Airfreight the 21st century. To organize the air cargo

Airfreight process.

Air freight is the
transportation of goods by aircraft. Air transportation has been developing in accordance
with the evolution of logistics, its theory and practice.

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The first cargo
flight took place on November 7, 1910 in the USA, between Dayton, Ohio and
Columbus, Ohio and a plane transported a package of 200 pounds of silk for the
opening of a store.

 

The history of
cargo transportation by aviation is closely connected with South-West Africa,
where in 1914 the delivery of diamonds was organized on small utility aircraft.

 

The further development
of transport aviation received momentum, thanks to the active growth of German
industry in the years preceding World War II, as well as the use of air forces by
armies. At the same time, the American air cargo market was developed, as well
as several international air cargo transportation agreements.

 

The airfreight
process is used in combination with other shipping modes such as rail, road and
marine and has since become widely used as one of the most efficient delivery
options in global transportation in the 21st century.

 

To organize the
air cargo delivery requires some key steps taken by integrators, freight
forwarders and the air carrier.

 

Here is a general
illustration of how the process of air cargo is usually arranged:

 

First, cargo departs shipper’s facility
with support of 3PL or courier service. Then, consolidator combines all client
parts into a whole shipment and a chosen freight forwarding company assists
with shipping paperwork and delivery to the terminal of the airport of origin.
The ground handler uploads the cargo onto plane at the airport. The airline
flies the cargo from the airport of origin. After transit to destination is
complete, cargo is unloaded from plane by ground handler that works on behalf
of the airline and ensures the infield operations. Then the de-consolidator
provides the cargo separation procedures and a local freight forwarder manages
the final delivery to the client’s premises through 3PL or trucking company

 

Each international
air shipping process has the following 3 main paperwork / operations key points
that should be performed.

 

1.     
Outgoing handling

2.     
Air Transport

3.     
Incoming handling

 

1.     
Outgoing handling

Let us review
which steps should be applied if goods are being exported:

 

1.     
Cargo is picked up and a POA
(Proof of Acceptance) is issued

2.     
Cargo is checked, sorted,
labeled and packed according to flight schedule

3.     
Prepare security and customs
declaration and proceed for customs inspection

4.     
Consolidate all air waybills in
one cargo manifest

5.     
Book a flight through the
airline and inform consignee’s forwarder of the incoming shipment

 

2.     
Air Transport

 

There are certain
steps to be carried out while transporting the goods by airplane.

 

1.     
Warehouse procedure for storage
shipment based on the current bookings

2.     
Check goods and documents

3.     
Prepare loading units according
to shipper’s instruction and the airport’s rules

4.     
Load onto aircraft by using
ramp loading/transport devices

5.     
Unload from aircraft by using
ramp loading/transport devices

6.     
Breakdown loading units
according to the air waybill (AWB)

7.     
Check incoming cargo against
AWB and cargo manifest

8.     
Arrange warehouse storage and
clear  the manifest

9.     
Dispatch goods through courier
service, trucking company or integrator

 

3.     
Incoming handling

 

Getting cargo by
air transportation is considered as the fastest method to transfer goods. There
are the following steps taken to ensure on-time delivery:

 

1.     
Receiving documents once
notified by the airline and arranging pickup of the docs at the airport

2.     
Transmitting import customs
declaration, proceeding with clearance and getting the customs release note

3.     
Schedule local pick up of the
shipment at the airport

4.     
Arrange release to consignee
with accompanying documentation and obtain Proof of Delivery

 

3.2 Airports

Although airports have been changing a little in their service since
2008, carrying the commercial cargo remains the most visible activity after
transporting the passengers.

 

 

3.2.1       
Airport Categories

 

Airports can be divided in four classes – international, regional,
municipal, and local – based on their existing activity levels:

• International – Assists the federal and provincial clients in
connecting with national and international markets.

• Regional – Supports regional economies by connecting communities on
interprovincial level.

• Municipal – Services people and businesses by giving access to
provincial markets.

• Local – Helps arrange emergency flights, local cargo operations,
flight training, and general aviation activity.

Generally, airports can be divided into three types:
origin/destination (O/D), hub, and O/D with hub function airports. This
separation, though, does not reflect the complete picture, since airports have
to pass various evolutionary levels or development stages between being one of
those three kinds of airports.

 

 

Origin-destination airports

The O/D airports offer POE and POD for local shipments and passengers.
There should be a stable traffic through those airports to secure profitable
operation. Connectivity is not so important for them..

Timmins could be considered as a small O/D airport covering an area
in the radius of 500…700 km.

 

Hub airports

Airports with specific economic locality for shipments can be viewed
as hub airports. Thunder Bay and Hamilton International Airports, for example,
are hub airports, as the airports serve as major distribution centres for cargo
movement out of Western and Southern Ontario.

 

Origin-destination airports with hub function

International airports with global flight networks are categorized
as O/D airports with hub function. Typically, origin-destination-hub airports
are important distribution centres for passengers and cargo. Vancouver
International is an example of an O/D-hub airport, as it is located in the area
with a large population of customers, and a sizeable industrial and
distribution base, and many international flights.

 

3.2.2 Integrators and
Freight Forwarders

Airports are vital parts in the supply chain operations, which allow
increasing and facilitating cargo delivery from market to market. Shipping by
air is used for products that are
perishable, high value, time sensitive, etc. Generally,
such cargo has a higher transportation cost compared to road or rail
transportation. Freighters repeatedly carry out spare parts for mining industry
where on-site inventories of industrial parts are poor. Other products such as
perishable food and temperature-controlled vaccines also rely on air cargo
aircraft to be delivered on a tight schedule. E-commerce and online stores have
further generated new opportunities for the cargo aviation industry, including
goods being air-transported such as sporting equipment, computers and other goods
to be delivered “just-in-time”.

