Paper 8: Cargo Operations and Management
Module 24:The Cargo Industry and its stakeholders
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 Mr. Surender Kumar,
Head, Deptt. of Tourism, Government, PG, College Dharamshala, HP (India)
Content Reviewer Prof. S.Kabia,
Chairman, Institute of Tourism and
Hotel Management, Bundelkhand University, Jhansi
ITEMS DESCRIPTION OF MODULE Subject Name Tourism and Hospitality
Paper Name Cargo Operations and Management Module No.
24
Module Title The Cargo Industry and its stakeholders Objectives
To understand the meaning, concept and development of CargoIndustry and its stakeholders
Keywords
Cargo, cargo terminal, navigation, freight services, Custom brokers
TABLE OF CONTENTS
1. Outcome of Learning 2. Introduction
3. Overview of History 4. Stakeholders of air cargo
4.1 Detailed description of Stakeholders of air cargo 5. Summary
QUADRANT I
1. Learning Outcomes:
This module will help students to:
i. Understand the operations in cargo industry
ii. Classify various types of stakeholders in cargo industry
iii. Understand the responsibilities and duties of various stakeholders in cargo industry.
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The Cargo Industry and its stakeholders
2. Introduction:
Air cargo is any material which is carried out or to be carried in an aircraft. Air cargo comprises of Express air mail and air freight. Anything other than personal baggage and persons travelling
by air is known as air cargo. As compared to the other means of transport in freight such as road transportation, rail, Sea transportation, the air cargo is the latest addition to the freight sector. Concept of air cargo transportation started just after World War one. At the present time the air cargo industry has become an important part of the global economy, which holds an important name in the transport of low and high weight, high value commodities. Air cargo services connect to every part of the world with the help of the infrastructure which is put in place by public and private agencies for air travel. The airport and air traffic control systems are the most important part of air cargo services.
3. Overview of history:
Before the First World War only freight services were tried and it was not in common use to transport freight through air. After the end of First World War the air freight services were offered by the Airlines. At the beginning the air cargo services were used only by the military or government bodies. The air cargo services were not that common before and during First World War because of following reason:
1. The military Aircrafts used for Air transportation were not suitable for commercial services because the maintenance cost of military aircrafts was very high.
2. There was no proper infrastructure to provide safety to travel during that time because traffic control systems, weather services, navigation services and other Security Services or not that accurate and safe.
3. The air transportation and air cargo services at that time were very costly and the companies who try to send their freight through air have to sacrifice their major revenue for Air transportation.
4. The business providers and organizations were not interested in commercial Aviation Services because without government subsidies and other facilities it used to be a very costly affair.
5. Only high value commodities were made to move by air and that low value products which are less costly are sent to travel by cheapest modes of transportation such as the train, trucks, ships and surface vehicles.
Air cargo is any Freight and mail which is carried through International or domestic airlines.
Apart from cargo planes many passenger carrying aircrafts also operate air freight. The products which move by air and surface are different from one another, but they have many things in common for example the cargo which is carried by the air is higher cost material and lighter in weight but it has certain level of urgency emergency and time sensitivity. These are the materials which are required immediately at the destination. It may include some important medicines, equipment’s, information, material or documents. Many products are perishable in their natural so there is a need to transport these materials immediately with faster mode of communication and hence air transportation is the best mode to do so. The perishable materials are such as vegetables, flowers, fruit, fish, food items, milk etc. Some materials which are required at a particular time for special events such as festivals, celebrations, events like Diwali Christmas, Valentine's Day, Olympics, World Cup and fashion shows etc.
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Stakeholders of air cargo:
The process of transporting air cargo from one place to another involves many efficient agencies and persons who are known as stakeholders of air cargo industry. They are concerned about requirement, operations and services offered in their respective fields. The stakeholders have
different type of involvement in the transportation of air cargo based on the type of material to be moved and the geographical regions where we are taking the cargo. Almost every passenger carries some material or baggage when they travel through airlines and they come in contact with various stakeholders of the air cargo industry.
