Paper 8: Cargo Operations and Management. Module 28: Future trends in cargo industry THE DEVELOPMENT TEAM

Transcription

1 Paper 8: Cargo Operations and Management Module 28: Future trends in cargo industry THE DEVELOPMENT TEAM Principal Investigator Co-Principal Investigator Paper Coordinator Paper Co-Coordinator Content Writer Content Reviewer Prof. S. P. Bansal Vice Chancellor, Indira Gandhi University, Rewari Dr. Prashant K. Gautam Director, UIHTM, Panjab University, Chandigarh Prof. S. P. Bansal Vice Chancellor, Indira Gandhi University, Rewari Dr. Amit Katoch Assistant Professor, UIHTM, Panjab University, Chandigarh Mr. Surender Kumar Head, Deptt. of Tourism, Government, PG, College Dharamshala, HP (India) Prof. S. Kabia Chairman, Institute of Tourism and Hotel Management, Bundelkhand University, Jhansi

2 ITEMS Subject Name Paper Name Module No. Module Title Objectives Keywords DESCRIPTION OF MODULE Tourism and Hospitality Cargo Operations and Management 28 Future trends in cargo industry To understand the future trends in cargo sector e-cargo, globalization, automation, cargo airports, 1. Outcome of Learning 2. Introduction 3. Future perspective of air cargo Industries 3.1 Future airports 5. Latest trends in air cargo industry 6. Trends in Indian subcontinent 8. Summary TABLE OF CONTENTS QUADRANT I Future trends in cargo industry 1. Outcome of Learning This module will help students to: i. Understand the Future perspective of air cargo Industries ii. Learn the concept of future airports. iii. Understand the Latest trends in air cargo industry

3 iv. Learn the latest Trends in Indian subcontinent 2. Introduction: Air cargo industry is changing with the changing world. New technologies boost efficiency and the green image of air cargo industry. The air cargo industry is constantly evolving and striving for latest innovations and technology. The past few years of airline industry has experienced exceptionally interesting trends. The globalization has reshaped the airline industry and continues to present new challenges day by day. This dynamic environment creates a very interesting work conditions, pushing the abilities of the air cargo companies to the limit and set high standard for future working. Looking towards the future of air cargo industry new

4 emerging trends can be observed. New trends of doing business, earning money, transferring cargo and handling business distinguish one competitor from others. The new technically advanced aircraft has emerged and it has changed the scenario of air cargo. Like other aspects of modern life air cargo industry is also focused on green practices and green image. Innovations are made every day which reduces the environmental footprints of aircrafts and make the process environment friendly. Automation in the cargo handling process, improved infrastructure, and better performance of aircrafts and reduced time of journey has reduced the carbon emission by airline industry. All these advancements are only starting phase of the green practices and the further specialized methods are pushing the air cargo industry towards a sustainable and green environment friendly era /trend_2016_2_full.jpg

5 3. Future perspective of air cargo Industries The forecast in air cargo market is very difficult as in stock market because there are many variables and factors involved in air cargo industry. The air cargo industry is continuously changing with the changing trends of the market. The main driver of air cargo industry growth is global economic activities which are determined by world GDP. The GDP growth is relatively flat due to high unemployment in developed economies and weak consumer purchasing behaviour. The aviation industry is forecasted to grow around 3.2% and its cargo industry is anticipated to grow at an annual growth rate of just more than 5%. The air cargo industry is believed to be the most important component of supply chain for both International and Domestic suppliers especially in emerging markets, which will connect developed economies with developing economies. The developing countries have created a strong demand for goods and commodities. Therefore we can forecast that the air cargo industry is also going to expand in the years to come. The larger size aircrafts which can carry a lot of weight in one journey are in great demand. There are many factors which has an impact on air cargo growth. These are the factors which are responsible for global challenges in air cargo industry and currently affecting its sustainability. Some of these challenges are; increasing fuel cost, environment policies, geographical model shifts, security and information technology, new automation techniques, and changing technology of equipment s. Figure: World Air Cargo Traffic over next 20 years Source: Boeing.com/commercial/cargo: World Air Cargo Growth Forecast, executive summary.