There are FF and Integrated patterns in air-freight operations. Let
us review them.

 

The Integrated Approach: Delivery from Manufacturer to Consumer

In an integrated supply chain procedure, a sole company (named
“integrator”) is accountable for the freight, beginning from the seller’s side
and all the way through to the customer. The growth of firms such as Purolator
and their constantly improving sophisticated air freight schemes are getting
more visible. The integrators have compound supply chain patterns, controlling
the whole delivery process and using their own means of transportation: cars,
trucks, aircraft.

The postal service units and small parcels were the main shipping
items before. Now, integrators can process almost any shipment and freight
forwarders can offer some services that were previously only available from
integrated carriers.

 

The Dispatch Approach: Market to market shipping

In a freight forwarding process, the functions of some market
players such as courier companies and 3PL are deeply integrated in the movement
of goods. Generally, a freight forwarder sets up the pick-up, customs
processing, warehousing, consolidation/de-consolidation and delivery of the
shipment using local truckers and other cargo processors.

 

 

The Airport – Tenant
Relationship

The airport should take into
consideration the City’s concerns when planning its own development without
infringing on the safety of flights and keeping in mind the worries of
environmental organizations when inviting new tenants.

Usually, airlines have a wide range of options for building daily
interaction with the airport. With the development of its infrastructure,
airport management must evaluate the capabilities and development plans of each
cargo operator. Airport’s flexibility and willingness to meet air carrier
requirements are crucial factors in creating a new relationship.

Although the air cargo market is heavily intruded by integrators in
recent years, forwarders are still an important link in arranging successful movement
of goods by air, especially with exports/imports.

Many forwarders can choose the location for their offices and
warehouses outside the airport, but it is believed that the presence of such
companies at the airport is a powerful synergistic factor for both subjects of
the transportation process. The ability to properly integrate forwarder’s
operations with airport regulations is the key to their mutual success.

Components of Aggregate
Demand

•           Fuel Costs – Fuel
is number one concern with regard to all cost components and it has
significantly risen over the last 15 years. An upsurge in jet fuel costs makes
air movement a pretty expensive option for cargo transportation.

•           Road Transport
Competition – Even if airlift is a more pricey option comparing to other modes
of transport, it provides a good level of security and speedy shipping times. Nonetheless, on some short distances (up to 300…400 km),
trucking companies can compete with the cargo planes.

International Trade, Exchange and Bank Interest Rate – Economics and
consumer behavior have a huge impact on air transportation. When warehouse
costs are high, air delivery is preferred.

•           Industrial Factor – Depending on
production plans of various industrial enterprises, which, due to the nature of
their products actively use air
transportation, and the market situation, the demand
for air transportation through some airports can vary significantly.

•           Logistics
Aspect – Air transportation has been used for “last-minute” cargo shipping of
some goods. Reconsidering cargo chain management and material planning can
affect a need for transportation

 

 

Airport Supply Components

The airport supply components are as follows:

•           Airport Capacity – More
cargo traffic requires more cargo operators at the airport.

•           Rail/Road/Ocean
Connections – It is highly important to combine some modes of transport to meet
customer’s requirements on price, time and volume.

•           Airport
Infrastructure – It is a part of successful cooperation between airport and
ground handler and between airport and airline. It is actually part of their
synergy.

•           Taxation and
Regulation – All those components can influence air freight. Airport should be
a leader in informing its tenants about all applicable regulations.

 

3.2.4       
  Multimodal Air Transportation
Hubs

Multimodal transportation centers are an important part of the
largest airports contributing freight options for the hundreds-and- thousands
of consignments which are shipped on a daily basis.

Road, rail and air capabilities are related, and changes to one mode of transport can influence the others. The
North Bay community can maximize the benefits of each capacity by prioritizing
them.

Any kind of road congestion or delayed delivery is too costly to the
region in terms of lost business opportunity. Rail shipments in majority of
cases cannot be directly transferred to the airports for further air
transportation. That is why the airport relies on flawless conjunction between
its cargo gates and other transportation markets, with little resilience for
shipment delay while in transit.

To arrange the connection of airports to the rail and road legs,
some airports develop specific ways for interconnecting with other modes of
transportation.

Generally, multimodal transportation hubs have the following
features:

•           A combination of
all or some of transportation modes (Rail, Road, Sea, Air)

•           Ease of connection
with federal and provincial highways

•           Availability of
industrial and business conglomerates with sufficient cargo volumes

•           Considerable
regional, provincial and federal distribution chain

Airports with a shortage of hub infrastructure, with poor intermodal
activities have less potential in engaging business property demand – the availability of
the land alone is not sufficient to create significant cargo volumes.

 

3.2.5    Freight Capacity

Over the last six years, the air cargo segment has been growing at a
steady pace. YHM and some other small airports have maintained substantial growth in last several years. At the
same time, YYZ keeps attracting almost half of the Canadian air freight weight.

 

3.2.6    Worldwide Demand and Air Freight

 

Based on a study of international air cargo activity, the following
trends should be considered:

•           Cargo being
processed through airports has a high “value to weight ratio” and comprise shipments
such as electronics, communication devices, luxuries, etc. Other quickly rising
items include pharmaceuticals and some perishables.

•           The USA continues
to be the largest air freight market for Canada and keeps up to 35% of Canada’s
total cargo operations, but China has become the major import partner for
Canada in the last 8 years.

•           Imports through
Canadian airports continue to grow in value, particularly for electronics, some
industrial goods and precious metals, while exports rise slowly.