Resources Required by Both Airlines and Airports to Handle Cargo Efficiently - Assignment Example

Name Course Instructor Date 1. What factors can influence why shippers may choose to use air freight, including the advantages and disadvantages it can offer to industry, what cumulative impact does this have on world trade With increased globalization and competition in today business environment, different individuals prefer some freight as opposed to others. Shippers are forced to choose a mode of freight to ensure their goods reach their different destinations safer and quicker. Increased global trade has led to the desire to ensure goods are being delivered at a quicker pace. There are various factors that can influence shippers to use air freight (HLB Decision Economics Inc 2001). Time management is a very essential factor that influence why shippers prefer air freight. When we focus on speed, it is quite evident that air freight is faster as compared to other methods of shipping. For businesses, time is money and therefore high speed in the air freight. Sea shipment takes a day or more depending on the destination and this is a disadvantage if the cargo being shipped does not reach its destination on time. There are certain types of cargo that are highly suited to be transported by air. These cargos include; perishable goods such as fruits, emergency medical supplies and flowers. Here, while transporting such goods time is considered to be the prime consideration. The fact that air freight is much faster, it assists in freeing the capital which would otherwise be tied up in the long transit time for goods to reach the buyer destination before the payment can be realized by the dealer (HLB Decision Economics Inc, 2001). Airfreights companies are known to give importance to convenience to their customers. These companies are preferred since they offer different packages depending on the destination and size of cargo to be transported. With increased competition, nowadays there are increased airlines across the globe making air freight more convenient. With increased partnership and collaboration, airlines accept each other way bills and this therefore implies that a shipper can send his shipment to almost each destination using the same air waybill. Therefore network interline facilities and destination is another factor influencing shippers. Insurance premium is another factor that influences shippers. It is quite evident that insurance premiums are lower as the time for cargo transportation is reasonably short. In additions, airports are areas that are considered to be of high security and therefore low insurance premiums. Reliability is a factor that influences shippers in their choice for freights. Owing to the high cost involved in air flight transportation it this call for maximum utility (McCann, 1998). Further both the arrival and departure times are reliable and this enables shippers to send their cargo to different destination on time. Shippers understand that flexibility and high performance standards in meeting the ever changing customer needs are offered by airfreights. There are various disadvantages that air freight can offer. Air transport is considered to be the costliest mode of transport. The cost especially operating cost of aero-planes is very costly and this impact on the world trade based. Additionally, compared to the sea freight, air freights have a considerably small carrying capacity. It is quite evident that aero-plane has smaller carrying capacity and this therefore implies this mode of transportation is not suitable for cheaper and bulky cargo. With increased global trade, business people are preferring freights which can carry bulky cargo so as to ensure availability of their goods especially in the wake of increased competition (McCann, 1998). In today global trade, businesses are ensuring that they are in a position to minimize any risk involved so as to enhance their performance as well as operations. Air transport is considered to be the most risky mode of transportation. Evidently, a minor accident may cause loss to the cargo and this can negatively affect world trade. Further, lack of proper servicing of aero-planes expose aircrafts accidents as compared to other types of transportation and this may with time have cumulative impact to world trade. Additionally, air transport is affected by weather condition and this may cause delay in the delivering of goods and this negatively impact on world trade (McCann, 1998). 2. Identify the resources required by both airlines and airports to handle cargo efficiently, and analyze how airlines can benefit financially from carrying cargo. (750 words) Airlines experience many operational problems and challenges. These include limited aircrafts, schedule disruptions such as flight cancellations, increasing clients’ expectations as well as limited crew and maintenance personnel. As such there is need for improvement in air transport for greater efficiency and safety. Information and communication technology (ICT) is particularly important in this case as it helps achieve the airlines business objectives towards fulfilling its goals. Barcode scanners and RFID ensures a smooth flow of air cargo operations (McCann, Philip, 1998). Communication within and outside airline departments is essential as it keeps the staff up to date with events such as flight delays, cancellations and/or rescheduling. A clear comprehension of flight schedules, available cargo space and changing conditions is