Chapter 2 Background on the Aerotropolis
2.3 International aerotropolis experiences
2.3.2 Memphis Aerotropolis
23 Estimations of the employment effects of Schiphol Airport show that the largest share of employment is created by aircraft carriers, aircraft manufacturer Fokker, and the security services of the airport, including the military (Hakfoort et al., 2001). All these employment opportunities emanate from the fact that Schiphol aerotropolis is seen as a complex industrial enterprise with various activities which are brought together to facilitate the interchange between air and surface transportation for passengers and freight (Hakfoort et al., 2001;
Warffemius, 2007). The firms that are located at or very close to Schiphol offer a wide range of supporting services and facilities and because of this, the Schiphol agglomeration provides what Warffemius (2007) calls the “airport product” or a service package for the airport functions.
In relation to RED conceptualisation and enactment, the governance of Schiphol aerotropolis is a public–private partnership between Schiphol and the Dutch government. The airport city has managed to attract companies from various sectors indicating how Schiphol agglomerates economic activity and is a cluster of businesses. Its success can be attributed to air connectivity, an extensive network, a clear strategy and business model, and a competitive region and market. All these factors have also been crucial selling points of the Schiphol aerotropolis and have been hugely influential in attracting further investment. Bundled together, they boost the regional marketing strategy and assist the Schiphol aerotropolis to compete effectively as a global player. Overall, Schiphol aerotropolis has had a great impact on the wider metropolitan region of Amsterdam. This has essentially challenged traditional forms of government which were unable to cope with the interdependencies that include other cities such as Rotterdam, Hague and Utrecht.
The next section considers the Memphis Aerotropolis in the United States.
24 now focuses on time-critical medical distribution – in particular, biologistics and personalised medicine (Cox, 2009).
In 2006 Memphis airport declared itself as an aerotropolis; positioning itself in world aviation and economic development as America’s aerotropolis (Cox, 2009). Although this was during a period of national downturn, Memphis capitalised on the fact that even in such times, efficiency in distribution becomes and remains of great importance (Cox, 2009). The rationale cited was that “fragmented distribution channels add cost to global logistics and so a community that can provide the most efficient distribution environment will have a competitive advantage over others” (Cox, 2009:150). This is a competitive advantage that saves time and money.
Because Memphis is also home to some of the world’s greatest performers and artists, the city attracts tens of thousands of tourists from across the globe (Cox, 2009). This is what drives up demand for passenger air service (Cox, 2009). In addition to the booming tourism sector, Memphis is known to business as a distribution hub with runway, road, rail and river as forms of distribution (Cox, 2009). The Greater Memphis Chamber (2009) defines this as quadramodal logistics: procurement, maintenance and transportation of material involving four modes of transportation.
The first of the newest wave of investors to recognise Memphis’s potential was FedEx, a logistics company which set up its world headquarters in the city in 1973. From this beginning, air cargo has since come to be known as the heartbeat of the city’s community. Currently, over 4 million tonnes of cargo passes through Memphis every year, indicating ample capacity to provide business and cargo air services solutions Cox, 2009). According to the Greater Memphis Chamber (2009), 94% of this cargo is due to FedEx, which processes over 2 million packages per night. Furthermore, Memphis has approximately 300 daily national and international cargo flights that ensure that the hub covers the globe. Through its active role in logistics and tourism, Memphis Chamber is of the view that the aerotropolis is “the physical and spatial manifestation of these tourist, supply chain and corporate enterprise networks”
(Greater Memphis Chamber, 2009:14).
Because of its quadramodal infrastructure, Memphis evolved as an aerotropolis. Investment and job growth, as a measure of success, sat at around 37 000 new logistics jobs between 2005 and 2007 (Cox, 2009). According to the Greater Memphis Chamber (2009), the economic impact of Memphis Aerotropolis has been considerable: of an overall $22 billion impact on the
25 economy by the airport, $19,5 billion resulted from air cargo activities. A total of between 166 000 and 220 000 jobs in the metro have been attributed to airport city activity (Greater Memphis Chamber, 2009; Cox, 2009). Overall, the business community indicated that they saw their economic future as being closely linked to the airport (Memphis Chamber, 2009).
Given what has been discussed above, Sheffi (2013) argues that the Memphis Aerotropolis is more than an aerotropolis built around FedEx services. This is because what agglomerates clusters together through this hub are other transportation and logistics options; intersecting interstate highways and trucking companies are afforded ease of doing business while the rail hub connects Memphis to the Gulf Coast, Chicago and all of Canada.
According to the Greater Memphis Chamber (2009), the development of the Memphis Aerotropolis was spontaneous and haphazard, which detracted from its economic efficiency as its aesthetic appeal and environmental sustainability were not of commensurate standard. A decision was then taken to improve the airport city development through strategic infrastructure planning (Greater Memphis Chamber, 2009). According to Cox (2009), stakeholder engagement and community cooperation played a key role in the materialising of the Memphis Aerotropolis vision. MemphisED is the community’s economic development initiative, which has involved more than 2500 businesses, community leaders and multimillion dollars in support of the multiphase, multiproject initiative (Cox, 2009). In addition, Memphis Aerotropolis formed a project steering committee to capitalise on the region’s aviation and logistics assets and address airport area issues, including social and physical infrastructure gaps in the region that had potential to limit the effectiveness and growth potential of the aerotropolis (Greater Memphis Chamber, 2009). What is also important in the governance of Memphis Aerotropolis is collaboration, a shared vision and mobilising of resources (Greater Memphis Chamber, 2009).
The Memphis Aerotropolis is a cluster of economic activity founded upon logistics and distribution and strongly reliant on Memphis’s quadramodal logistics platform in which procurement, maintenance and transportation of goods involves four modes of transportation.
At the centre of this cluster is FedEx, which is responsible for approximately 94% of the cargo that goes through the Memphis Aerotropolis every year. The Memphis Aerotropolis has built its competitive advantage from its quadramodal infrastructure and its intensive flight network of approximately 300 daily national and international cargo flights. Governance dynamics in the Memphis Aerotropolis include channels for stakeholder engagements and community
26 participation which play a role in the materialisation of the aerotropolis vision; MemphisED and a steering committee also play a role in the governance of the Aerotropolis.
The next section considers the Tancredo Neves Airport in Belo Horizonte, Brazil.