6 Future-32.jpg 3.1 Future airports: The modern airports are using new innovative technologies for the day to day operations and they are becoming key factors in global transportation industry. The modern airport plays a major role in production and shifts in cargo trends. Future airport are shaped by providing local and regional touch to their environment so that it can stimulate the shopping and purchasing at airport premises. With the development of new double decker aircrafts the airport has to rebuild their gateways and configure their process to handle such aircraft. Airports are powerful entities of local and regional development of a reason attracting aviation related business such as time sensitive manufacturing and distribution facilities. Airports are evolving into complex and dynamic airport cities; from a collection of facilities that move people and materials via air. This increases demand for property from importers and exporters who are interested in close access to cargo flights and site locations from their

7 companies near airports. The future of airports is now related to regional planning and infrastructure development with the full focus on how to take advantage of airport area development. Other modes of transportation such as roads and trains should connect airports effectively to major businesses, residential areas and industries. For effective airport planning the airport planners, local and regional government and other stakeholders must work together in order to develop airport effectively. Availability of land is always a major asset for airport because as the airport grows the development around airports increases. Most of the old airports are constructed within the city and the land available for further development and infrastructure expansion is very less. Therefore the development and construction of new airports is carried out outside the city so that in future they have more area for expansion. Airports of the future are categorized into three categories: Gateway airport: These Airport caters the Global International passengers. Domestic and low cost airports: They cater to the passengers travelling through them. Cargo airports: This serves cargo carriers. Cargo airports generally operate on low cost because they do not have to provide the facilities as required by the passengers, and hence their operation is relatively low in cost. Many airports are focusing on developing cargo activities through capital improvement projects at their respective airports. This will further attract all cargo service providers and integrators. An airport s air cargo classification falls into one of four distinct types of functions: local market station, air cargo hub, international gateway and intercontinental hub. The local market stations are the airports that offer origin and destination services to the passengers. These types of airports are originally passengers oriented and contain passenger services and cargo services which depend upon local market and surrounding area. The air cargo hub airport does not depend on local and surrounding market and they act as transit facility. The provide service basically as a gateway and these are the airports which service the local market. These types of airports are generally located near to the population and industrial centers.

8 The international gateway airports are very similar to air cargo house in which they are not dependent on the surrounding market to generate business. These types of airports work as a distribution consolidation and processing center for international air cargo. The modern airports have to achieve new goals in air cargo operations some of these goals in various fields are as below: 1. Goals for cargo operations at airports: Effective performance evaluation systems for air cargo operations. To make information and material flow system more effective and efficient in a freight terminals. To make ground handling and warehouse systems more efficient. There are many airports reporting insufficient space to handle growing volume of air cargo and therefore they have to expand their storage area. 2. Goals for revenue management and pricing: Revenue management: Revenue management is a complex problem in air cargo management system. There are still many areas in this sector which requires a proper research. Some of the areas for research are forecasting the free area available for sale, to analyze origin and destination demand, and to address the multidimensional nature of cargo industry. 3. Better pricing techniques: The contract pricing is static in general and to adjust rates with daily changing supply and demand the freight forwarders and airlines depend on call centers to negotiate pricing. The advancement in technology has made pricing more dynamic in air cargo industry. The pricing of air cargo industry is very complicated and dimensional problems and this problem is of extreme importance and needed to be studied in details. For guiding the freight forwarders for confirming their order capacity with the airlines needs more research in the area. For strong relationship between airlines and freight forwarders, a

9 better capacity management between freight forwarders and shippers is required. It will impact the accuracy and available capacity at departure for the airlines. 4. Goals for security: After the increasing threat to airlines industry the securities procedure for cargo shipment have improved significantly. It is not possible to inspect complete cargo manually; therefore airport security machines and automation systems are used for ensuring full inspection of carbon. For the trade of air cargo, securely and efficiently there are still many areas of development. 5. Goals for air cargo flight network: Traffic imbalance is an important feature of air cargo industry which is not presented to its actual extent in passenger business. Airlines can help in expanding individual flight networks. There is a need of more understanding of the impact of traffic in balance on the network designs.

