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OM in the News: The Memphis and Louisville Aerotropolises

November 13, 2013
More than just a hub

More than just a hub

“After most Memphians have gone to bed and before they switch on their coffee-makers,” writes The Economist (Nov. 2, 2013), “150 cargo jets land at Memphis International Airport and take off again.” They have no passengers, but some planes are able to carry 225,000 pounds (102 tons) of cargo non-stop from Tennessee to Shanghai. Such flights make Memphis the world’s 2nd busiest airport by cargo volume (after Hong Kong). Around 10,000 people work the FedEx overnight shift, sorting 1.5 million packages.

Memphis calls itself America’s “aerotropolis,” referring to the title of a recent book by Kasarda and Lindsay. The book argues that cities of the future, and their economies, will increasingly be built around airports. We open Chapter 8, “Location Strategies,” with a definition of aerotropolis as: “an airport integration region, extending as far as 60 miles from the inner cluster of hotel, office, distribution, and logistics facilities.”

Memphis’ air-cargo operations produces a total economic output of $22.1 billion and supports 132,000 jobs. Louisville, Kentucky—home to the hub of FedEx’s chief rival, UPS—has a similar story. Louisville’s 2 airports are responsible for 9% of all jobs in the Louisville area.

The carriers have in turn attracted companies that profit from being near a direct mail hub. Some are retailers: Zappos, an online shoes and clothes store, has a huge distribution center there. CaféPress, another online seller, moved its headquarters from California to Louisville, netting it millions from cost savings and later cutoff times for orders. Louisville claims that since 1993 more than 150 firms have moved there to be near the UPS hub. These include health care outfits such as the National Eye Bank Center, which stores corneas for ocular surgery, and Oxford Immunotec, a medical diagnostics firm, which moved its laboratory from Boston. Now Oxford can guarantee that blood samples from almost anywhere in America can get from patient to lab within 32 hours.

Classroom discussion questions:

1. Why is the aerotropolis concept a location strategy factor?

2. Identify some other cities in the world that fit this definition.

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