Let's use old terminal for distribution hub

November 10, 2008
In 2001, the Indianapolis Airport Authority began its efforts to dramatically improve Indianapolis International Airport, culminating in the Nov. 11 grand opening of Col. H. Weir Cook Terminal. In addition to the terminal, a new control tower and a new entrance off Interstate 70 have been constructed.

The estimated $1.1 billion investment in the airport should greatly enhance the security and velocity of passengers and cargo moving into and out of Indianapolis. Today, the airport serves 8.5 million passengers and transports 1.2 million tons of cargo annually. While a respectable amount of cargo moves through the Indianapolis airport, the volume is only a third of the largest cargo airport: Memphis.

Since 1944, when the airport was renamed Weir Cook Airport, after the World War I flying ace, Col. Harvey Weir Cook, of Wilkinson, its primary focus has been to safely and comfortably transport passengers. However, the lengthening of supply chains to serve evolving consumer demands and satisfy business needs for cost-effective, timely material has precipitated tremendous growth in air cargo. Neither airports nor airplanes were originally designed to handle the roughly 53 million tons of freight that is moved daily in the United States.

The airport authority has announced that it will demolish the old terminal. As with the implosion of Market Square Arena in 2001, the space it formerly occupied offers the city and the authority an opportunity to erect a facility that takes advantage of the region's assets. The metropolitan area has made transportation and logistics a key economic development strategy. Most of the nation's airports have limited space and few can boast of nearby ground and rail links. Fewer still provide reasonable business operating costs with easy access to major U.S. markets.

The city should organize a public-private partnership to create a multi-modal distribution community at the site of the former terminal, designing and building a facility or series of facilities that serve the requirements of air cargo and offer integrated links to rail and truck transportation. Such a unique and fully integrated distribution hub would leverage the region's investment in the airport; its past investments in the FedEx hub; and its familiarity with the staffing, management and operation of distribution facilities.

Indiana is first in the nation in interstate highway access, it ranks ninth in rail miles and 14th in maritime shipping tonnage, and is in the top 10 of U.S. airports for airborne cargo. A community of distributors at the site of the former terminal would link Indiana's infrastructure, providing manufacturers access to the most cost-effective mode of transporting their products.

Civic investment would spur private investment, with additional cargo hub jobs and businesses generating tax revenue to support continued investment in the community. Jobs in the logistics industry typically provide wages that are more than 30 percent higher than the average Indiana wage. U.S. freight volumes are expected to double by 2035. Stronger cargo growth could also provide the authority with additional revenue sources, lessening the dependence on passenger fees and passenger sales to support operations and bond obligations.

The demolition of the old terminal is another sign of the evolution of Indianapolis. We should take advantage of this circumstance to build something that will create a better, more vibrant city for future generations.


Williams is regional venture partner of Hopewell Ventures, a Midwest-focused private-equity firm. His column appears monthly. He can be reached at bwilliams@ibj.com.
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