Milwaukee airport building facility to lure cargo from Chicago area

Construction is underway at Milwaukee Mitchell International Airport on a modern air cargo terminal that local officials say will make it easier for Wisconsin businesses to move goods domestically and internationally, but ultimate success still hinges on attracting one or more cargo airlines that can provide airlift.

The speculative project will redevelop a significant portion of a former U.S. Force Reserve base into a 337,000-square-foot dedicated cargo building with parking for up to five Boeing 747-400 freighter aircraft and enhance adjacent taxiways to improve accessibility for widebody jets.

An all-new airfreight facility in Milwaukee will be cheaper and more efficient for shippers in the region than having to truck goods 70 miles south to Chicago O’Hare airport, which is often congested and has high user fees, according to Milwaukee County officials and the developer.

“When this project is complete, builders and suppliers will be able to transport their raw materials and finished products in and out of Wisconsin more quickly and efficiently,” said Airport Director Brian Dranzik in a news release on Thursday.

At a groundbreaking ceremony on Thursday, Milwaukee County Executive David Crowley said the four largest shippers in the state – GE Healthcare, Rockwell Automation, packaging giant Amcor and Mercury Marine, a manufacturer of boat engines – are interested in utilizing Milwaukee airport (MKE) for air transport.

“I love the fact we’re taking business from Illinois,” he said in a short speech during the event, which was recorded by a local TV station. 

The Illinois airports Crowley alluded to are Chicago O’Hare and Chicago Rockford. O’Hare is one of the largest gateways for international cargo. Chicago Rockford is a secondary airport much closer to the Wisconsin border that has successfully created a cargo friendly alternative to O’Hare, with logistics companies renting terminal space and arranging scheduled freighter services with widebody aircraft. Many businesses located in southeast Wisconsin, including newly established tech firms, ship goods through Chicago Rockford, but the vast majority rely on feeder trucks that connect the region to Chicago O’Hare, according to local logistics experts.

Crow Holdings, a privately held real estate investment and development firm with $33 billion of assets under management, is financing and managing the air logistics center in exchange for a 50-year ground lease. The facility, estimated to cost $80 million, will have high ceilings, wide open areas to facilitate storage and sorting, 68 truck docks, and stalls for 75 trailers. It is scheduled for completion in 2026.

Grants from the Federal Aviation Administration’s Airport Improvement Program, for the taxiway improvements, and the state of Wisconsin will cover $11.2 million of the total bill, according to the airport.

The project involves tearing down a vacant business park on the former campus of the 440th Airlift Wing, extending the aircraft apron to add parking for an additional freighter and reconstructing a portion of the taxiway that doesn’t meet standards. 

The discovery that the taxiway needed replacement slowed planning and resulted in a larger footprint than the originally planned 288,000 square feet. Developers assumed the Air Force had maintained the taxiway with overlays, but the thickness was only about 11.5 inches compared to a 19-inch subbase needed to support large cargo aircraft, said Jack Rabben, Crow’s vice president of industrial, in an interview. Laying the concrete deeper meant a wider footprint was needed to achieve a minimal slope, resulting in more space that could accommodate a larger building, he explained. 

Existing infrastructure – power, water, sewer, fiber optic cable and roadways – and the site’s proximity to the main runway attracted Crow because development costs will be much lower than a greenfield facility. And those savings will pass through to users, said Rabben.

Key to monetizing the infrastructure, he said, is getting a critical mass of interested shippers and logistics providers that make it economically viable for a cargo airline to offer service at MKE. Crow is also engaging cargo agents for interest in running the cargo warehouse and handling truck-to-air transfers on behalf of airlines.

“All those shippers are currently flying products into other airports in Illinois. Obviously, it doesn’t make sense to fly things into Illinois only to ship them up to Milwaukee in a truck,” Rabben said. Officials said the metro area has the third-highest-per-capita manufacturing base in the country. 

He said shippers will save close to 60% by operating out of MKE instead of Chicago O’Hare because of the lower ground rent, building rent, taxes, landing fees and trucking costs.

Unlike facilities at many airports that are antiquated and functionally obsolete, the MKE cargo terminal will be built to the latest industry standards for efficient processing. Rabben said Crow will deliver a building shell that can easily be customized for a wide range of needs, including cold storage for pharmaceuticals and perishable foods, as well as live animals.

County officials said the cargo facility also has the potential to attract passenger airlines by lowering the overall operating cost for all airlines at MKE.

Finding customers

The new southside cargo facility will function in addition to an existing one where FedEx and UPS support a limited number of flights per week. The age of the legacy facility raises questions about how long it is serviceable, but MKE spokesperson Summer Hegranes said that “there are no plans at this time to relocate existing cargo tenants or to make any changes to their space.” 

Convincing cargo airlines and logistics companies to establish operations at non-major airports is a tall order because the habit to move shipments through large metropolitan airports is ingrained and difficult to change. 

Southeast Wisconsin has a strong manufacturing and distribution base that could support additional air cargo service in Milwaukee, but capturing business from O’Hare will be a challenge, consultant Michael Webber said two years ago when Crow first floated the project.

“I think they’re in a position to certainly pick up overflow from that Chicago market,” but O’Hare has an overwhelming advantage as an international gateway with a mix of cargo carried by passenger aircraft and freighters, Webber explained. Freight forwarders like using airports with a wide range of traffic from around the world because it gives them more shipping options and the ability to create specialized routes for their customers when direct flights aren’t available. 

Secondary airports typically secure freighter services when a logistics company has a key client, or two, with enough volume to justify chartering dedicated flights to locations where they can enjoy priority treatment, said Webber, who once studied the cargo market for the MKE airport authority.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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