Beyond Arrivals and Departures, Airports are on Their Way to Becoming a Cargo Distribution and Storage Center

On the other side of the wall, within the premises of the airport, there is a world of its own. The dynamics between the shipper and the logistics operator are not as obvious and simplistic, as Cesar Worms, real estate business manager at Viracopos, explains.

Worms explains that there is a paradigm in the logistics industry that makes many people understand that the space within airports is a place of passage and not storage. However, the developments within the premises can indeed be used for warehousing products.

"Cargo passes through the terminal. The areas within the airport can be developed into warehousing and logistics operation projects," he explains.

The business manager explains that after the nationalization of imported products, for example, the cargo goes to a warehouse, which is usually in the vicinity of the airport, but it does not need to undergo the entire transit if the distribution center is within the airport premises.

• Read more: Logistic Chaos - Operational Issues at Guarulhos International Airport Affect Supply Chain

Fundamentally, common sense asserts that airports are more expensive locations, a point Worms confirms but justifies. According to the legislation, after the end of the concession contract period, airport assets revert to the government; thus, these developments do not have a private owner.

So, what happens throughout the life of a real estate project within the airport? "The return on investment is the principal plus interest, like a fixed-income security. Thus, the amount equivalent to the asset's sale at the end of the cash flow. Every month, a assignment is made (equivalent nomenclature to rents within airports), and the owner receives the rent plus a portion of what would be the residual value of the property at the end of the contract; hence the assignment. This is the economic and financial question that justifies this higher value," he explains.

Additionally, factors such as location and efficiency directly impact the asking price of the developments. "How much is it worth to be inside the airport to streamline the distribution logistics operation? This is something very difficult to quantify," he questions.

In Viracopos, being an international airport, 38% of the current cargo is imports, 29.5% is exports, and 27% is domestic cargo. Despite the large volume, the space is still not sufficient.

"We see a very good opportunity regarding cargo volumes and demand for warehouse spaces," he concludes.