Logistics. Air Cargo Industry

Transcription

1 Logistics Air Cargo Industry Claudia Siegner Fuat Berk KırlK rlı Oğuzalp Yücel

2 Contents 1. Air Cargo 2. Aircraft types 3. Providers 4. Trends in the industry

3 Air Cargo "Any mail, freight or goods moving by air. An all revenue air traffic other than passengers. Air cargo consist of Source: International air cargo association

4 Air Cargo General Characteristics Heterogeneous structure according to shape, size, density and weight The imbalance in flows Intense competition from other modes of transportation The profitability is highly dependent on the unit yields (revenues), unit costs and load factors

5 Air Cargo

6 Air Cargo Categorisation Emergency cargo highly sensitive to time, usually not planned the cost of transportation is small in relation to the opportunity cost of not receiving the goods as quickly as possible spare parts for machinery, medicinal equipment, documents, business contracts, legal papers, computer disks Routine cargo Cargo that can be diverted it is planned, still time-sensitive decision is based on demand and service factors price for transportation is not the prime reason can be divided in perishable and non-perishable freight less time-sensitive, more price-sensitive than the others

7 Air Cargo Participants 2001 Market Value Source: Boeing Source: International air cargo association Two-thirds of total traffic is carried by non-u.s. airlines.

8 Air Cargo Drivers of air cargo growth Overall economic growth (especially world trade). Historically, 2 to 2.5% increase in world trade with each 1% increase in total GDP Since 1970, 7% expansion in air cargo traffic annualy. 2,4 times faster than the rate of GDP growth. Source: Boeing

9 Air Cargo Drivers of air cargo growth Globalization Increasingly integrated and interdependent national economies Liberalized (free) trade and reduced protectionism Lean Inventory Strategies Reduced order-cycle times: just in time and make to order Less stock on hand to avoid production shutdowns, retail stockouts Air freight shortens delivery times to customer

10 Air Cargo World Forecast An increasingly interrelated world economy is forecast to expand at an average of 2.9% annually through the year Source: Boeing Traffic will more than triple between 2001 and 2021 Worldwide traffic will grow from billion RTKs in 2001 to more than billion RTKs by 2021 Source: Boeing

11 Air Cargo World Forecast Asia, will lead all other international geographic markets in average annual growth for the period 2001 to Source: Boeing China will be the fastest growing contiguous market in the world, averaging 10.3% growth per year for the forecast period. Source: Boeing

12 Air Cargo Outlook for Air Cargo Industry Short-term outlook is mixed, uncertain: Economic slowdown, end of high-tech boom responsible for cargo decreases, more so than September 11. Asia air cargo traffic indicates potential recovery largest Asian airports reporting 20-25% gains in 2002 over much weaker Total tonnage returning to 2000 levels, but yields are much lower. US West Coast seaport strike gives air cargo demand a boost But continued economic weakness and threat of war will delay air cargo recovery Epidemic diseases are still a threat, such as SARS. Longer term fundamentals support strong growth: China s economy grew 7.8% in 1st half 2002, air cargo grew 14% Normal growth rates of 6-7% worldwide possible by 2004 (Source: Airline Business, November 2002)

13 Aircraft Types Passenger aircraft: handle cargo in baggage holds Account for half of cargo transport (regional differences) Combi Convertible: can be converted in three days Quick change: can be converted in less than an hour All-cargo aircraft:

14 Aircraft Sizes and payload Standard-body aircraft: fuselage diameter < 200 in (5.08m) single row of full-size unit load devices longitudinally Single-aisle in passenger configuration Widebody aircraft: fuselage diameter > 200 in (5.08m) two rows of full-size unit load devices longitudinally Twin-aisle in passenger configuration Source: 2003 Freighter Reference Guide Source: World Air Cargo Forecast 2002/2003 (groups based on cross-section width & payload capability ) Special aircraft: Aircraft providing unique, exclusive services (e.g., oversize) Tend to be highly specialized

15 Special aircraft Antonov An-225 Mriya the world's largest aircraft designed to carry piggy-back loads which are too big to fit into its fuselage E.g. the Buran Space Shuttle first flew on 21 December, 1988 Specifications Type: Heavy Transport Max take-off Weight: 600,000kg Max Payload: 275, 000kg Wingspan: 88.4m Length: 84m Height: 18.1m Speed: 800km/h Cargo Hold: Length: 35.97m Width: 6.4m Height: 4.39m Range with Max Payload: 4,500km

16 Aircraft examples Airbus A : Boeing (Passenger, mixed and all-freight version):

17 Aircraft demand 75% fleet expansion in 2021 replacement of many mediumsize, standard-body freighters by widebodies ( tripling number of units) Widebodies 40% of world s fleet Share will grow to 60% by 2021 capacity increase from 80% to 90% Standard-body freighter significance: Number of units remains constant Small freighters Serve niche and feeder market roles Double in number (driven by increasing availability of 737 passenger airplanes) Source: World Air Cargo Forecast 2002/2003

18 Freighter Conversions Conversion: removal of passenger equipment installation of a main deck cargo door Integration of a cargo handling system Duration: generally 4 months (Boeing) When: After around 15 years passenger aircraft, depending on the aircraft type Source: World Air Cargo Forecast 2002/2003 After conversion, the economic life of an aircraft can be extended by 20 years, subject to subsequent use. cargo payloads generates only half as much revenue by weight as passenger payloads cost advantages of freighter conversions are much more significant for smaller freighters than for larger freighters 60% of added widebody freighters will come from conversions 90% of added standard-body freighters will be converted passenger airplanes

