They'll see the Bohai Economic Zone, and its place within the larger
The delegation from
"Because of the reach of the 777, where it can get into the U.S. mainland out of Asia without a stop in Anchorage, hit the same delivery time and have four to six hours in the middle you don't have to spend refueling and so on, the customer at the front end has an extra two to four hours," explains Tom Schmitt, president and CEO of FedEx Global Supply Chain Services.
Or, as FedEx Chief Information Officer Rob Carter once told Fortune, "We engineer time … I believe that as the world shrinks and changes, we offer solutions that allow you to engineer time to make things happen along time schedules that weren't possible."
"Think about retail and e-tail business," says Schmitt during a group interview with Memphis-Shelby County Airport Authority Chairman Arnold Perl and Memphis Regional Chamber President and CEO John Moore. "You have a few more hours of orders you can accommodate that same day.A lot of co-location here in
Location, Relations, Negotiation
In their 2007 book "Simple Solutions," Schmitt and Perl recount how the airport authority saw the light when FedEx needed more space for hangars, ramps and sorting facilities, but was landlocked because of the Tennessee Air National Guard's facility for C-17 cargo jets on an adjacent 103-acre (41.7-hectare) parcel.
"It looked like a stalemate that would force FedEx to look for expansion at airports in other cities," they write.
But serendipity came into play, as the U.S. Air Force changed the mission of the Tennessee Air National Guard such that much larger C-5 jets would need to use the facility, which would require some $125 million in upgrades. However, the existing base did not have enough space to accommodate those C-5s while also providing the necessary protection required by all military bases since Sept. 11, 2001.
The Airport Authority stepped in and offered a solution: Use the $125 million in Air Guard funds to build a new base on a
But the $125 million, while enough to modify the old base, was about $100 million short of what was needed for a new base. So a simple solution was devised: FedEx Express would pay the difference, which would be used as a prepayment of rent for the old base for a period of 30 to 50 years. Negotiations took months, with the Airport Authority agreeing to be the contracting agent and manager for the $220-million project.
The situation was a reprise of sorts of FedEx's original choice of Memphis over Little Rock, Ark., for its startup hub, when the company was able to use some hangar space belonging to the Air National Guard.
Schmitt also serves as chairman of the board of the Memphis Regional Chamber, as well as chairman of the city's Aerotropolis initiative, launched two years ago after reading Dr. John Kasarda's favorable comments about
The Power of Numbers
The aerotropolis initiative is built on the area's "quadramodal" capabilities, says Perl, a longtime civic leader and labor lawyer who's a partner at Ford & Harrison, LLP. That means air, rail, road and water. The
In fact, "15" keeps popping up in
However, it was 16 distribution and logistics companies that either relocated or expanded in
Schmitt calls the aerotropolis an accelerator for FedEx's own critical inventory logistics business, "helping to provide the best modes for either central or forward-stocking location distribution." That division currently has more than 200
"The label of aerotropolis is a mandate," says Schmitt, praising the area's collaborative spirit. "We figure these things out together. That's the beauty of being in a place where what you do matters, that's small enough that connection happens."
After all, he says, FedEx founder Fred Smith didn't pick the city by accident. It was positioned ideally in terms of both
Schmitt's leadership of the Chamber's efforts is likened to running a FORTUNE 500 company by Chamber staff. He sees the aerotropolis initiative as "the pacesetter for all the other pieces of our economic development plan. It sets the standard for how high is up" when it comes to economic impact, and pulling along the Chamber's other initiatives in such areas as innovation, bioscience and music tourism.
"He's meeting with senior staff once a month. We have color-coded goals. He gets monthly status of our initiatives," says Jim Covington, vice president of logistics and aerotropolis development for the Chamber.
"There are FedEx employees we're able to call on if we have questions," says Amy Daniels, the chamber's director of communications.
"It's an amazing advantage to have, like going to the encyclopedia," says
"We're sitting on a gold mine, and we'd better take advantage of it," says Schmitt.
Striking that gold could be traced back to one flight: That Northwest/KLM flight that decided to be the first international passenger route to
John Moore says he asked Mike Levine, Northwest Airlines' president at the time, what it would take to get an overseas nonstop flight to land in Memphis, and was told that if he lined up commitments on a demanding punch list, Northwest would support the idea. Those requirements included building a new federal inspection services facility (with funding raised from outside the airport's residual lease agreement with its carriers); getting cargo and passenger commitments from companies and shippers; and getting written commitments from approximately a dozen top U.S. markets that would feed in to Amsterdam (home of the model airport city of Schiphol) as a destination.
Moore and his team managed to check off that punch list in a mere six months. Levine was astounded, says
"What made it show that was a peculiar combination of double-connect, single-connect and local traffic," says
Perl says the FIS facility became a model for how such a facility should function. And because of its linear design and the fact that the flight was the only one at first, "it was like private concierge service getting through customs," says
Central to the flight's inception, says Perl, was Northwest's groundbreaking alliance with KLM, protected by anti-trust immunity. And that in turn hinged on high-level government negotiations.
"Northwest invented the alliance technology," says
"That's why the aerotropolis concept is so important," he says. "For airport cities, those early on like us that have easy access to other parts of the world are going to be the assets that drive growth in our economies."
Perl says the parallels between
But just as important as the system implementation, if not crucial to it, is the enthusiasm with which it is embraced.
Fifteen years ago, when that inaugural flight from Amsterdam, nicknamed "Elvis One," touched down in Tennessee, international media were on hand to see 2,000 invited guests filling the airport, a dozen fire trucks celebrating with a traditional runway spray, and the cockpit crew waving U.S. and Netherlands flags out their windows as they taxied.
"When that plane came in," says Perl, "we imagined our future."