thus ensured through systems integration. Alternative shipment routes are sought to ensure a smooth cargo flow for ultimate customer satisfaction. The successful handling of cargo hence requires an efficient communication system. Security is also important in air cargo handling. Both airlines and airports have been faced with frequent security threats from thieves and terrorist attacks and this warrants heavy investment in security matters for increased safety and passenger assurance (McCann, 1998). In a bid to curb risks associated with air travel, proper fire and rescue infrastructure should be considered to ensure that loss of lives including air cargo is taken care of and this can be successfully achieved through proper coordination and cooperation. An automated cargo system through emails, phones, cargo community systems and the internet will ensure customer satisfaction by accessing the information at any point. This greatly increases efficiency by reducing queues at the counter for booking, reduced staffing levels and decreased call times at the counter. Proper storage facilities should be provided in airports; for instance, cold rooms for perishable goods. X-ray scanners should be fitted for outbound cargo (McCann, Philip, 1998). Well structured warehouses with loading docks to ease movement of goods from one point to another during loading and offloading of cargo. In addition, small offices near the airports should be provided to enhance clearing and forwarding of cargo. Cargo handling activities including inspection should be located outside the airport to avoid congestion and minimize on operational costs. Cargo villages (sites with multiple cargo terminals) should be provided to ensure smooth cargo flow and improved traffic flow. A common office block should also be established to facilitate the shipment processes among the forwarders, carriers and shippers. As the volume of cargo increases, there is need for improved warehousing technologies with modernized equipment especially for national carriers and designated ground handlers. Refrigeration space may be required for instance, by flower exporters though majority have their storage facilities located outside airports. However, this will work where delays in security inspections and aircraft movements are insignificant or not anticipated (Mackie and John 2001). Ground Support and Gate Personnel (GSGP) is another resource that airlines and airports should invest in and depends on the number of flights including the type of aircraft supported. The ground support and resource management tools avail charts for all the GSGP resources required by each flight specific workgroup to aid in planning, assessing the impact of new flight schedules, maintaining company standards, handling of contracts dealing with daily operational problems/challenges (Mackie and John 2001). In addition, for aircraft packing, automated tools should be utilized to ensure a smooth flow of traffic from flight to flight and reduce confusion that may result if this is not the case. This requires the integration of the gate management system with the resource monitoring and real time flight systems. An efficient cargo system will also need to have measures put in place to deal with cargo displaced due to flight changes/disruptions. In 2004, about 38 million tonnes of freight and 1,890 million passengers were transported via the air transport industry (ICAO, 2004). Airlines can benefit financially by carrying cargo in several ways which include creation of employment and wealth, catalytic benefits; capacity to serve larger markets, influence on investment, labor market and effect on business operations. Further benefits may include its contribution to world trade, spurs tourism and directly contributes to a country’s revenue through taxation (Lakshmanan et al, 2001). Increased airline efficiency has led to drop in world airfares by 40% since the mid 1970s (World Air Cargo Forecast 2004/2005, Boeing (2004). The air transport industry as a whole contributes to approximately 880 billion US dollars annually (2.4% of global GDP) i.e. direct, indirect and induced impacts. Direct impacts amount to about 330 billion US dollars (OEF, 2004). Cargo transport generates revenue for countries through facilitation of movement of goods across countries (Lakshmanan et al, 2001). Approximately 2 billion passengers and 40% of interregional goods are transported by air. The airlines and cargo transport generates a total of 29 million jobs globally which helps spur economic growth through the Gross Domestic Product (GDP). Out of these, 5 million jobs are direct jobs out of which 4.3 million people are employed by airlines and airports globally. This contributes to about 275 billion US dollars of GDP to the global economy (Lakshmanan et al, 2001). References HLB Decision Economics Inc., 2001. Cost-Benefit Analysis of Highway Improvements in Relation to Freight Transportation: Micro-Economic Framework, Draft Report, Federal Highway Administration, July 12, 2001. Lakshmanan, T.R., U. Subramanian, W.P. Anderson and F. Leautier, 2001. Integration of Transport and Trade Integration Book Series in ’Directions in Development’, World Bank. Washington. D. C. Mackie, Peter and John Nellthorp, 2001. "Cost Benefit Analysis in Transport" in K.J. Button and D.A. Hensher (eds.) Handbook of Transportation Systems and Traffic Control, Oxford: Pergamon. McCann, Philip, 1998. The Economics of Industrial Location: A Logistics-Costs Approach , Heidelberg: Springer. Read More