Humboldt County Economic Development

Final Report Interns: Jason Jones and Madison Payne

Supervisor: Jacqueline Debets

Final Report

Executive SummaryA freight study was conducted to determine local shipping demand, better understand the shipping needs of local businesses, and identify carriers operating in the county. A key goal of the study was to uncover whether a true disparity exists between local business’s shipping needs and the service being allotted to them via shipping carriers operating in Humboldt County. The study included research on freight trends in the area, interviews with a number of local business and political leaders, and a market survey in order to better understand the logistics of shipping products out of Humboldt County. Findings and recommendations were presented to multiple stakeholder groups.

Project ObjectivesThe purpose of this project was to analyze current shipping demand as well as project future shipping demand in order to provide shipping carriers a compelling business reason to increase capacity and to help local businesses increase their shipping efficiency. Final deliverables included a presentation to the Airport Advisory Committee as well as a written report of our findings that was distributed to key stakeholders.

Methodology Methodology used to complete this project included independent research, collaboration with local business and political leaders, collaboration with local businesses and carriers, collaboration with academic faculty, and data analysis.

Project Plan

Overview

To accomplish the project objectives a project plan was developed consisting of three stages:

I. Market Research

II. Business Research

III. Freight Survey

I. Market Research

This portion of the project plan was focused on developing an understanding of the freight industry as a whole but in particular how the freight industry operates within the county. The initial stage of the project plan focused heavily on independent research, collaboration with carriers and local business and political leaders, data analysis, and presentation development.

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i. Freight Study Development

The first stage of the project plan included extensive research on previous freight studies, particularly ones that had been conducted in Humboldt County. During our initial research we discovered two local freight studies that had been published by the California Department of Transportation in June 20121 and by the Humboldt County Association of Governments in October 2013.2 These studies provided information about some of the logistical problems carriers face when transporting freight in and out of the county. Phone and email interviews were also conducted with local business and political leaders for suggestions and additional information on how the freight industry operates in the county. These local business and political leaders included David Ravetti (CalOre pilot), Emily Jacobs (Program Coordinator at Humboldt County Aviation Division), Alex Stillman (Airport Advisory Committee) and multiple CalTrans employees.

ii. Identifying Carriers

The second phase in the market research stage of the project was to identify the carriers transporting freight in and out of the county. Carriers operating in the county were identified through independent research, emails to local businesses, and data provided by Emily Jacobs.

iii. Understanding Carrier Services

After successfully identifying the major carriers operating in Humboldt County phone and email interviews were conducted with shipping managers at each company to better understand the services they provide in the county.

iv. Determine Freight Capacity

The fourth phase of the market research was to determine the amount of freight capacity currently available in Humboldt County and the increase in demand that would be required to increase current capacity. Through independent research and information provided from interviews with shipping managers, the capacity currently offered by the major carriers in the county and the growth that would be required to increase that capacity were determined.

v. Determine Freight Trends

The fifth phase of the market research focused on determining and analyzing historical freight trends within the county. Emily Jacobs provided us with raw data about the volume of freight being transported in and out of both the Arcata-Eureka Airport and Murray Field Airport. That data was used to run an analysis that determined airfreight volume trends over the last five years within the county.

1http://www.dot.ca.gov/hq/tpp/offices/ogm/district_freight_fact_sheets/updated_092412/District_1_GM_Fact_Sheet_061412.pdf2 http://hcaog.net/sites/default/files/7_goods_movement_10.01.13.pdf

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vi. Presentation Development

At the conclusion of the market research stage a power point presentation was created about the freight industry to share with key stakeholders. The presentation focused heavily on the information we learned through the independent research, information provided by shipping managers at the key carriers, and the historical freight trends we discovered during the analysis of the data provided by Emily Jacobs.