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The various stakeholders of air cargo industry are as following:
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1. Passenger or travellers: A passenger who is travelling by air is most important stakeholder of the air cargo industry. For any travellers traveling through air the airport provides a common point between two flights from where the passenger can take the services of airlines to reach the destination airport Or destination. Passenger is the person who is travelling by the airline and paying for the services of the airlines. With the money of passengers all aircrafts and Airlines are running their business, providing services to the customers, giving salary to their employees. The passengers can be classified into various types such as
Arriving Traveller
Outgoing Traveller
International travellers
Domestic travellers
Charter airline’s passenger
Passenger in transition
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2. Air carriers:
Carriers are the companies who provide transportation services from one airport to another. They are also one of the most important stakeholders of the air cargo industry because without their services it is not possible to transfer data from one place to another. These careers
include both passenger careers, cargo carriers, and mix of both. Passenger Carriers are those Carriers who carry only passengers on board, while cargo Carriers are those carriers who take only cargo on board. Mix careers are those who carry both passenger and cargo, and these are the most famous type of aircrafts any airline would like to operate. Aircrafts are generally of three types which include large carriers, small carriers, and Chartered planes. Large carriers are big in size and they can carry more than 500 passengers on board while small Carriers can carry less than 200 passengers on board. Chartered planes are those planes which operate during special requirements of the passenger; they may carry 5 to 50 passengers.
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3. Airport and related organizations:
Airport plays very important role in air cargo transportation. It is the place where passenger get the services given by the airlines. It is the place from where a passenger can take flight to and from a destination. The size of the airport varies as per the requirement of the operations. There are small airports who handle few flights in a week where as there are some big International Airport who handle hundreds of flights in a day. The size of Airport organizational structure varies as per the requirement of the operations. The airport operations are generally managed by the airport management teams which are appointed by the government in partnership with the
private sector. These organizations are responsible for setting infrastructure, developing infrastructure, providing services and maintaining safety and security of the passenger and cargo. These organizations play a very important role when it comes to transporting air cargo from one place to another safely. They provide manpower training, equipment’s, their services and other services to the passengers and aircrafts.
http://www.investgrowrepeat.com/images/skyscraper-business-organizations.png 4. General users of Aviation industry:
The aviation industry is used by many other general users who are not involved in the direct services of the Airlines and airport but they play a very important role in aviation industry. They contain many stakeholders who are not covered in the definition of air carriers. These stakeholders play very important role in day to day working of airport and airlines. They also play a vital role when it comes to safe services of air cargo operations. Some examples of these users are business organizations, aircraft rentals, air taxi operators, flight instructors, corporate transporters observation etc.
http://slideplayer.com/slide/3871653/13/images/7/1.+Air+Transport+Service+Providers.jpg 5. Air service providers:
The air service providers are private operators who provide services to air carriers, airports, general passengers and generally work in compliance with the government rules and regulations. Some of them are independent service provider while others are dependent service providers. These service providers play very important rules when it comes to successful operations of the airport and airline industry. Some of the common examples of these service providers are:
Cargo handling and storage,
aircraft cleaning services,
Aircraft fuel and oil supply service,
Loading and unloading of aircraft,
Internal cleaning of the aircraft,
Transfer of passenger within airport,
Catering services in the airport and aircraft,
Security Services to the Airlines,
Maintenance of aircraft
Health and Medical Services to the passengers and Cabin crew staff.