19 Dimensions of Cargo decks Source: 2003 Freighter Reference Guide

20 Load handling accessory ULD = Unit Load Device individual pieces of cargo standard-size unit for efficient (un)loading of aircraft having compatible handling and restraint systems various containers and pallets - dependent on type of airplane matched to the needs of airfreight: light, matched to the body of the airplane when loading an airplane a balanced distribution of the load and securing of the load has to be warranted The flat bottom surface interfaces with ball, roller, or caster surfaces of aircraft and loader handling systems for (un)loading Aircraft conainer: fiberglass, metal, or other Aircraft pallet and pallet net: Belly cargo loose cargo, i.e. not carried in ULD (e.g. in bags) Source: 2003 Freighter Reference Guide

21 Air ships an alternative? Properties. Definite advantages over airplanes in short distance hauling of very heavy or bulky cargo Airships can also be configured to perform vertical lift operations Do not require a big dimensions of loading platform more economically than helicopters Capability for lifts ranging from 20 to 150 tons. Despite air cargo: Surveillance activities, Mineral detection, Pollution watch, Border lookout, Radar platform, Police patrol

22 Shipper Providers of cargo services Main Players in air cargo transportation Sends/receives goods Contacts with a freight forwarder Freight Forwarder (e.g. Consolidator of the shipments (e.g. Bax Global, Emery) Responsible for delivery of air cargo shipments to airlines Organization of air transportation and also, responsible for pick-up and delivery of the shipment at the both ends of the transportation chain Airlines (e.g.airfreight Express, Continental cargo) Airlines Operate flights for transporting of the goods Sales partner of freight forwarders Integrators (e.g. DHL, TNT, FedEx, UPS, Airborne) Integrators Offer door to door services to shippers Offer time definite services and recently focus on documents and package size consignments.

23 Providers of cargo services Providers of cargo services Traditional Air Cargo Chain

24 Providers of cargo services Types of airlines that offer air cargo transportation Type 1 : Passenger airlines that regard air cargo as a mere by-product of passenger transportation. (e.g. Adria Airways,British Midland,etc.) Type 2 : Passenger airlines that market their cargo hold capacity more intensively.(e.g.americanairlines,delta airlines,finair, air canada, etc.) Type 3 : The fleets of which, apart from passenger aircraft, include convertible aircraft, quick-change aircraft, combis and dedicated freighters. (e.g.lufthansa Cargo, British airways,thy,united airlines, etc.) Type 4 : Operate scheduled or charter services on their own account with allcargo aircraft. (e.g.airfreight express,asia Pacific airlines,etc.) Type 5 : Airlines which operate as contract carriers for other airlines as well as for integrators and forwarders. (e.g.atlas air, gemini air cargo,etc.) Type 6 Type 6 : Airlines owned by integrators and forwarders.(e.g.airborne,dhl,tnt,fedex,ups, etc.)

25 Market Structure Freight forwarders & airlines Work closely together (inter-dependent) Freight forwarders act as airline s sales partner and also at the same time airline s customer Forwarders specialise in routing shipments on scheduled flights but also organise charter flights on behalf of shippers. Air cargo alliances allow new expansionist strategies Creation of global freighter networks, the standardisation of services,the coordination of flight schedules and ground handling operations.

26 The integrators strategy is to control all stages of the transportation chain. Also,they are trying to enter heavy and special cargo areas. Large forwarders acquire by integrators to increase the product portfolio. Market Structure Freight forwarders & integrators (Source :International Air Cargo Assoc.2002)

27 Market Structure Market Structure Distribution of World Freighter Fleet- operator region (2001)

28 Market Structure Market Structure Distribution of World Freighter Fleet- operator focus (2001)

29 Market Structure Market Structure Distribution of World Freighter Fleet-largest operators (2001)

30 Market Environment Magnet Effect The demand for air freight depends on the economic activity in the importing region or country, conditioned by transportation costs, exchange rates, and relative prices. (Source: Boeing World air Cargo Report-2003) Although primarily influenced by economic activity, other factors affect the development of world air cargo.

31 Market Environment Constraints & Forces Constraints Forces (Source: Boeing World air Cargo Report-2003)

32 Trends Expectations & Realities Rapid growth in demand for air cargo Intra-Asia is the largest true air freight market Stabilization in tax and tariffs, and economies Forecasts for continued traffic growth at 6% per year Falling real yields (revenue per ton-mile) Regulatory liberalization has leaded price competition - Lower tariffs further stimulate demand, but also cause airlines to focus on lowering unit costs Growth in international trade has increased trip length, associated with lower tariffs per mile Average 2.5% decline in yields

33 Trends Expectations & Realities Integrator expansion Integrated express carriers own air and ground assets to handle entire shipment journey FedEx and UPS, facing competition and decreasing yields in express documents, expanded to international markets With limited international small package growth, carry standard air freight (airport to airport) Consolidation of freight forwarders M & A s between FF and integrators between FF and airlines

34 China Sky s s the Limit "It's mandatory." (UPS CEO David Abney) Manufacturing and technology sectors are booming Protectionist and insular government is embracing more liberalized international trade Has the word's largest population Despite the rocket-like growth of its economy in recent years, is still considered to be a largely untapped market. Logistics operators are rushing in to fill gaps the third-party logistics field is growing 25 percent a year in China; by contrast, that market is growing between 5 percent and 10 percent annually in the rest of the world. Large infrastructure investments allowed to Boeing started operations in Shanghai, Guangzhou and Beijing Fed-Ex operates weekly 11 all-cargo flights UPS started 6 flights in each week (Source :International Air Cargo Assoc.2003)

35 Air Cargo Industry Thank you for listening Feel free for questions