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(1)Paper 8: Cargo Operations and Management Module-33: Understanding of Cargo Flight Management, Warehouse Management and Billing THE DEVELOPMENT TEAM Principal Investigator Prof

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Paper 8: Cargo Operations and Management

Module-33: Understanding of Cargo Flight Management, Warehouse Management and Billing

THE DEVELOPMENT TEAM Principal Investigator Prof. S. P. Bansal,

Vice Chancellor, Indira Gandhi University, Rewari Co-Principal Investigator Dr. Prashant K. Gautam,

Director, UIHTM, Panjab University, Chandigarh Paper Coordinator Prof. S. P. Bansal,

Vice Chancellor, Indira Gandhi University, Rewari Paper Co-Coordinator Dr. Amit Katoch,

Assistant Professor, UIHTM, Panjab University, Chandigarh

Content Writer Dr. Sandeep Guleria,

Principal, ITFT College, Chandigarh.

Content Reviewer Prof. S. Kabia,

Chairman, Institute of Tourism and

Hotel Management, Bundelkhand University, Jhansi

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ITEMS DESCRIPTION OF MODULE

Subject Name Tourism & Hospitality

Paper Name Cargo Operations and Management Module No. 33

Module Title Understanding of Cargo Flight Management, Warehouse Management and Billing

Objectives To understand the complete Supply Chain Management in Cargo Flight Management and Operations

Keywords Cargo Management, Warehouse, CASS, Billing,

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TABLE OF CONTENTS 1. Learning Objectives

2. Introduction

3. Cargo Flight Management

3.1 Load Distribution Management 3.2 Weight and Balance Management 3.3 Fuel Management

3.4 Capacity Management 3.5 Ramp Management 3.6 Freight Management 3.7 Flight Event Notification 3.8 Security

4. Cargo Warehouse Management 4.1 Type of Warehouses

4.2 Basic Principles of Warehouse 4.3 Storage Requirement by Freighter 4.4 Warehouse Planning

4.4.1 Space Utilization and Handling 4.5 Stock Control and Movement 4.6 Legal Aspect

5. Cargo Billing System

5.1 Cargo Accounts Settlement System (CASS) 5.1.1 Advantages of CASS

5.2 Implementation of CASS

5.2.1 Participant for CASS and cost involvement 5.3 Roles and Responsibilities related to CASS 5.4 Traditional way of Account Settlement 5.5 Working of CASS

6. Summary

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UNDERSTANDING OF CARGO FLIGHT MANAGEMENT, WAREHOUSE MANAGEMNET AND BILLING

1. Learning Objectives

After completing this module, one shall be able to understand:

 Working of Supply Chain Management in Air Cargo Industry

 The entire Flight Management of cargo

 Warehouse Management System and its working

 Billing process involved in Air Cargo

 Various players of Air Cargo Industry involved in Accounting System

http://www.aircargopedia.com/images/hermes_img2.jpg

2. Introduction

The Air Cargo Industry is one of the booming industry and a vital factor in the growth of the global economy. As per Air Cargo Solution Sabre Inc. This Global Air Cargo market is dollar 40 billion a year and the market is dominated by the carrier who has alliances and subsidiaries. It is estimated that by 2019 there would be addition of more than 2500 air freighter and about 1000

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obsolete freighters would retire. Not only is this it also predicted that the growth of air cargo would exceed the passenger traffic growth worldwide. Like in other sectors air cargo industry is also looking for better solutions with the help of Information Technology as the customers in this industry are demanding best and fastest product around the globe. A Cargo Handling System Operator always looks for the balance between higher profitability and efficiency without making any compromise with the security. The only need to meet above levels is the use of best quality hardware and software available for Cargo flight Management. Nowadays most of the cargo handling agencies uses Totally Integrated Automation (TIA) technology. These helps in minimizing service cost and engineering expenditure and ultimately get the highest productivity at a very reasonable expenditure. The only value of any air cargo is to deliver with speed and consistency.

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800_of_Lufthansa_in_Frankfurt_Germany_-_Aircraft_ground_handling_at_FRA_EDDF.jpg

3. Cargo Flight Management

Many Companies in the past as well as in recent times manages flights manually by using multiple systems which waste valuable time loading the same date several time and also increasing the risk of making mistakes each time. With the help of Information Technology nowadays companies automates the load planning process and increasing production with reducing expenditure at same time. The new technology automates the Zero Fuel Weight

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calculation and shows the exact quantity of fuel required in advance. These optimizations in fuel consumption also have positive impact on environment. Main task in Cargo Flight Management is load planning which is a complex task and should be handled by the experts after all calculations. Some of the airlines still calculate this manually but most of them automate with the help of IT. With this many flights are handled simultaneously with single intuitive graphical interface by these airlines. This saves the time of load controllers in switching between different systems. The Load controllers receive information directly from ramp and freight agents who use tablets to access the data through dedicated HTML interface, in real time. The flight management system stores all messages and events records, publishes all pre and post departure documents and checks that controllers are eligible to handle each aircraft type automatically.

https://4.imimg.com/data4/IA/XS/MY-886018/logistics-services-500x500.jpg

3.1.Load Distribution Management

The Load distribution takes place in three categories, fully automatic, semi-automatic and manual Load distribution. Implementation of each category depends upon the type of aircraft used. Multiple weight specific checks are done in this section. Special checks for dangerous and special goods are implemented. Multi leg flight calculations are also done in this segment.