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6. Employees of the airport and Airlines:
The persons who are working in the airport or in the airlines play a very important role in Customer services. The employee of airport and Airlines are in direct contact with the passengers and they play a very important role in delivering good services to the customers. These employees include both direct and indirect employees of airport organizations or airlines. Some employees are appointed by the government while other employees are appointed by the private sector organizations. The duty and responsibility of these employees is to provide safe secure travel experience to the customers and to handle cargo operations effectively.
http://www.srinternational.com/files/1714/2809/1742/sr-header1.jpg 7. Freight forwarders :
Freight forwarders are the private companies which deal in importing and exporting goods and cargo. They are the specialized Agencies which provide services in exporting cargo. For example if a shipper wants to send some material from one place to another then he will call freight forwarded. The freight forwarders control about 70% of international freight and 20% of domestic freight. Freight forwarders are also of two types such as some freight forwarders deals in small business while other freight forwarders has a large business setup. Freight forwarders are usually not located on the airport they operate the business from outside the airport. Freight forwarders provide services to the clients at doorsteps; they pick the material from their place and transfer it to other countries on the behalf of the sender.
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8. Consolidators:
Consolidators work with freight forwarders to handle cargo operations. They help freight forwarders in assembling the cargo at a point and it's delivery to the destination point. This job is very important as they provide services to the freight forwarders in delivering the freight at the destination and they help them to reduce the shipping cost. The ability to consolidate shipments and the frequency of flights is important for the continuous success of cargo operations. Most of the consolidators work outside from the airport but sometimes they are given a space inside the airport. They need space for warehouse or Store so that they have an easy access to the cargo and the operations of cargo can be carried forward easily.
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9. Custom brokers:
Custom Brokers facilitate in the clearance of international cargo through local customs rules and regulations. They need a proper space for office use but they need least space for warehouse and storage requirements. Generally they work together with freight forwarders who provide then space and large storage requirements. Custom brokers are originally not located at the airport because they handle most of their business electronically with the help of freight clearing Agencies, so their office may be located outside the airport but they are in continuance contact with the operations of cargo at airport.
https://www.joc.com/sites/default/files/field_feature_image/TNT_plane_being_unloaded.jpg 10. Integrators:
Integrators are those Carriers who operate a trucking component as well as aircraft such as Fed Ex. They provide point to point and airport to airport delivery services. Their job includes delivery of the cargo at the destination. They provide specialized services to the cargo handlers such as overnight access and handling of special cargo. Due to their activities they require a proper place at the airport for parking the aircraft and loading and unloading of the aircraft because there job and services requires a lot of time to deal with such needs. At the largest airport they required a lot of man power and equipment to handle a large amount of cargo.
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11. Cargo handling companies:
Cargo handling companies work on a contract basis with the service providers and they provide services to the Carriers on the behalf of government. Their main job is to load and unload aircraft cargo. They also work in the warehouse where they provide services for handling the freight.
Their main work area is generally airport ground.
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12. State and Central Government bodies:
The government bodies participate in various operations related to the air cargo. Sometime their job is to observe the processes taken at the airport and in some cases they participate in the day today working of the airport and cargo handling process. Government bodies act as a bill payer and regulator. The airports are governed by airport authority of India(AAI) in India. They take care of various airport services, facilities and improvement programs to be taken at the airport. They are also responsible for collection of airport fee, airport taxes, aircraft taxes and other such taxes applicable to the airport and aviation industry. These organizations are also responsible for providing security services, customer handling, health services, latest equipment’s, emergency services, snow removal equipments, Technology up gradation etc.
These organizations are also responsible for legal and financial compliances of the rules and regulations late on by the government.
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13. Local government bodies:
Local government bodies also play a very important role in the operations of the aircraft and cargo handling processes. Generally the airports are operated and managed by the government bodies through local bodies. At the largest airports local bodies play a very important role in effective functioning of the airports.
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14. Non-government organizations (NGO’S):
Nongovernmental organizations such as human rights organizations and environmental bodies play an important role in airport management process. There are many other organizations who are interested in operations of the airport but NGOs also play a big role in the airport Management process. Their proactive approach towards environment and human right issues is Important for ethics of airport and air cargo operations. These organizations are generally interested in protection, safety, health and welfare of the individual and communities that are affected by the air transport industry. They are also concerned about the environmental effects of the airport or air cargo operations. They try to negotiate with the airport authorities and Airlines to reduce negative impacts of the aviation industry. NGO’s also take care of the interests of communities who are affected by the operations of airlines and Civil Aviation industry. The NGOs and local government always raise the concern of local communities at appropriate platforms.
