Professional Documents
Culture Documents
TheAirCargoSystem
CargoesusingAirTransport
TheEconomicsofAirCargo
AirCargoTrafficFlows
Conclusions
Airtransportation
Week7Cargoairlineoperations
Dr. POLINLAI
Freighttonne kilometers(FTKs)
Freighttonne kilometers(FTKs)
FTKsmeasuresactualfreighttraffic.
SomeairlinesdiscloseCargoTonne Kilometres (CTK)
whichexplicitlyincludesunaccompaniedbaggageand
mail,avoidingambiguity.
Itistheequivalentof RPK forfreight.
OneFTKisonemetrictonne ofrevenueloadcarried
onekilometer.ThesumofFTKsforeveryflightstage
flownbyeveryaircraftoveraperiodistheFTKofan
airlineovertheperiod.
FTKsisameasureofhowmuchfreightbusinessan
airlinegets.Weightcarriedisnotadequatemeasure
becausedistancematters:carryingatonne 10,000km
isclearlyagreatersupplyoftransportservicesthan
carryingthesametonne 100km.
FTKsareobtainedbymultiplyingthetonnes offreight
upliftedbythesectordistanceoverwhichtheyhave
beenflown.
Revenuetonne kilometers(RTKs)
AirCargo Generalknowledge
RTKsmeasuretheoutputactuallysold.Theyare
obtainedbymultiplyingthetotalnumberoftonnes
ofpassengersandcargocarriedoneachflight
stagedistance.
Roughly150to180billionRTK
Shipping,incomparison,53.4trillionRTK(16.2trillion
withoutbulk)
Nonexpressitemsincludeperishables,highvalue
electricgoodsneedingrapidconsumermarkets
access
Anecdotally,above$3.00perkilograminvaluemay
justifyshippingbyairiftimerequirementsodemand.
AirCargo Generalknowledge
AirCargo Generalknowledge
Strongoverall
statisticalrelationship
betweenairfreightand
GDP
NotonlyGDPbutalso
Fuelpricealsoaffectair
freightinrecentlyyears
TypeofCargoCarrier
Combinationcarrier
Conventionalscheduledairlineswhichcarryboth
passengersandcargo
Cargocarriedintheholdsofscheduledpassenger
flights(Over50%ofallairfreight)
Allcargocarrier
Theseoperatecargoonlyflights
Bothscheduledandadhoc(pointtopoint)charters
Oftenspecialisttypesofaircraft
Integrator
MajorAirlines(2012)
TypeofCargoCarrier
Integrators
Provideadoortodoorservice
Alsooperateroadvehiclesforthedeliveryand
collectionoffreight
Contractfreighter
Aircraft,crew,maintenance,insurance(ACMI)leases
Carryfreightonbehalfofotherairlines
Offerflexibility
FreightForwarders
Integrator
Provideaninterfacebetweenshipperandcarrier
Expertsinthecomplexityofaircargomovements
Packaging,documents,insurance,customs,etc.
Buycapacityinbulkfromairlinesandsellinsmaller
quantitiestoshippers
Impactonairlines
Separatetransportproviderfromthecustomer
Reduceyieldsasforwardersusemarketpower
Sectorisnowbeingenteredbythelarge3PLs
Passengervs CargoOperations
Passenger
Cargo
Traffic flow
Round trips
Lowconcentration
Often imbalances
Keytradeflows
Airlinechoice
Manydecisionmakers
Subjectiveassessment
Fewdecisionmakers
Objectiveassessment
Service
offering
Deliverytimeimportant
Minimumchanges
Dayflightsoftenpreferred
Durationimportant
Routingnotimportant
Night flightspreferred
Lessrevenue
Marketspecificalliances
Policy
Increasingly deregulated
forinternationaland
cabotage
Increasingly deregulated
forinternationalonly
Ratecomparison
Shippersuseaircargoonlywhen
Characteristics
Routine (High
Occasional
Perishability(e.g.food,fashion)
Opportunitycost(e.g.capitaltiedupinhighvalue
product:Iphone)
Inventoryrelatedcost(justintime)
Timedefiniterequirement(express)
Value-Density)
Emergency
Shipments
Ultra-high
value density
Time critical
Perishable
Nonperishable
Medicines
Aid
Documents
Gold
Diamonds
Works of art
Horses
F1 Cars
Newspapers
Fruit
Fish
Electrical
goods
Microchips
Speed
Surface modes
disrupted
Security
Speed and
security
Short product
life
Total logistics
cost reduced
JIT
CostIssues
Aparticularproblemishowcombinationcarriers
shouldallocatejointcosts
Jointcosts:
Occurwhentheoperationofoneservicecannotbe
separatedfromtheoperationofanotherservice
Cannotbeallocatedtoaspecificservice
Negligiblereductionincostsifonepartisdiscontinued
CostIssues
IATArecommendsthefollowingapproachtocost
allocation
1. Directoperatingcosts apportionedonthebasisof
theusablevolumeoftheaircraftallocatedtoeach
2. Cargospecificcosts shouldbeidentified examples
includesalesandmarketing,groundhandling,land
transport
3. Administrationandindirectcosts splitinproportion
tothesumofalltheothercosts
CostIssues
PricingTariffs
Generalcargorate
Combiaircraft
Expressedperkilogram,mayhaveminimumweight
Mayreducewithincreaseddistance
Candifferdependingupondirectionoftravel
Allocatejointcostsonthebasisofvolume
Cargooccupiesboththebellyholdandpartofthe
passengerdeck
Quantitygeneralcargorate
Ratedecreasesasconsignmentsizeincreases
Specificcommodityrates
Allcargoaircraft
Greaterpayloadthanpassengeraircraft
Issuewithoversupplyofcapacitywhichcanaffectyields
PricingTariffs
Classrates
Encouragethecarriageofcertaincargoes
Unitloaddevice(ULD)rates
Chargeperunitload
Encourageshippers/forwarderstouseandfillunitloads
IssueswithRevenueManagement
Reduction/surchargeongeneralcommodityratewherecargo
requiresspecialtreatment
Accountholdertariffs
Availabletofreightforwarderswhogeneratesufficientbusiness
Capacity
Contractrates
Passenger
Freight
Fixed number of
seats
Weight/volume available
affected by many factors
Three dimensional capacity
(weight, volume, fixing
positions)
Negotiateddirectwithcustomers
Guaranteeminimumvolumeoveragivenperiod
Spotrates
Usedtofillsparecapacity
Timedefiniterates
Doortodoorservicewithguaranteeddeliverytime
Allotments
space for major
customers
Contractual obligations
affecting available space
Kasilingam (1996)
OverallMarketTrends
Majoraircargotradelanes
Boeing (2010)
Majoraircargoformodern
economies
FactorsAffectingDemand
Boeing (2010)
MainAirCargoLocations
TransshipmentPoints
4,500,000
N.America Asia
4,000,000
Europe Asia
3,500,000
Direct
3,000,000
ANC
Direct
PEK
KIX
ICN
NRT
PVG
KIX
2,500,000
ICN
2,000,000
1,500,000
Asia N.America
1,000,000
Asia Europe
Direct
500,000
ANC
KIX
ICN
ACI (2012)
Direct
PEK
KIX
ICN
NRT
PVG
Conclusions
Aircargoisakeycomponentofworldtrade
Playinganincreasingroleinsupplychainsas
companieslooktoreducetheleadtime
Whilesomeairlinesseecargoasaprofitcentre,itis
actuallyajointproductfromoperatinganaircraft
Thismakescostallocationandrevenue
managementmorechallenging