Project: Huntsville Alabama

1.0 Synopsis

The International Intermodal Center (IIC), an inland port complex located in Northern Alabama, is located at the Port of Huntsville. The port complex also includes the Huntsville International Airport and the Jetplex Industrial Park, which are under the jurisdiction of Huntsville?Madison County Airport Authority. The IIC includes two distinct operations: rail cargo, which began in 1986, and air cargo, which began in 1987. The total construction cost of these two operations combined was $53.11 million ($2008). To accommodate the expected increases in freight truck traffic to and from the port, the Wall Triana highway was completed in 1987 connecting the port of Huntsville to I-565 at a cost of $7.83 million ($2008). In 2003, rail operations were expanded to include additional sidings and lift capacity, costing an additional $21.06 million ($2008). Between 2000 and 2003, the Port of Huntsville extended an existing 8,000 foot runway by 4,600 feet to 12,600 feet to meet the international cargo shipment needs of Panalpina, an existing air cargo firm at the airport. The new 12,600 foot runway opened in May of 2004 and cost $33.7 million ($2008). In response to the runway extension, Panalpina flights throughout the U.S. and abroad increased from 7 per day in 2000 to 15 per day in 2008 accommodating an increase of 13,000 tons of freight. (Because of the recession of 2008-2010, Panalpina volumes have decreased, but are expected to increase again as the economy improves.) The total cost of the development of the IIC, subsequent improvements and expansions, and highway access was $118.34 million ($2008). This investment can be credited with the creation of 514 jobs.

2.0 Background

2.1 Location & Transportation Connections

The Port of Huntsville is a multi-modal inland port located on the east side of the Huntsville International Airport, nine miles southwest of Huntsville, Alabama in Madison County. The port is situated 2.1 miles south of Interstate 595 and 9.4 miles west of the US Army Garrison Redstone Arsenal. The port offers rail and air cargo transportation services through connections to the Norfolk Southern Rail line and the Huntsville International Airport. The intermodal center is also a U.S. Customs port of entry that handles cargo via air, highway, and rail.

The rail intermodal terminal is adjacent to the air cargo terminal. The rail terminal is owned by the Airport, operated by Port Authority employees, and is served by Norfolk Southern (NS), whose main line between Memphis and Chattanooga passes about 4 miles north of the terminal. NS pays a lift charge to cover the cost of terminal operations. In 2008 the rail terminal had 46,303 lifts which decreased to 32,789 in 2009 as a result of the national economic downturn. The terminal annual lift capacity is estimated at 114,000 lifts. Roughly 90% of the volume at the terminal is international containers with 60% to 70% of that moving through west coast ports.

The Port of Huntsville is organized as an Alabama public corporation governed by a five-member board made up of local citizens and business representatives called the Huntsville Madison County Airport Authority. The principal funding of the Port's operating revenues comes from both passenger and air cargo operations, which totaled $17M and $3.5M respectively in 2005. The airport collects landing, handling and other cargo processing fees for carriers that ship and receive product through their facilities.

2.2 Community Character & Project Context

The city of Huntsville had a population of 142,513 in 1980 which grew to 166,865 in 2007 (+17 %). The population of Madison County grew 63% to 320,914 during the same time period, while the population of Alabama grew by 20%. Between 1985 and 2007, employment in Madison County increased by 69% to 228,640 jobs and state employment grew by 45% to 2.6 million jobs during the same time period.

Industries in the Huntsville region that rely on air shipments include chemicals, automated equipment, technology, computers, well drilling, aeronautics, helicopters, and automotive suppliers and manufacturers. The region has developed a strong base of auto assembly and parts facilities, including companies such as Hyundai, Mercedes-Benz, Toyota, and Volkswagen.

3.0 Project Description & Motives

In the 1960s, Huntsville leaders envisioned developing the Huntsville International Airport into a premier multimodal gateway by expanding into air and rail cargo freight transportation. A major goal of this vision was economic development and job creation.

Over a twenty year period (1967 through 1987), Huntsville pursued development of a multimodal port facility. Cargo operations at the resulting International Intermodal Center (IIC), an inland port that provides a central location for receiving, transferring, storing, and distributing cargo by air, rail, and highway, commenced in 1987. The facilities and infrastructure were built to meet long-term growth projects, with excess capacity still available at the Port. Today, the Airport Authority owns 6,000 acres of undeveloped land for future Port facilities and industrial development, and the Port master plan calls for acquisition of an additional 4,000 acres.

The IIC is a regional distribution hub serving rail customers within a 200-mile radius and air cargo customers within a 600-mile radius. Local services are offered by a number of freight forwarders, customs brokers and ground handlers. The IIC is designated as Foreign Trade Zone 83, which provides manufacturers and processors within the zone incentives such as duty deferral, duty reduction and other financial savings.

