to be St. Louis."