II. Business Research

The business research portion of the project plan was designed to gain a better understanding of the freight industry from the perspective of local businesses. The second stage of the project plan consisted primarily of collaboration with local businesses and carriers.

i. Collaboration with Businesses

The first phase of business research involved work with local businesses to understand the logistical problems of transporting freight in and out of the county. Findings about the freight industry were presented to a number of Humboldt County businesses and a request for recommendations on how to proceed with the study. These businesses included Kokatat, Wing Inflatables, the Blood Bank, HumboldtMade, and Wild Planet. Feedback and suggestions were received from each of the businesses. In addition, some of the misconceptions businesses had in regards to the availability of airfreight within the county were identified.

ii. Collaboration with Carriers

After learning more about the shipping needs of local businesses additional inquiries were made with the contacts made at the local carriers to inquire about possible solutions. In addition, a rough estimate of the cost of scheduling a charter flight out of Murray Field was determined, contact information for people working in sales at various carriers was received, and more information was obtained as to what the carriers would need to potentially provide new services to the county.

III. Freight Survey

The freight survey portion of the project plan focused on developing a market survey that would help us to determine the shipping needs of local businesses, their projected growth and satisfaction levels. The third and final portion of the project plan consisted of independent research, survey development, collaboration with professors at Humboldt State University and survey analysis.

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i. Survey Development

Upon completion of the market and business research stages of the project, a market survey was developed. The purpose of the survey was to capture data on current shipping demand, project future demand and determine satisfaction levels of businesses with their current carriers. The survey was developed after extensive research on past freight surveys and by using information gleaned in interviews with local businesses and shipping carriers. Collaboration with Jacqueline Debets (Humboldt County Economic Development Coordinator) and a number of Humboldt State faculty members including Professor Chris Gaines, Dr. Sarita Ray Chaudhury and Dr. David Sleeth-Keppler helped ensure the survey captured the desired information.

ii. Survey Distribution

The survey was distributed to 303 local businesses in various sectors by Jacqueline Debets. HumboldtMade and Alex Stillman also distributed the survey to an undisclosed number of local businesses.

iii. Survey Results

48 survey responses were received over the course of a two and a half week period and results were reviewed and analyzed. Key trends and patterns used to support our final recommendations were obtained during this stage of the project.

Accomplishments

I. Market Research

i. Identified Major Carriers and Determined Carrier Services

Through research, major carriers operating in the county and the shipping services they provide were determined.

Ameriflight – AirfreightAccording to the Blood Bank and members of the Airport Advisory Committee, Ameriflight was transporting freight in and out of the county via air. They were operating both as a part of UPS and chartering a private aircraft to transport bank documents and medical materials for various testing labs until leaving the county in early March 2015.

Conway – Truck freight According to Carson Robertson (Shipping Manager at Conway in Eureka) Conway is currently transporting freight in and out of the county via truck.

FedEx – Truck freightAccording to a FedEx employee at the Arcata freight hub FedEx is currently transporting freight in and out of the county via truck.

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Redding Aero – Airfreight According to Victor Clarke (Director of Operations at Redding Aero) Redding Aero is currently leased under UPS to transport freight in and out of the county via air. They have a 150 lb. weight limit on parcels they transport.

North Coast Mercantile – Truck freight According to Jeff Huffman of Wild Planet the North Coast Mercantile is currently transporting goods out of the county via truck. They currently haul products Monday – Friday using one refrigerated truck cooled to thirty-eight degrees Fahrenheit. They load product around 7:00 PM and arrive in San Francisco around 2:00 AM where the goods are typically loaded onto aircrafts by 5:00 AM. Businesses interested in potentially working with North Coast Mercantile should contact Matt Rushner at (707) 445-4910, Ext 304.

SkyWest – Airfreight According to the data provided by Emily Jacobs and dialogue with members of the Airport Advisory Committee SkyWest is currently transporting a small amount of freight in and out of the county via air.

UPS – Truck freightBased on a conversation with the manager at the UPS Customer Center in Eureka UPS is currently transporting freight in and out of the county via truck.

West Air – AirfreightAccording to Tim Abbott (Dispatch Manager at West Air) West Air is currently leased under FedEx to transport freight in and out of the county via air. They have a 140 lb. weight limit on parcels they transport.

ii. Determined capacity

Through independent research and during our conversations with the shipping managers at the major carriers, current freight capacity for five major carriers was determined. How each company determines capacity and the growth that would be required to increase current capacity was also obtained.