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http://slideplayer.com/slide/1705087/7/images/36/Weight+and+Balance+The+wings+generate+a +limited+amount+of+lift.jpg

3.2.Weight and Balance Management

In this section the business, structural and legal requirements are met all the time. With the help of technology the automatic aircraft weight calculations are carried out. The breakdown of the weight is mandatory for the payload calculations. Estimated ZWF calculations, trim calculations using bay pallet positions are accurate. Lastly dynamic calculation of center of gravity of the aircraft carried out.

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http://content.aviation-safety-bureau.com/allmembers/faa-h-8083-31-amt-airframe-vol- 2/images/Figure%2014-21.jpg

3.3.Fuel Management

For fuel management the system needs to be interfaced with flight planning system. It retrieves the historical, provisional and final data. The system automated interface with carrier flight planning system or aircraft for fuel updates. Then the fuel uplift and distribution takes place on selected fuel densities. This updated dynamic system maintains the historical fuel records.

https://thaimilitaryandasianregion.files.wordpress.com/2016/10/air_a400m_loading_features_lg.j pg

3.4. Capacity Management

One of the important function comes under the cargo flight management is to calculate optimum capacity available for mail, baggage, cargo and other commodities. Cargo commodity classifications set at carrier level via the database management interface which uses integrated historical statistics, business rules and priorities. Cargo allocation per commodity takes place to manage the space in the aircraft. Connection types, Destination, Flight number, Minimum connection time and priority these are the factors for which business rules are set up for transferring cargo.

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3.5.Ramp Management

The main task here is to share information between the ramp staff and load controllers. Once the load plan has been approved and the load controller released this it should be modified and updated. Another task is to add supplementary information with the exchange messages to load controller for post departure messages. The ramp agent and load controller both monitor ramp activities and clear items as they are loaded.

http://www.aventisintl.com/data/pagebanner/407e6bdb68c6493d6b1f45e762109fbf.jpg

3.6.Freight Management

The main function here is automatic processing of data from external cargo system with generation of special load data, dangerous goods and cargo. The system within updates the status of cargo like assigned or unassigned dead load, standby, offload and transfer to and from flights.

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https://www.brusselsairlines.com/en-se/Images/sms-notification335-31847.jpg

3.7.Flight Event Notification

Under Flight event notification the main task is to communicate the flight event information to external systems in real time. The system generates the flight event notification for airlines’

external system. Besides the airline code, date, leg impacted, flight no. etc. related flight date is sent with the event name.

Source: Air Cargo Solution Sabre Inc.

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3.8.Security

X-raying the pre-packed ULDs is the traditional approach of security in cargo industry. Besides this some companies also offer another innovative option to minimize the risk of dangerous freight getting on board. The new technology of Flight Simulation chambers detect explosives reliably by means of ultrasound, low pressure and time-controlled sensors and very well versed in detecting suspicious audio signals. If there would be any change occur in external conditions during a flight a specially developed simulation program imitate it and allow controlled explosion of any dangerous objects in the cargo.

Supply Chain Management

Source: Air Cargo Solution Sabre Inc.

4. Cargo Warehouse Management

A warehouse is defined as the building which is used for the storage of semi-finished, finisher or raw goods. The Cargo Warehouse Management involves receiving, inventory control and shipping of the consignment properly. The Cargo Warehouse Management provides a consignor effectively manage and control the flow of cargo as it is received by the warehouse. The management helps to convert typical godown operations into a totally connected logistics and supply service provider. The unique feature of any Cargo Warehouse Management is powerful

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tracking and reporting system to manage inventory, receiving, shipping, labor, billing etc. The Freight forwarders, warehousing companies, shipping companies indulge themselves in Cargo Warehouse Management to receive goods at their docs and store them in their warehouse. They prepare the withdrawal receipts, shipping documents and keep control of their operations.

Warehousing is also defined as taking the responsibility for the storage of the goods for any time and releases them as and when they are required.

https://image.slidesharecdn.com/warehousing-130309093815-phpapp02/95/warehousing-11- 638.jpg?cb=1362823033

4.1.Types of Warehouses

 Commercial: These types of warehouses are in rented buildings and are used for commercial businesses.

