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Milan's expansion plans

Malpensa Airport – the biggest airport serving the Northern Italian economic hub of Milan – has ambitions to increase its cargo traffic. Helen Massy-Beresford learns how freight operators are already seeing the benefits of the site’s expansion

The operator of Milan’s Malpensa Airport, SEA Milano, has big plans for cargo growth and is working with the airport’s key operators to achieve them.


The operator is constructing three new cargo buildings that will process ‘made in Italy’ products including fashion, furniture, sports cars, machine equipment and leather goods, which form the bulk of the airport’s exports. The airport also handles imports of everything from fabrics to consumer electronics – Milan is already Apple’s Italian distribution hub.


SEA Milano’s Cargo Manager, Giovanni Costantini, says the airport operator has reserved space for three new cargo buildings, eventually seeing its current 500,000 tonnes per year of cargo doubling.


The first building is earmarked for FedEx and is due to be operational later this year. The second has been contracted to two cargo handling companies, WFS and BETA-TRANS. Construction was due to begin in January 2016, meaning the building should be ready for operations by the end of this year.


“In regards to the third building, we are dealing with some possible customers but have not yet signed a contract. We will plan the construction as soon as we have signed a contract with a future tenant,” Costantini says.


In September, two handling companies already operating in Malpensa – B3/MLE (Malpensa Logistica Europa) and Alha – opened new pharmaceuticals facilities. “Each of them built a dedicated pharmaceutical warehouse around 600/800m2 and both of them have been rewarded with IATA CEIV pharma certification,” Costantini says.


“Since then we have seen an expansion in the pharma traffic in Malpensa,” he says, adding that although it will never be a big part of the airport’s cargo business, pharmaceuticals could be an interesting addition. “We think it's a priority for us and for the operators next winter,” he says.


Construction is well underway on the 15,000 m2 facility for FedEx, the  first of the three new buildings, says Costantini. “The work is in progress and is perfectly on time. We plan to deliver the building to FedEx before the end of July 2016. This building is three times the size of FedEx’s present warehouse and will allow the company to gradually increase its cargo volume, giving it enough space to grow into the future,” Constantini says.


Vito Bernardi, Managing Director, Properties and Fleet for FedEx EMEA, explains the importance of Malpensa to the carrier’s operations – not just in Italy but for the broader southern European region.


“Malpensa is in the centre of the most economically developed area in Italy; we use it to gather all the shipments from different airports in Italy into Milan,” he says.


From Malpensa, shipments travel either directly to the US on a Boeing 777 flight to Memphis, TN, or to Paris Charles de Gaulle, France. “Paris-CDG is where we have our largest international hub at FedEx. From there we can reach every corner of the world. Malpensa is really the centre of our activity for southern Europe and Italy; it's very well positioned to serve that mission,” says Bernardi.


The company has been operating from Malpensa for 20 years but needed more space. “We needed to expand the area. We decided not to do it in the same building, but rather go for a brand new one in an area that SEA targeted for these kinds of activities,” he adds.


The operator plans to be fully up and running in the new building by October 2016, in time for the peak pre-Christmas season, Bernardi says. “We don't really have the luxury of postponing it. I'm glad to see that the airport understood that.”


Bernardi says FedEx’s business in Italy is concentrated among small and medium-sized enterprises because of the way the Italian economy is made up. “This is the fundamental part of the Italian economy. We have a small presence with a few very large companies, but we have a bigger presence overall with small and medium-sized enterprises. They have always been trying to access the international market and the Italian economy is very open to international trade. We can help them get to the other side of the world quickly and reliably. That is really a key element for their development.”


Bernardi says fashion houses and textile manufacturers, as well as makers of tiles and furniture, are key customers who put particular value on FedEx’s express service.


DHL Express also has big plans in Milan, where it has already made a significant investment, says Country Manager for Italy, Alberto Nobis. “Operating in Malpensa gives us the ability to relieve stress from our main national hub at Bergamo Orio al Serio airport,” where there were capacity constraints.


The company now has six Malpensa flights to add to the 26 through Bergamo. “Malpensa therefore allows us to keep pace with fast growing volumes, focusing on customers in north-west Italy with much better cut-off times,” Nobis says.


“We intend to further extend our operations at Malpensa, which we definitely deem as strategic, with an investment of €90.2 million in a new site in SEA’s new cargo area. The new site will allow us to absorb the expected growth and increase flight connections.  We are actually analysing the opportunities for an extra direct flight to the US,” he adds.