Conway – Truck freight - Current Capacity: 4 trucks- How they determine capacity: Conway estimates demand at the corporate level where they have analysts that analyze historical trends and current economic conditions.- Growth needed to increase capacity: Conway would be willing to increase capacity and add another truck if there was a 15-20% increase in current demand.

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FedEx – Truck freight- Current Capacity: 3 trucks - How they determine capacity: FedEx estimates demand at the corporate level where they have engineers that analyze historical data, freight volume throughout the year and current economic conditions. - Growth needed to increase capacity: FedEx would be willing to increase capacity and add another truck if there was a 20-25% increase in current demand.

Redding Aero – Airfreight - Current Capacity: 2 aircrafts (4,200 to 5,100 lb. of capacity)- How they determine capacity: The amount of capacity that Redding Aero provides is determined by the amount of freight inbound rather than outbound. - Growth needed to increase capacity: UPS/Redding Aero would be willing to increase capacity with a 1250-1500% increase in current demand.

UPS – Truck freight- Current Capacity: 30 package cars- How they determine capacity: UPS estimates demand at the corporate level and sends the information to the regional levels weekly. Capacity is based on trends and automated demands when customers submit orders. - Growth needed to increase capacity: UPS would be willing to increase capacity and add an additional package car for every 3-4% increase in current demand.

West Air – Airfreight- Current Capacity: 3 aircrafts (7,500 to 10,200 lb. of capacity)- How they determine capacity: FedEx determines West Air’s capacity at the corporate level where they have engineers that analyze historical data, freight volume throughout the year and current economic conditions.- Growth needed to increase capacity: FedEx/West Air would be willing to increase capacity and add an additional aircraft with a 75-100% increase in current demand.

iii. Determined Air Freight Trends

Historical airfreight trends in the county were determined by analyzing the freight volume data provided by Emily Jacobs. In addition, the current trend for airfreight being transported out of the county as well as the trend for airfreight being transported into the county was identified.

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Final Report

2010 2011 2012 2013 20140

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Total Freight Enplaned (ACV, EKA)

Year

Lbs

of fr

eigh

t

Figure 1: The total amount of outbound freight that was transported out of the Arcata-Eureka and Murray Field airports between 2010-2014.

Trends for airfreight enplanedKey facts (2010-2014)- Since 2010 the County on average has had a 5.93% decrease per year in the amount of freight enplaned. - In 2011 there was 1,100,284 lb. of freight enplaned in the County which was the most during the five year period. - In 2014 there was 853,066 lb. of freight enplaned in the County which was the least during the five year period.- Since 2010 the County on average has enplaned 975,591 lb. of freight each year. - Growth peaked between 2010-2011 when the County saw a 2,748 lb. (0.25%) increase in the amount of freight enplaned. - Growth hit its lowest point between 2011-2012 when the county saw a 166,072 lb. (15.09%) decrease in the amount of freight enplaned.

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2010 2011 2012 2013 20141,150,000

1,200,000

1,250,000

1,300,000

1,350,000

1,400,000

1,450,000

1,500,000

1,550,000

1,600,000

Total Deplaned (ACV, EKA)

Year

Lbs

of F

reig

ht

Figure 2: The total amount of inbound freight to the Arcata-Eureka and Murray Field airports between 2010-2014.

Trends for airfreight deplanedKey facts (2010-2014)- Since 2010 the county on average has had a 1.31% increase per year in the amount of freight deplaned. - In 2014 there were 1,533,001 lb. of freight deplaned in the county which was the most during the five year period. - In 2011 there were 1,305,304 lb. of freight deplaned in the county which was the least during the five year period.- Since 2010 the county on average has deplaned 1,451,611 lb. of freight each year. - Growth peaked between 2012-2013 when the county saw a 132,454 lb. (10.15%) increase in the amount of freight deplaned.- Growth hit its lowest point between 2011-2012 when the county saw a 197,920 lb. (13.17%) decrease in the amount of freight deplaned.

