Longitudes: 3 ‘Aerotropolises’ Powering the Global Economy

(UPS’ globalization blog Longitudes asked me to nominate three cities vying to be the hub-to-end-all-hubs. My nominees: Zhengzhou, China; Dubai World Central – since renamed Dubai South – and Panama City. The full post is after the jump.)

Big-city airports aren’t just massive travel hubs today; they’re also evolving into critical nodes of the 24/7 global economy – creating jobs, connecting workers and suppliers, and building infrastructure.

Their enlarged role is seeding communities in the way that maritime ports once defined landmark shipping destinations such as Hong Kong, Hamburg and Rotterdam.

Welcome to the age of the “aerotropolis,” a term coined by authors John Kasarda and Greg Lindsay in an influential book of the same name.

International air routes today, Kasarda says, are forming a kind of logistical Internet, with airports serving as the “routers” for circulating people and products around the clock. And their sphere of influence goes beyond obvious and familiar destinations such as Heathrow, LAX and JFK.

Here’s a look at three emerging air-based global trade hubs that will shape the global economy in years to come.

Zhengzhou, China

The device you’re using to read this is a big reason to consider Zhengzhou an important aerotropolis.
Foxconn, the company that manufactures devices for Apple, Sony, Nintendo and HP, moved here to be closer to Guangzhou Baiyun International Airport.

Cargo volume in and out of Zhengzhou grew by 80 percent in 2014, compared to just 4 percent on average in China.

While Zhengzhou is a provincial capital located inland in the Henan Province, the airport is set up as a special economic zone designed to cater to aerial logistics.

More than 20,000 workers today are building a second terminal and runway; by 2030, five runways are expected to handle 5 million tons of cargo and 70 million passengers a year.

By 2025, the surrounding population is expected to hit 2.6 million, double what it is today.

There has been speculation that Foxconn may one day launch its own cargo airline out of Guangzhou Baiyun, given its gargantuan shipping demands.

Dubai World Central

One of the world’s 20 busiest international cargo hubs, Dubai World Central, which covers almost 56 square miles with a planned capacity for 220 million passengers, has spawned a self-sustaining economic zone with districts customized for residences, commercial space, aviation, exhibition — even golf.

The airport itself sits adjacent to the Jebel Ali port and trade zone, the world’s largest manmade harbor, which supports massive manufacturing and provides tariff advantages.

“Because of its shipping position and low-cost, high-speed logistics, Dubai makes it possible to send shipments from China via ocean freight and move it onto planes to Africa,” Lindsay says.

DWC is also designed as an integrated, customs-bonded warehouse zone: Shippers can move cargo in a matter of hours.

Last year, DWC’s Al Maktoum International began a $32 billion expansion to bring its annual cargo capacity to 16 million tons per year.

“Dubai is seen by Chinese firms in particular as the most important place to be,” Lindsay says. “It’s a hub for northern and sub-Saharan Africa.”

Panama City

With the help of Copa Airlines and the $5.2 billion Panama Canal expansion, another aerotropolis is springing up around Tocumen, Central America’s busiest airport.

“[Copa] is very aggressive in bidding to become the Dubai of the Americas,” Lindsay says.

The so-called “Panatropolis” is only a two-hour flight from Miami, eight hours from Europe, and five and half from Rio de Janeiro.

Since it’s impossible with current aircraft to fly directly from northeastern Asia to the Southern Hemisphere, Panama will likely emerge as the hub for sending commodities out of South America to China in exchange for finished goods.

“Aerotropolises are becoming hubs for not only air transportation, but for ocean and ground transportation as well,” says Brian Littlefield, UPS marketing director for the aerospace segment. “Companies take advantage of these hubs by locating manufacturing and distribution near them to obtain inbound materials and provide finished goods to end customers faster and more efficiently.”

The planned project in Tocumen calls for four phases of development in 40 years’ time. It includes a Tocumen Airport City, which would house everything from trade and exhibition facilities to hotels, shopping, mixed-use commercial space, and residential areas with green space.

Panama also boasts a new $1.7 billion subway and oceanfront highway. Lastly, its economy has grown 8 percent in the last five years — double that of its neighboring countries.

As increasingly critical links in the global supply chain, these emerging logistics hubs will continue to influence the global economy for years to come.

For companies around the world, the challenge is tapping that influence to gain a competitive advantage.