DHL Express expects to complete the project during 2017. It also plans to connect Malpensa with its eight gateway airports around the country.


“In terms of ground operations, our aim will be to combine typical preparation and consolidation steps which are currently performed in local service centres. The north western metropolitan area of Milan, including the provinces of Como, Varese and Novara, will benefit from these process synergies and the redesign,” says Nobis.


Operations at Malpensa will also allow DHL Express more flexibility when it comes to fine-tuning processes that can cut the preparation and handling time of shipments, fitting in better with air and road schedules as well as allowing for earlier deliveries and later pick-up/cut-off times.


Expansion plans at Malpensa will make for a near-doubling of the area of operations, from the current 27,000m2 to 46,000m2, Nobis says. “The new warehouse will be LEED certified with a total surface area of almost 15,000m2.” The company plans to install a shoe sorter that can process 15,000 items per hour, up from the current 4,000.


“Thanks to this new sorting technology we will be able to combine international and local domestic services, offering our customers in the area a better service in terms of efficiency and efficacy. We will aim at handling between 12,000 and 34,000 pieces per day and improving pick-up and delivery times by more than an hour,” he adds.


The plans form part of a wider investment, Nobis says: “All in all, in the next five years DHL will invest approximately €300 million in Italy to guarantee continuous innovation and the best possible service for our customers, both in Italy and around the world. The magnitude of the investment in Malpensa is designed to allow future growth and scalability. Malpensa will therefore play a much bigger role above and beyond its mission to serve the Italian market, becoming a key European hub that will supplement the current set-up which includes primary hubs in Leipzig, Germany; East Midlands, UK; and Brussels, Belhium, as well as the entire European network of 85 hubs and gateways


While expansion in cargo facilities is giving today’s operator added benefits, Costantini says the investment in facilities should, in the longer-term, lead to more business for the airport as a whole. This is partly thanks to its geographically strategic position in the heart of Italy’s economic centre, not far from the Swiss border.


“Malpensa is well-positioned,” adds FedEx’s Bernardi. “I know that the airport is making an effort in that direction to make it even stronger for the future. Malpensa is really the key location if you want to enter the Italian market and allow exports. With this location, which is much larger than before, we plan to be able to serve our customers well for the foreseeable future. We don't expect we'll need more space than this because it has already tripled the size of what we had before.


“However, you don't simply invest for a month or a year – you do it for a few years. Because of the automated tool we are going to have, we feel confident that it's going to last quite a long time. We don't know what the future will bring, but we are extremely positive about this development. Sorting capacity will be 20,000 packages per day; in our industry it's extremely important to be fast and reliable,” Bernardi explains.


The company’s new facility is in a newly developed area in the southern part of the airport. “Before, we were in the north part, which is a bit more congested,” Bernardi says. “Now we are moving to the south, which is well connected to the external highways and also to the runway. This position is also south of the existing cargo area – something that will be another advantage.”


The Malpensa investments already look to be paying off for the airport’s cargo operations as a whole. While Italy’s economy may be showing tentative signs of recovery, Malpensa has chalked up more impressive growth in recent months, Costantini says.


“In Milan, we had the World Expo 2015, something that helped cargo traffic. There was a good quantity of cargo, especially for the last-minute shipments coming from foreign countries that had exhibitions in the Expo. It was a good amount. Despite the fact that the Italian air cargo market is more or less flat [in 2015 the increase, compared with the previous year, was just 1%] in Malpensa we have increased by 9%.”


On 9 December, the airport beat the maximum quantity of cargo in SEA’s history, Costantini adds. “The record was set in 2007 when we more or less had 470,000 tonnes for the whole year. The same amount was reached in 2015 by 8 December, with the total amount of cargo moving through Malpensa last year being more than 500,000 tonnes.”


Looking ahead, Costantini believes 2016 will generally be a stable year. “We do not expect a great increase compared to 2015. There will be a 3% or 4% increase that will roughly align to the market. But of course in 2017, when we have FedEx fully operating, we hope to attract more traffic. 2016 will be the waiting year – we will wait for 2017 for a great increase.”


With key operators’ ambitions well on the way at Malpensa, SEA is looking ahead to the next stage of its cargo plans. “We hope to make a decision to contract the third new building by March 2016,” Constantini concludes.

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