Airfreight Trends AnalysisAnalysis of data on freight volume between 2010-2014 provided the large disparity between the amounts of freight deplaned and the amounts of freight enplaned. During the five year period analyzed, the amount of freight deplaned at its lowest point (2012, 1,305,304 lb.) was significantly greater than the peak year for the amount of freight enplaned. (2013, 1,100,284 lb.) The amount of freight enplaned has been trending downward every year since 2012 while the amount of freight deplaned has been trending upward every year since 2012. A significant increase in the volume of freight processed

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at Murray Field and a significant decrease in the volume of freight processed at the Arcata-Eureka Airport was also noted. During the market research phase of the project multiple carriers confirmed that this was due to Murray Field’s more central location.

iv. Developed power point presentation

At the conclusion of the market research portion of the project plan a fourteen-slide presentation focused on the airfreight industry in Humboldt County was presented to the Airport Advisory Committee to share project progress to-date.

II. Business Research

i. Successfully Collaborated with Local Businesses

Blood BankDuring a meeting with employees of the Blood Bank to discuss their shipping needs they expressed their dissatisfaction with the reliability of the carriers currently transporting airfreight out of the county and their need to be able to ship on different schedules than most businesses. Contact information for the North Coast Mercantile was provided as a potential shipping alternative for the Blood Bank and their temperature sensitive products.

Business PanelThe initial power point was updated and included information about the benefits of switching to airfreight, sales contact information for three major carriers, and information about a planned survey. A physical copy was presented and distributed to Kokatat, Wing Inflatables, the Blood Bank, and HumboldtMade who obtained permission to share it with other local businesses. Feedback from the four businesses suggested a focus on smaller-sized local businesses.

Wild PlanetJeff Huffman (Eureka Dock Manager) was interviewed and shared his opinion that a majority of local businesses are currently unaware of the airfreight capabilities available to them. He also shared that Wild Planet anticipates they will ship roughly 50,000 lb. of fish during the summer months as various fishes become available. He was provided research regarding airfreight capabilities in the county as well as contact information for three airfreight carriers. In exchange, he provided the contact information for the North Coast Mercantile and information about the services they offer.

ii. Successfully collaborated with carriers

Redding AeroThrough our conversations with Victor Clarke (Director of Operations at Redding Aero) potential alternatives for businesses with unique shipping needs were identified. Clarke shared that his company was willing and able to add another flight to cater to businesses with different schedules or unique requirements or that required different destinations

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than currently being provided. Clarke explained that a charter flight would vary in cost depending on a number of different factors but was eager and willing to work with Humboldt County businesses to ensure their needs are met. He authorized sharing his contact information in a presentation to the business panel and Wild Planet.

FedExBased on conversations with Rob McAndrew (Feeder Aircraft Advisor for FedEx) the changes in infrastructure required to add a 250 lb.+ overnight freight service were shared. In addition, he stated that a large reinforced aircraft would have to be flown into the Arcata-Eureka Airport and a pallet jack and forklift would be required to load the goods, which is not currently part of their standard loading process in Humboldt County. Finally, he provided a sales contact, which we shared with Wild Planet and the businesses panel.

III. Freight Survey Results

i. Satisfaction Levels

Analysis of the survey results demonstrated that 72.72% of businesses surveyed are satisfied with their primary carrier’s ability to meet their shipping needs, while 13.64% of businesses surveyed are neutral and 13.64% are dissatisfied.

ii. Current Carriers

The three most common carriers are UPS (65.91% of respondents), FedEx (59.09%) and USPS (59.09%) respectively. Other carriers include Conway, SkyWest, Western Web, Watkins Shepard, Oak Harbor Freight, B&G Trucking, A-Tech, E.G. Ayers, USF Reddaway, Tractor Trailer Service, Eureka Trucking, Veritable Vegetable and other private or independent drivers.

iii. Package Types and Current Frequency

The most typical package shipping weights are 1-5 lb. (44.4%), 5-10 lb. (35.56%), 11-15 lb. (22.22%), and 150 lb. + (26.67%). The most common shipping frequencies are 2-4 times per week (41.86% of respondents), weekly (20.96%), monthly (16.28%) and daily excluding weekends (16.28%).

iv. Perishable Goods and Same Day Delivery

Analysis of the survey results identified that 25.53% of businesses surveyed do ship perishable goods. Of those respondents, 80% would consider switching to airfreight, while 20% would not. Regarding same-day delivery, 19.15% of businesses surveyed do utilize same-day delivery. Of those respondents, 6.38% require same-day delivery weekly and 12.77% require same-day delivery monthly. Additionally, of the businesses surveyed that do utilize same-day delivery 44.44% would consider switching to airfreight while 55.56% would not.