 Transit: The transit warehouses are for temporary storage of goods which are to be forwarded to some other locations and need storage only for some short span of time.

 Government: These warehouses are found at the ports or harbors.

 Bonded Warehouse: These warehouses are used to store those goods whose duty is not paid and where goods are to be transported to another country. Pre-positioned goods are often held in these warehouses so that export is quick and can be stored for longer duration.

 Pre-fabricated: These are the warehouses where there are no permanent structures. These are raised mostly in emergencies.

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 Open storage: These are used mostly as alternative in emergencies as they are not fit for perishable products.

https://image.slidesharecdn.com/warehousingmanagementfinalcopy-130317035503- phpapp01/95/warehousing-management-final-copy-6-638.jpg?cb=1363492569

4.2.Basic Principles of Warehousing

 Planning inbound Receipt Procedures: Here the warehouse should be well off with the knowledge of all procedures related to inbound receipt of consignment.

 Storage formalities: Storage of goods involves the knowledge of location management, inventory control and occupational health and safety procedures.

 Outbound Delivery Procedure: The smooth outbound delivery procedure helps the owner of the warehouse to close the contract with the party without any loss or damage of the goods.

4.3.Storage Requirement by Freighter

The freight forwarder or shipper is determined for the requirement of the storage and looks for two basic things; 1) suitable location, 2) warehouse selection.

1) Suitable Location Selection

Forwarders consider so many factors while deciding the location of a warehouse. These factors are security, proximity to the ports for entry, access, land size available, availability of labor, floor weight, services, the context and site condition etc.

2) Warehouse Selection

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While selecting the warehouse some of the factors considered by the freight forwarders are like nature of handling equipment available, characteristics of goods to be stored, parking area, no. of loading docks, secure compound area, duration of storage whether long term or short term.

http://www.furnibox.co.uk/images/warehouse.png

4.4.Warehouse Planning

While planning the space layout of the warehouse, it should be planned for general storage and goods picking and dispatch. There after some space should be left for the other activities like maintenance and parking of equipment, refueling of trucks, charging of equipment such as pallet trucks, empty packaging, and a quarantine area for keeping rejected goods or to be sent back or destroyed. Washrooms, office area etc. While planning the main operating area some of the requirements should be seen in prior. These requirements are like to mark an area for each type of product and locate it a number, sufficient space for access to the stacks for loading or unloading even for inspection. It should be 1 meter from the walls and other stacks, the area should be spaced such that cleaning of the entire floor can be done.

In some type of the goods it require special attention in terms of type and security concerns of the warehouse these include the drug shipment and medical supplies which contains a large number of valued and small restricted items, and most of them with small shelf life. For those

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items a secure area is required with proper knowledge of expiry dates of the medicines. Fuels, insecticides, ether, alcohol, compressed gases and other toxic and inflammable substances must be stored separately and in cool place.

4.4.1. Space Utilization and Handling

The entire Warehouse comprises of four main functional activities:

 Receipt of Goods

 Storage of Goods

 Picking of Goods

 Dispatch of Goods

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Source: dlca.logcluster.org

4.5.Stock Control and Movement

The consignment is to be transported from the supplier and for the control of movement of the consignment in the warehouse, the inventory manager of responsible. The point which the inventory manages has to ponder on:

 Has to establish the levels of the operating stocks and shall be reviewed from time to time depending on the needs.

 Has to maintain monthly stock usage report of each time and record the overall trend of usage in last quarter.

 Has to ensure that the monthly and weekly stock balances to the total tally.

 Has to report on half yearly basis slow moving items indicating the last movement date and liaise with the department for the consignment.

 Has to keep a record of all non-stock items received, returned and issued to the customers.

4.6.Legal Aspects

It has been seen in this industry that the common practice in emergencies is to lease or rent not purchase the warehouse. In this case it is often seen a shortage of suitable buildings or locations for warehouse space which cause in increase in the cost. So it is always advisable to use temporary warehouse for shorter duration by drawing up the lease agreement with the owner.

The basic inclusions of lease agreement are as follow:

 The time of the lease agreement.

 Detail of all security arrangements in and outside the warehouse.

 For exit, if there is a requirement of notice period or not.

 Confirmation of the property insurance, covering third-party, fire, water damage, etc.

 A detailed inventory of fixtures and equipment.

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 The weight capacity of any equipment such as forklifts shelves and racks.

 Indemnity

 Confirmation and details of other tenants or having sole tenacity

The key component of the supply chain management in emergencies is the warehouse. Any breakdown or uncertainties occur in supply chain management, warehouses buffer all of them. A warehouse gives consistent supply of materials when it is needed if it is properly managed and appropriately stocked.

