This article - the second in a series of three - looks at how the air cargo industry's footprint in Anchorage expands as the volume of goods going in and out of China grows.

Weekly air cargo service between the United States and China is expected to nearly triple by April over the same time last year, with almost 80 percent of the new flights landing at the Ted Stevens Anchorage International Airport while on their way to and from China.

And that's just the beginning.

Air cargo activity between the United States and China is expected to grow faster than any other U.S. airfreight market over the next 20 years, according to the U.S. Department of Transportation.

MergeGlobal, an industry consulting firm based in Virginia, forecasts that U.S. airfreight bound for China will grow an average of 7 percent a year between 2003 and 2008, while China's airfreight to the United States will increase by nearly 10 percent a year.

MergeGlobal predicts air transport of small packages between the two countries during the same five-year period will grow by an annual average of more than 10 percent.

To meet the demand, the United States is scheduled to grant 111 additional weekly cargo flights to U.S. companies by 2009, based on an aviation agreement it signed with China in mid-2004.

Prior to the new agreement, three U.S. companies - FedEx, UPS and Northwest Airlines - operated 20 weekly cargo flights to China. The United States has now increased these airlines' weekly flights to China and added Polar Air Cargo to the U.S.-China airfreight market, for a total of 58 available flights by April.

A Chinese paramilitary officer pedals by a FedEx plane in Beijing, China, in 2003. Anchorage is poised to benefit as trade between the United States and China grows, and an agreement takes effect allowing more cargo flights between the two nations. Weekly cargo flights between the two countries are expected to almost triple in April with nearly 80 percent of those flights landing in Anchorage. AP Photo/Ng Han Guan

The airlines' new flights are expected to bring an additional 62 cargo landings to the Anchorage airport each week, increasing the airport's weekly cargo landings by about 10 percent, airport director Mort Plumb said.

Some of the cargo planes will stop in Anchorage on their way to and from China, while others may depart the United States from Anchorage and continue on to Europe after landing in China.

Plumb said the additional cargo landings will generate at least $5 million in annual airport revenues from landing, parking and other fees as well as increase demand for fuel and airplane parts.

Hotels, malls and taxi services will be some of the many local businesses to profit from the airport's increased activity as the airlines hire additional handlers and more pilots fly through Anchorage, Plumb said. "The real important impact is to the surrounding community and to the state of Alaska."

The new flights may also bring new businesses to Alaska.

The prospect of reducing the time it takes to transport a business's product can often entice the business to relocate or begin operations near an air cargo hub, said Dave Kevern, vice president of worldwide services for FedEx.

Reducing transport time is particularly important for businesses manufacturing high-value, time-sensitive products like cell phones, pharmaceuticals and even trend-setting clothing that has a short shelf-life. These types of goods make up more than 50 percent of what FedEx transports, Kevern said.

For Anchorage-based Dat/Em Systems International, getting its mapping software and hardware quickly to customers is a key part of its operations, marketing director Sunny Wilster said.

Operating near the Anchorage airport enables Dat/Em to directly ship its product to Asia, which makes up about 40 percent of Dat/Em's business, she said. "Anchorage being the gateway to Asia is very convenient for us."

Dat/Em is scheduled to begin distributing its product in China this year, said Jerry Shively, the company's international sales director.

"China is the largest market in the world. Just to get a little bit of that market would be beneficial to any company," he said. "One percent of it would be enough for us."

Plumb believes more local businesses like Dat/Em will begin exporting to China as air-cargo service between the Anchorage airport and China ramps up, he said. "I think this will have a multiplier effect for opportunity."

The new aviation agreement between the United States and China also allows China to grant new weekly flights to Chinese companies flying cargo planes to the United States.

China is allowed to grant 111 additional weekly cargo flights to Chinese companies by 2009. The Chinese government has yet to begin awarding the new flights.

Many of these new flights could land at the Anchorage airport, Plumb said. "There is an equal opportunity for China on the other side. This is all good for us."

Bill Mosley, a spokesman for the federal transportation department, said the United States' ultimate goal is to completely liberalize the market, putting an end to the current system that limits the number of flights commercial airlines can make between the United States and China.

"There is already unmet demand," he said. "There is a lot of competition for the new rights that we are putting into effect."

The United States and China have agreed to meet next year to discuss expanding the skies between the two countries, Mosley said.

At FedEx's 500,000-square-foot hub in Anchorage, employees handle every package originating from North and South America that is bound for China, said Steve Barber, a company spokesman.

All of the packages FedEx transports from China through Anchorage are cleared by U.S. customs before traveling to their final destinations.

About 90 percent of the packages are cleared as FedEx's planes cross the Pacific Ocean while the remainder are inspected by agents working in the Anchorage facility, said Mike Higley, managing director of the company's Alaska operations.

"This is a major consolidation point," he said. "We have to have Anchorage to handle Asia and the world."

With so many new flights to China stopping in Anchorage, Higley said he may have to increase his staff of about 1,200 employees to handle the more than 1 million pounds of additional cargo that could pass through Anchorage each week.

Almost all of the UPS planes flying between the United States and China land in Anchorage, spokesman John Wheeler said.

In addition to the 18 weekly flights UPS will fly this year between Shanghai and the United States, it has petitioned the federal transportation department for three more weekly flights to China.

While Wheeler declined to comment on whether the new flights would increase the Anchorage hub's 376-person staff, he said "We are a labor-intensive business and as our volume grows so does our employee base."

The volume of cargo UPS transported out of China in the fourth quarter of 2004 increased 125 percent compared to the same period in 2003, according to a UPS Jan. 27 news release.

"As the China economy grows it becomes such a huge lure for business and it can't be overlooked. They need to ship things in and out, like everything else," Wheeler said. "We see nothing but opportunity for China. We think that all multi-national businesses have to have China as a major component of their forward-looking strategy."

China is also a big part of Northwest Airlines' growth strategy, spokesman Thomas Becher said.

With the expectation of the cargo Northwest transports in the belly of its passenger planes, all of its cargo traveling between the United States and China passes through Anchorage, Becher said.

By April, the airline is scheduled make eight weekly cargo flights to China and it could add eight more flights next year.

In gaining nine weekly flights to China, Polar Air Cargo said in a news release last year that it planned to fly between Shanghai and five U.S. cities, including Anchorage.

The airline's increased landings in Anchorage would generate about $900,000 in annual airport fees, said Alan Caminiti, a spokesman for Polar's parent company, Atlas Air Worldwide Holdings Inc.