Rail Cargo

The rail portion of the IIC became active in 1986 after extensive negotiations with Norfolk Southern to provide rail service to the Huntsville terminal and pay a lift charge for terminal services. An second phase of rail expansion was completed at the end of 2003, and included 4,000 feet of siding track, 2,000 feet for additional lift/load capacity, expansion of inbound/outbound truck lanes, and the addition of a 45-ton overhead Mi-Jack gantry crane (for a total of two cranes). Phase 2 of the rail expansion cost $21.06 million ($2008). The equipment and yard improvements enabled the IIC rail facility to handle 114,000 lifts per year. From Huntsville, NS connects directly to some of the largest US rail hubs through the national rail system.

Air Cargo

The air cargo operational plans were developed by the Authority in the 1970's as part of the Multi-modal transportation complex. The actual air intermodal terminal was built in 1986, prior to the rapid expansion of intermodal and international container growth nationally, and included facilities for receiving, storing, transferring and distributing domestic and international air cargo. By 2004, HSV ranked 18th among U.S. airports for international air cargo tonnage. The facility processed 73,569 metrics tons of cargo in 2008 (down to 59,475 tons in 2009 due to the national economic downturn.) The air cargo facility has over 1 million square feet of ramp space and 200,000 square feet for receiving, storing, transferring, and distributing domestic and international air cargo. Support equipment includes two main deck loaders.

From 1990 to 2000, cargo carrier activity at the Port of Huntsville increased by 116%. In 1995, freight forwarder Panalpina was already contracting two weekly international flights from the Port of Huntsville which grew to 9 flights per week in 2000. Flights throughout the U.S. and abroad totaled 7 per day in 2000 and the company wanted to provide direct service from Huntsville to Asia and the Pacific Rim in response to shippers' demands and to expand its marketplace. A longer runway that could handle larger, heavier aircraft was needed. The Port of Huntsville agreed to extend the airport's west runway from 8,000 feet to 12,600 feet to accommodate larger aircraft such as the Boeing 747-400 to meet Panalpina's needs. The runway extension was built between 2000 and 2003 and included a parallel taxiway extension to 750 feet. The extension increased payload capacity and operational efficiency, and allows Panalpina and others to compete for the growing market for internationals air freight shipments.

Through 2002, the total costs for the development of the IIC, including both rail and air cargo facilities, was $53.11 million ($2008). The Airport Authority financed about 60% of this cost, with the remainder paid for by Federal sources. An additional $7.83 million ($2008) of state funds were spent to construct the Wall Triana Highway, connecting the Port of Huntsville to I-565. Expenditures on the second phase of rail improvements totaled $21.06 million ($2008), and the runway expansion cost $33.7 million ($2008) bringing the total cost of the development of the IIC to $118.34 million ($2008)

The IIC is one component of the package of incentives that help attract businesses to the port. The Foreign Trade Zone designation is also an important draw for businesses that can benefit from the financial incentives it offers.

4.0 Project Impacts

4.1 Transportation Impacts

4.2 Demographic, Economic & Land Use Impacts

According to the Port of Huntsville, there are 244 jobs at the intermodal center, which include cargo carriers, freight forwarders, lift operators, and cargo handlers. In addition, 5% of the tenets at the JetPlex industrial park have located there due to the proximity of the air and rail intermodal access, translating into an estimated 270 jobs. In total, 514 jobs have resulted from the development of the port facilities.

5.0 Non-Transportation Factors

In May 2009, an air cargo building measuring 92,000 square feet was opened at the Port of Huntsville, which increased the air cargo capacity of the International Intermodal Center (IIC) by 30%. According to the Port of Huntsville website, there are currently 300,000 square feet for receiving, storing, transferring and distributing domestic and international air cargo. In discussions with Port officials and freight forwarders, there is sufficient space at the facility to meet all demand. The economic impacts of this facility are not included in the results of this case study, which evaluated impacts through 2008. The port has been designated a Foreign Trade Zone. Within the zone, businesses can benefit from deferred duty payment until goods are formally brought into the U.S. market through U.S. Customs.

The Jetplex Industrial Park has 5.6 million square feet of industrial space located in and around the Huntsville Port complex which provides access to air, rail and highway transportation infrastructure and cost $1.058 billion ($2002).

6.0 Resources

6.1 Citations

1. 2009 Port of Huntsville Annual Report
2.  “Economic Report for the Port of Huntsville”, 2003 and 2008.
3.  LPA Group Inc. “Huntsville International Airport, Huntsville, Alabama - Benefit Cost Analysis Runway Extension Project”, December 2000. 
4. http://www.hsvairport.org/

6.2 Interviews

Organization

City of Huntsville

Huntsville/Madison County Chamber of Commerce

Panalpina

Port of Huntsville

Footnotes

Case Study developed by Economic Development Research Group