5. Cargo Billing System

For billing in aviation industry IATA (International Air Transport Association) is well known for providing distribution services to the transportation and tourism industry. Its Cargo Accounts Settlement System (CASS) provides effective settlement services to the airlines industry and freight forwarders. Since 1971, IATA has been providing settlement services to the travel industry. Since its inception it has relies on data processing and electronic transfer of information to provide core settlement system service.

5.1.Cargo Account Settlement Systems (CASS)

To simplify the billing and settling of accounts between airlines and freight forwarders Cargo Accounts and Settlement Systems (CASS) is designed. It is operated through an advanced web enabled e-billing solution known as CASS link globally. By the end of 2014 it was associated in 96 operations and was serving 500 airlines, ground handling companies and general sales and service agents worldwide

5.1.1. Advantages of CASS

It is evident that Cargo Accounts Settlement System yields a two-fold solution. It replaced old paper based invoicing of airlines. Also help to replace the manual controlling of agents on invoicing.

 It provides benefit from streamlined invoicing and collection of sales revenue processes.

 Act as a neutral settlement office.

 With the help of CASS link’s web-based application there is total flexibility to manage data centrally or from any field office.

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 The total eradication of invoices’ loss or fail to deliver thanks to electronic production and distribution.

 As the CASS rate of success in collecting funds is virtually 100 percent, it enhanced financial control and improved cash flow.

5.2.Implementation of CASS

If there is more than one or more airline or freight forwarder any market may host CASS operation as long as there is enough volume. To identify all potential participants, operational practices and the cost of operation IATA is responsible to conduct a market assessment. The final implementation of CASS is then depends on the market’s group of airlines to join and bear the entire cost of operation.

5.2.1. Participation for CASS and Costs involved

There is no cost involved for IATA accredited agents to join CASS where certain amount has to be paid by non- IATA members or other intermediaries to join CASS. For a freight forwarder the participation can be done with the help of local CASS Manager or regional customer service.

There is open eligibility for all airlines of the world. Entry fees for IATA members are $ 2500 and for non-IATA members it is $3500. Rest all other costs are bear equally based on volumes process through the system. As far as pricing formulae is concerned Industrial distribution and financial services (IDFS) management is responsible for applicable participation fees and joining fees of Members. It would determine the prices applicable for CASS products and services offered. Whatever charges are charged by IDFS management for the operations of CASS, those are based on a budget based pricing approach and allocation as established in the ISS charging structure. From time to time the IDFS management shall publish the pricing formulae which is developed after consulting the members and in particular the CASS Policy Group

5.3.Roles and Responsibilities related to CASS

 To manage the operation of all CASS centers and regional support centers

 To set up all policies and business plans.

 To set prices for services and supplies provided to customers

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 To manage all costs and revenue budgets after establishing the financial plan.

 Consolidating, contracting and selecting all system and service suppliers.

 To conduct periodic review and conduct business cases

 Staffing

 Expansion of product and value added services.

 To provide capital expenditure

 Standardization and Redesign the process

5.4.Traditional Way of Account Settlement

Cargo Agents are the middle person between Export airfreight and Airlines. These agents charged from Shipper for payment overt to the airlines. After that airline produce invoices to their agents for these sales. One agent works with many airlines and airlines accept consignments from many agents. Each airline receives and prepares an invoice to every agent. The multiplicity of reports and the multiplicity in invoices need to be consolidated and payments are to be made individually. This created a scenario of lot of burden for both agents and for carrier.

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Source: IATA

5.5.Working of CASS

An airway bill is captured by a participating airline in its own system and is uploaded the data to CASS. Each airway bill which was issued during a reporting period to CASS office for processing the airline submits a copy for it. CASS gives standard invoices prepared from that data. A file contained electronic records of airway bill transactions may be fetched by the airlines. If CASS finds any discrepancies during the processing of airway bill data, in reporting or remittance by Carrier or any other member, it can report to ISS manager. A statement indicating the total amount due to all carriers and an invoice in respect to each airline is received by each agent. And the reciprocal accounting information is received by each airline. Each and

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every member of the CASS has the opportunity to ask for any clarification, as all receipts are to be produced a fortnight in advance of the remittance date. The agent remits the total amount to CASS on that day. Each carrier is made payment from that account. The ISS manager acts as neutral mediator if there is any dispute occurred between two parties.

6. Summary

Supply Chain Management is a dynamic function which is flexible and changes according to demand in the market. Logistics is another term given to this sector which comprises of Supply + Material Management + Distribution. It is the process involving cost effective flow and storage of goods from one point to another. Three main functions of this industry are receiving the consignment, storage of the consignment and delivery of consignment. There are number of small processes involved with these three main functions which help to run this industry smoothly.

References

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