Table Of Content

Joachim G. Schäfer Air Cargo Players - Processes - Markets - Developments Air Cargo Joachim G. Schäfer Air Cargo Participants - Processes - Markets - Developments Joachim G. Schäfer Duale Hochschule Baden-Württemberg Lörrach Lörrach, Germany ISBN 978-3-658-38192-9 ISBN 978-3-658-38193-6 (eBook) https://doi.org/10.1007/978-3-658-38193-6 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 This book is a translation of the original German edition „Luftfracht“ by Schäfer, Joachim G., published by Springer Fachmedien Wiesbaden GmbH in 2020. The translation was done with the help of artificial intelligence (machine translation by the service DeepL.com). A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation. Springer Nature works continuously to further the development of tools for the production of books and on the related technologies to support the authors. This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer Gabler imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH, part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany Preface Hardly anyone who holds a new smartphone in their hands, puts a piece of Victoria perch in the frying pan or receives a replacement for a lost credit card has any idea of the complex supply chain that airplanes have made possible in the first place. Even though airfreight represents only a tiny fraction of the tonnage moved worldwide, today’s stan- dard of living would be almost inconceivable without the aircraft as a means of transport. A broader public takes note of the importance of air freight primarily when interruptions in the supply chains lead to delivery delays or even production stoppages. For example, when European airspace was closed for several days following the erup- tion of the Icelandic volcano Eyjafjallajökull, the effects were felt worldwide. More than 100,000 flights were cancelled and 10.5 million passengers had to change their travel plans. The impact on air cargo was similarly dramatic: Kenyan flower growers lost US$3 million in sales each day of the shutdown, over a million roses had to be composted and 5000 employees in Kenyan agriculture were temporarily out of work. A number of European car factories were at a standstill because important production parts could not be installed. Indian diamond cutters were no longer able to send their goods to dealers in Antwerp. Bone marrow donations, which have to be administered within 72 h, reached patients too late. But how has the product air freight developed over the last century, who is involved in its creation, what do the processes look like in detail and what are the challenges for the future? As a lecturer in international transport management, I share the observation of many students and practitioners that the overall source material on the phenomenon of air freight is unsatisfactory. Practitioners and academics who want to deal with the subject in more detail have so far had to rely on a few, mostly English-language publications. In the German-language literature, there are a number of publications on the training of freight forwarders, but these place more emphasis on description than on background analysis. I hope to close this gap somewhat with this book. The contents and focal points have emerged from my own professional practice and from discussions with experts. I am particularly indebted to Ewald Heim and Gottfried v vi Preface von Goßler, who conscientiously read the manuscript and improved it with their com- ments. Without them, this book would not have been conceivable. Monika Schweiger in the library of the DHBW Lörrach was a tireless help in obtaining the literature. Finally, I would like to thank my editor Susanne Kramer from the publishing house Springer Gabler for her patient, conscientious supervision of the project and her valuable advice on the content. Basel and Lörrach, Germany Joachim G. Schäfer Contents Part I Introduction 1 A Brief History of Air Freight 3 1.1 The Age of the Pioneers Until the End of the Second World War . . . . . . . . 4 1.1.1 Flying – Man’s Eternal Dream . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.1.2 Pre-war Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.1.3 Years of the First World War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.1.4 Airmail as the Engine of Aviation in the 1920s . . . . . . . . . . . . . . . . 6 1.1.4.1 Technical Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.1.4.2 Development in North America . . . . . . . . . . . . . . . . . . . . 7 1.1.4.3 Development in Europe . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.1.4.4 The Golden Age of Airships . . . . . . . . . . . . . . . . . . . . . . . 9 1.1.5 Progress in the 1930s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.1.5.1 Evolution of Modern Commercial Aircraft . . . . . . . . . . . 11 1.1.5.2 The Second World War as a New Turning Point . . . . . . . 13 1.2 The Boom Years from the End of the Second World War to the Mid-1970s 14 1.2.1 The Chicago Convention and the Establishment of ICAO . . . . . . . 