10 4. Latest trends in air cargo industry: The air cargo industry has experienced dramatic changes over the past decade. Various factors such as e-commerce, increased speed, high speed logistics requires that air cargo service providers re-examine their business goals, physical capacity, market priorities and the compatibility of these meeting the challenge of increasing growth. Recent trends in air cargo industry are described below and all these trends affect the air cargo industry to varying degrees.

11 Parking of aircraft: The time bound delivery and the growth of global air cargo market continues to drive market. In many cases the aircrafts cannot carry the cargo in the belly of passenger aircraft because the size and total volume of the aircraft is very less for cargo. This has boosted the utilization of freight operations.

12 Increasing Air passenger Traffic: It is forecasted that global passenger market will double in next 20 years to come. Therefore all service providers are challenged to provide resources to achieve targeted levels of services for both passenger and cargo growth. When the capacity of airport is exhausted by passengers there is a need to shift the cargo operations to the nearby suitable alternative. The cargo operators would seek locations which has low operating costs, existing infrastructure and levels of activity that would facilitate transfer of cargo easily.

13 Funtioning-at-Optimum-Capacity.png E commerce: The shipments generated by home shopping network, online shopping, catalogue shopping, and e-commerce requires specialized facilities for efficient processing and timely delivery. For timely delivery the shipments rely on air cargo operations. This has increased the demand for air cargo operations and freed operations.

14 Increased manufacturing: The manufacturing organizations, particularly those focused on time sensitive products and response to demand for faster delivery are moving their stores and warehouse facilities closer to the airport. To provide fast dispatch and delivery of the products, manufacturing companies are interested in locating their units near to the airport so that they can transfer material via air by consuming less time. The location of stores and warehouses near airports reduces inventory cost, tracking cost and staff requirements of the companies where as it increases level of customer services and ensures faster delivery. Globalization: The most number of companies are now focusing on emerging and new international markets as a part of their growth strategy. Now logistic and cargo solution providers have a role to play in enabling this trend through a transportation network. The recent trends in globalization have increased the demand of faster deliveries and cargo solution providers are affected mostly by these changes.

15 Changing aircraft Technologies: The aircraft technology is also changing with change in technology, the modern aircrafts are more fuel efficient, they can carry more weight and they have greater range. The new aircrafts can overfly the traditional points of entry as well as the capacity of airport to accommodate modern aircrafts will affect the selection of origin and destination airports. The new Boeing 747 can carry around 120 tons of cargo. Changing logistics techniques:

16 The recent changes in manufacturing and shipping industries are giving rise to new high speed logistic facilities that can effectively integrate a number of diverse industry segments. These new logistic techniques can act as a major job generator in some cases, approaching the employment level of traditional manufacturing operators. Modern technology: The modern mobile technology has made people comfortable with technology and new generation is very much familiar with it. The new generation expects to have equipment in the workplace that can provide the same working using technology that they have in their smart phones and vehicles. The new generation managers are bringing traits of the technology to influence workplace processes. The new generation is expert in multitasking, confident, they are tech savvy and they expect instant facilities. Consumer behavior: With the increase in e-commerce, the logistics industry has experienced a great impact with supply chain. The Supply chain has multiple channels and it is changing quickly in order to meet the needs of the customers. The service providers must adjust themselves with the changing trends if they want to survive in the market. The present consumer expects faster delivery options, same day and next day delivery, last mile services and that too in very less prices. New security techniques: The Internet technology has made it possible for cargo carriers and logistics management companies to transmit the data over the internet with less time and more ease. The cyber-attacks are also increasing day by day and therefore it is the responsibility of system administrators to ensure that their systems are safe against such cyber-attacks. The security services needs to have an eye on doubtful components. This means that the security solution providers need to be more vigilant in identifying cyber threats, monitoring and rectifying these threats whenever needed. In the years to come there will be exponential growth both in threats to the security and solutions to