15. Heavy freight carrying Airlines:
These are the airlines that are specialized in carrying the heavy weight load instead of small weight packages or mails. Some common examples are Fed Ex, Cargolux, Atlas Air and Polar Air. These Airlines are also specialized in providing services such as maintenance, cargo insurance and leasing aircrafts to support the aviation industry.
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16. Combination Carriers:
Combination Carriersare defined as airlines such as Asiana, Korean Air and Cathay Pacific that fly separate air freighters and passenger aircraft. These carriers prefer to process both belly and freighter cargo in the same facility when possible. In rare instances, a carrier will split their belly cargo and freighter operations between airports when capacity becomes a factor, but this is typically a last resort because of the added cost factors.
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17. Trucking Companies:
They make up the ground component of air cargo operations. While these companies rarely lease space on an airport, it is very important that air cargo facilities be designed to accommodate trucking, including frontage, access, and roadway geometry.
In an ideal environment, most of these entities would be co-located on the airport, creating an efficient, integrated, air cargo community. Operating costs are lower, economies of scale can be achieved, and international goods can be cleared faster and with fewer problems. The realities of limited on-airport space and higher leasing costs have required that many of these businesses locate their operations that do not require ramp access at off airport locations.
http://www.torngrenmagnell.se/wp-content/uploads/2015/01/finansiella_investerare-730x350.jpg 18. Financial investors:
The majority of the airports are dependent upon the financial investors to provide financial help for the operations of the airport. Before providing financial assistance to the airport the financial companies look into various aspects of the airport such as:
Number of passenger coming to take flights
Passenger growth
Projected employment expansion
Population growth of that particular REGION
Trends in utilization of airport
Traffic at origin and destination.
Important of that airport to civil Aviation industry
Geographical location of that airport
Debt burden of the airport
Carrying capacity and carrying cost of the airport
Airfield capacity of the airport
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19. Ground arrangement operators and parking operators:
Ground arrangement operators provide ground services for handling cargo. It includes the services which are important to rental cargo and airport. Ground transportation providers include services like taxi cabs, rental cars, buses, rail services, shuttles etc. They also provide parking services at the airport with the help of public or private Enterprises. From airport management’s point of view, the desirable distribution between different modes of transportation will be very dependent upon the individual airport’s context. The income of ground arrangement and parking operators also depends upon the inflow of the clients. When the passengers are coming in large numbers their income increases and when the passenger volume decreases their income reduces.
20. Airport supply organizations:
Airport supply organizations are the organizations who supply essential material, goods, equipment’s and services to the airport. These organizations are very important when it comes to effective operation of the airport. Airport supply organizations have the airport itself as the end customer. This includes various contractors, Consulting firms, equipment suppliers, and others technical suppliers.
http://www.pacificcontrols.net/img/dwc-arch.jpg Summary:
As compared to the other means of transport in freight such as road transportation, rail, Sea transportation, the air cargo is the latest addition to the freight sector. Concept of air cargo transportation started just after World War one. At the present time the air cargo industry has become an important part of the global economy, which holds an important name in the transport of low and high weight, high value commodities. Air cargo services connect to every part of the world with the help of the infrastructure which is put in place by public and private agencies for air travel. The airport and air traffic control systems are the most important part of air cargo services. The products which move by air and surface are different from one another, but they have many things in common for example the cargo which is carried by the air is higher cost material and lighter in weight but it has certain level of urgency emergency and time sensitivity. These are the materials which are required immediately at the destination.
Stakeholders play an important role in transportation of air cargo. The number of stakeholders in air cargo industry is not fixed and their number varies with the density of operations. The number of stakeholders varies from region to region.