15 1.2.1.1 Organisation of the ICAO . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.2.1.2 ICAO Standards and Recommended Practices . . . . . . . . . 17 1.2.2 Freedoms of the Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.2.2.1 First and Second Freedoms (Technical Freedoms) . . . . . . 18 1.2.2.2 Third to Fifth Freedoms (Commercial Freedoms) . . . . . . 19 1.2.2.3 Sixth to Ninth Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . 19 1.2.2.4 ICAO’s Capacity to Develop . . . . . . . . . . . . . . . . . . . . . . 20 1.2.3 International Air Transport Association (IATA) . . . . . . . . . . . . . . . . 21 1.2.4 Developments in the USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.2.5 Development in Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.2.6 Technical Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 1.2.7 The Advent of Wide-Body Aircraft and the Consequences of the Oil Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1.2.8 Exogenous Crises as an Engine of Growth . . . . . . . . . . . . . . . . . . . 25 vii viii Contents 1.2.9 Phase of Deregulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.2.9.1 The Arduous Path to Open Air Spaces . . . . . . . . . . . . . . . 26 1.2.9.2 The New Role of IATA in Deregulated Markets . . . . . . . 27 1.3 Maturity Phase Up to the Global Financial Crisis . . . . . . . . . . . . . . . . . . . . 27 1.4 Development Since the Financial Crisis – A Phase of Consolidation? . . . . 29 1.4.1 A Standstill in Aviation Liberalisation – And a Decline? . . . . . . . . 29 1.4.2 Development of Traffic Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 1.4.2.1 Long-Term Correlation Between Transport Volumes and Gross National Product and World Trade . . . . . . . . . . . . . 32 1.4.2.2 Volatility of Quantities Due to External Shocks . . . . . . . . 32 1.4.2.3 Volatility During the Year . . . . . . . . . . . . . . . . . . . . . . . . . 34 1.4.3 Employment Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 2 Characteristics of Air Freight 37 2.1 Overview of Air Cargoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.1.1 Airmail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 2.1.2 Express and Courier Consignments . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.1.2.1 Express . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.1.2.2 Courier Consignments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 2.1.3 Conventional Air freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.1.3.1 Perishable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.1.3.2 Goods of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.1.3.3 Emergency Assistance and Urgent Replacement Products 41 2.2 Advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.2.1 Lower Capital Costs During Transport . . . . . . . . . . . . . . . . . . . . . . 42 2.2.2 Lower Inventory Costs Due to Speed and High Reliability . . . . . . . 43 2.2.3 Lower Insurance Costs Due to High Level of Security . . . . . . . . . . 43 2.2.4 Low Packaging Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2.2.5 Lower Upstream and Downstream Costs Due to Closely Meshed Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2.3 Disadvantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.3.1 High Cost of Air Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.3.2 Size and Weight Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2.3.3 High Environmental Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 2.3.3.1 Aircraft Noise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 2.3.3.2 Pollutant Emissions in the Vicinity of Airports . . . . . . . . 48 2.3.4 Greenhouse Gases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 3 Parties Involved 51 3.1 Consignor and Consignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.1.1 Rights and Obligations of the Consignor and Consignee . . . . . . . . 53 3.1.2 Allocation of Costs for Freight and Charges (Incoterms) . . . . . . . . 53 3.1.2.1 Ex Works (EXW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3.1.2.2 Free Carrier (FCA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Contents ix 3.1.2.3 Carriage Paid to (CPT) . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3.1.2.4 Carriage and Insurance Paid to (CIP) . . . . . . . . . . . . . . . . 56 3.1.2.5 Delivered to Named Place of Destination (DAP) . . . . . . . 56 3.1.2.6 Delivered to Terminal (DAT) . . . . . . . . . . . . . . . . . . . . . . 57 3.1.2.7 Delivered and Duty Paid (DDP) . . . . . . . . . . . . . . . . . . . . 57 3.1.2.8 Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 3.2 Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 3.2.1 Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 3.2.1.1 Full Service Network Carrier (FSNC) . . . . . . . . . . . . . . . 60 3.2.1.2 Integrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 3.2.1.3 Cargo-Only Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 3.2.1.4 Low Cost Carrier (LCC) . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3.2.2 IATA and ICAO Airline Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 3.2.3 Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.2.4 Possibilities for Optimising Turnover . . . . . . . . . . . . . . . . . . . . . . . 65 3.2.4.1 Load Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 3.2.4.2 Increasing Average Revenue Through Quality Leadership 67 3.2.4.3 Product and Price Differentiation . . . . . . . . . . . . . . . . . . . 69 3.2.4.4 Conflicting Objectives in Maximising Returns . . . . . . . . 70 3.2.5 Revenue Management as an Integrated Approach to Revenue Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 3.2.5.1 Long-Term Network and Capacity Planning . . . . . . . . . . 72 3.2.5.2 Medium-Term Capacity Planning . . . . . . . . . . . . . . . . . . 73 3.2.5.3 Short-Term Capacity Planning . . . . . . . . . . . . . . . . . . . . . 74 3.2.6 Airline Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 3.2.6.1 Leasing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 3.2.6.2 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 3.2.6.3 Other Aircraft Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 80 3.2.6.4 Kerosene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 3.2.6.5 Personnel Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 3.2.6.6 Handling Charges, Landing Charges and Overflight Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 3.2.6.7 Transports with Other Carriers . . . . . . . . . . . . . . . . . . . . . 84 3.2.7 Market Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 3.2.7.1 US Integrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 3.2.7.2 The New Players from the Middle East and Turkey . . . . . 86 3.2.7.3 Established Airlines from Asia and Europe . . . . . . . . . . . 90 3.2.7.4 Cargo-Only Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 3.3 Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 3.3.1 Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3.3.1.1 IATA Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3.3.1.2 ICAO Designations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 x Contents 3.3.2 Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 3.3.2.1 International Hubs with Cargo Activities . . . . . . . . . . . . . 100 3.3.2.2 LCC Airports with Cargo Activities . . . . . . . . . . . . . . . . . 102 3.3.2.3 Genuine Cargo Airports . . . . . . . . . . . . . . . . . . . . . . . . . . 103 3.3.3 Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 3.3.3.1 Competences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 3.3.3.2 Cooperation with Stakeholders . . . . . . . . . . . . . . . . . . . . 106 3.3.4 Connectivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 3.3.4.1 Critical Catchment Area . . . . . . . . . . . . . . . . . . . . . . . . . . 107 3.3.4.2 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 3.3.4.3 Favourable Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 3.3.5 Overview of the World’s Leading Cargo Airports . . . . . . . . . . . . . . 110 3.3.5.1 Hong Kong (HKG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 3.3.5.2 Shanghai (PVG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 3.3.5.3 Inch’ŏn (ICN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 3.3.5.4 Dubai (DXB, DWC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 3.3.5.5 Tokyo, JP (NRT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 3.3.5.6 Taipei, TW (TPE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 3.3.5.7 Singapore (SIN) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 3.3.5.8 Frankfurt Am Main (FRA) . . . . . . . . . . . . . . . . . . . . . . . . 117 3.3.5.9 Anchorage, Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 3.3.5.10 Hamad International Airport, Doha (DOH) . . . . . . . . . . . 119 3.3.5.11 Paris, FR (CDG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 3.3.5.12 Miami, Florida (MIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 3.4 Ground-Handling Agents (GHA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 3.4.1 Air Cargo Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 3.4.2 Success Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 3.5 Freight Forwarding Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 3.5.1 Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 3.5.1.1 Organisation of Pre-Carriage and Onward Carriage . . . . 123 3.5.1.2 Organisation of Main Legs as IATA Agents . . . . . . . . . . . 124 3.5.2 Market Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 3.5.2.1 DHL Supply Chain and DHL Global Forwarding, Freight 128 3.5.2.2 Kuehne + Nagel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 3.5.2.3 DB Schenker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 3.5.2.4 Panalpina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 3.5.2.5 Nippon Express . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 3.5.2.6 Mergers of Forwarders . . . . . . . . . . . . . . . . . . . . . . . . . . . 130