17 these threats. With each activity leaving behind a digital footprint the security services in the future will be more reliable efficient and cost effective. Growth in trucking services: It is difficult to measure truck substitution component in air cargo industry, many air cargo service providers are operating as truck terminals in which some shipments into the terminals are being delivered to their final destinations by trucks or other modes of transportation. It is very difficult to measure the volume of truck traffic because the reporting of trucks at airports is not done systematically. The truck service providers play a very important role in air cargo services and they are one of the important components when it comes to customer satisfaction and timely delivery. With the urbanization of services the trucking companies are also working in ride sharing formulas. Like the ride shares in taxis or cabs the trucking companies also invite the customers who want to transfer less weight of cargo and are interested in sharing the ride with other customers. New buildings: With the increasing cost of storing cargo materials and due to the shortage of storage area on the airports the modern cargo service providers are designing their buildings to have more space for storing with more speed of transition. This result into taller buildings for cargo handling and these taller buildings are able to handle highly mechanized equipment s with sufficient depth and area. All the air cargo operations do not require sophisticated equipment s but there is a demand for such equipment s. The demand for new buildings arises due to the nature of cargo, size of operation, budget requirements and scheduling needs of forwarders and shippers. The modern security requirement also requires more space for equipment storage and internal storage. 5. Trends in Indian subcontinent:

18 India is an important and useful stop over for cargo carriers operating between Asia and Europe. India now serves as a major refueling stop over for cargo aircrafts on their way to East Asia. India's economy is diversified and the future growth trend shows that Air cargo industry in India will continue to grow. China is a major center for air services in the Indian subcontinent. China has attracted a major part of foreign direct investment in air cargo sector. China offers cheap and skilled labor and it is world's largest domestic market. As per the reports of air cargo world, China's domestic air cargo market grew 20% every year since 1990 and air cargo operations of China grows at the rate of 14% annually. In the past few years International cargo growth in India was around 20% and the domestic cargo growth was around 35%. These Trends shows that India could become a key market for air cargo operations. The recent initiatives by government of India like Make in India program is expected to increase cargo outflow from India as the material is supplied from India to other parts of the world. India is fastest growing economy with second largest population in the world and it can play a major role in world air cargo market. 6. Summary The E-Commerce has improved efficiency of business processes which are becoming more and more customer oriented. The emergence of Internet and Internet based Technology has forced many air cargo service providers to redesign the relationship with the customers. The customers or directly interacting with the air cargo service providers with the help of their websites for booking of shipments, tracking and others services, therefore the use of middle man is reduced. Customers have never had access to more information today and with the next best website only one mouse click away, suppliers in the air cargo value chain need to be more than ever mindful of their price levels and quality of service, Researchers has prediction that air cargo logistics market will experience around 6% annual growth rate Worldwide from 2012 to This increased in air cargo market is expected mainly in online retail sales. Customers are now purchasing their products online and they want their products to be delivered as soon as possible and are ready to pay extra to get quick and timely delivery. As the air transport is the fastest mode of transportation we expect that air cargo industry has a major role to play in fast delivery of these products.

19 The major percentage of air cargo is made by certain products such as high end electronics and their parts, designer fashions and accessories and makeup materials. These items are very time sensitive and therefore they are well suited for Air transportation. Automation in the cargo handling process, improved infrastructure, and better performance of aircrafts and reduced time of journey has reduced the carbon emission by airline industry. All these advancements are only starting phase of the green practices and the further specialized methods are pushing the air cargo industry towards a sustainable and green environment friendly era.