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v. Current vs. Ideal Delivery Times

Figure 3: The graph on the left represents the current delivery times of businesses surveyed. The graph on the right represents the ideal delivery times for their shipments.

Current delivery times include same day (2.27% of respondents), overnight (4.55%), 1-2 days (20.45%), 3-5 days (56.82%), 5-7 days (11.36%) and 7+ days (4.55%). Ideal delivery times include same day (0% of respondents), overnight (15.91%), 1-2 days (45.45%), 3-5 days (34.09%), 5-7 days (11.36%), and 6-7 days (2.27%).

vi. Projected Increase in Volume

Projected increase in shipping volume in the next calendar year was determined. Of the businesses surveyed 31.82% project their shipping volume to increase by 1-10%, 15.91% of respondents project their shipping volume to increase by 11-20%, 4.55% of respondents project their shipping volume to increase by 31-40%, and 4.55% of respondents project their shipping volume to increase by 61-70%. Additionally, 4.55% of respondents expect their shipping volume to decrease, while 2.27% of respondents expect their shipping volume to increase by over 100%.

vii. Switching to Air Freight

Of the businesses surveyed, 41.46% said that they would consider switching to airfreight. On a 1-7 scale, 7 being most important, the factors that would influence the businesses to make that transition were faster delivery speeds (4.54 weighted average), cost going down (4.53 weighted average), consumer or market requirements changing (4.22 weighted average), and better reliability (4.11 weighted average).

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Recommendations

i. Airport Advisory Recommendations

Publication and increased accessibility regarding shipping rates, current capacity, and delivery times would substantially add to the current lack of awareness by small to mid size local businesses regarding airfreight options. An annual report listing the aforementioned and typical seasonal patterns could influence businesses to increase shipments via airfreight. Air carriers should work with the Airport Advisory Committee to publicize and distribute this information to the business community.

ii. Carrier Recommendations

Representatives of primary carriers should hold a yearly panel to better understand the local business’s needs and field questions so as to extinguish the discrepancy between perceived and actual services and ultimately establish a communication channel between small to mid size businesses and shipping carriers.

iii. Business Recommendations

Local businesses should seek information regarding availability of airfreight. Small to mid size businesses who ship perishable items and/or require same-day delivery should form a consortium so as to increase their overall shipment size and influence air carriers. Local businesses involved in retail might consider partnering with Amazon Prime to guarantee 2-day delivery of all shipments and increase airfreight volume. Businesses with unique shipping needs should seek out businesses with identical needs and collaborate their shipments. Specifically, the Blood Bank might seek out seafood carriers during peak times as frequent and reliable shipments at cold temperatures are required for each and thus could serve to influence carriers and decrease shipment costs for each in comparison to shipping individually.

ConclusionThere seems to be some discrepancy between the perceived capacity available in

the county and the actual capacity provided by carriers. Carriers are willing to work with local businesses in order to ensure their needs are met and are open to adding capacity if there is enough demand to support it. Satisfaction levels of the majority of the businesses surveyed were high which validated that most local businesses are satisfied with the current shipping services offered in the county.

The downward trend in the amount of freight being transported out of the county via air can largely be attributed to the fact that the majority of the goods that local businesses are shipping do not require one to two day delivery. However, there does appear to be some room for growth in airfreight volume as the majority of businesses surveyed said their ideal delivery time is one to two days. In order for businesses to

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switch to airfreight they would like to see cheaper prices, better reliability, or would need their customers to request faster delivery times.

There also appears to be an opportunity for businesses with unique shipping needs such as medical labs and seasonal food and flower companies to consolidate their shipments when working with carriers in order to increase their influence. Because Humboldt County is a unique geographical area it is going to take a joint effort between local businesses, carriers, and political institutions to truly maximize shipping efficiency and lower shipping costs for local businesses.

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