Moving Boxes by Air: The Economics of International Air Cargo

353 Pages·2011·1.92 MB·English

by  Peter

Moving Boxes By Air
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Moving Boxes by Air
The economics of international Air Cargo
PeTer s. Morrell
Cranfield University, UK
© Peter s. Morrell 2011
All rights reserved. no part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise without the prior permission of the publisher.
Peter s. Morrell has asserted his right under the Copyright, Designs and Patents Act, 1988,
to be identified as the author of this work.
Published by
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British Library Cataloguing in Publication Data
Morrell, Peter s., 1946-
Moving boxes by air : the economics of international air
cargo.
1. Aeronautics, Commercial--Freight. 2. Aeronautics,
Commercial--Freight--economic aspects.
i. Title
387.7'44-dc22
Library of Congress Cataloging-in-Publication Data
Morrell, Peter s., 1946-
Moving boxes by air : the economics of international air cargo / by Peter s. Morrell.
p. cm.
includes bibliographical references and index.
ISBN 978-1-4094-0252-7 (hbk.) -- ISBN 978-1-4094-0253-4
(ebook) 1. Aeronautics, Commercial--Freight. I. Title.
He9788.M67 2011
387.7'44--dc23
2011012353
ISBN 978-1-4094-0252-7 (hbk)
ISBN 978-1-4094-0253-4 (ebk)
II
Contents
List of Figures ix
List of Tables xi
Preface xv
Abbreviations xix
1 Air Cargo Traffic and Capacity 1
1.1 Air Cargo Traffic Trends 1
1.2 Air Cargo and the Economic Cycle 10
1.3 Airport Traffic 12
1.4 Hub Transhipment Traffic 14
1.5 Air Cargo Traffic Variation within a Year 16
1.6 Air Cargo Capacity 18
2 Air Cargo Market Characteristics 23
2.1 Commodities Carried 25
2.2 Special Handling Items 31
2.3 Humanitarian Aid 35
2.4 Defence Support 36
2.5 Modal Choice 37
2.6 Bimodal Shipment 44
3 Economic and Technical Regulation 49
3.1 Licensing of Airlines 50
3.2 Regulation of International Air Services 55
3.3 Mail Regulation 68
3.4 Future Air Cargo Liberalisation 69
4 Supply: Passenger and Freight Airlines 73
4.1 Introduction 73
4.2 Network Carriers 74
4.3 Low-Cost Carriers 75
4.4 Regional Carriers 76
4.5 Major Domestic Carriers 76
4.6 Passenger Flights of Combination Carriers 77
4.7 Freighter Flights of Combination Carriers 77
4.8 Freighter Flights by Freight-Only Carriers 80
vi Moving Boxes by Air
4.9 Charter and ACMI Operators 82
4.10 Air Cargo Carriers by Region 84
4.11 Conclusion 94
5 Supply: Integrated Carriers, Post Offices and Forwarders 97
5.1 Courier Companies 98
5.2 Integrated Carriers 99
5.3 The Post Offices 109
5.4 Freight Forwarders and Consolidators 109
5.5 Maritime Operators 115
6 Air Cargo Alliances and Mergers 117
6.1 Air Cargo Alliances 117
6.2 Air Cargo Mergers and Acquisitions 126
7 Aircraft and Flight Operations 131
7.1 Passenger Aircraft: Lower Deck 131
7.2 Freighters: Converted from Passenger Aircraft 134
7.3 New Production Freighters 139
7.4 ‘Combi’ and Quick Change Aircraft 144
7.5 Unit Load Devices for Aircraft 145
7.6 Aircraft Operations 146
7.7 Future Freighters 148
8 Airport and Ground Operations 153
8.1 Information Flows 154
8.2 Physical Facilities 161
9 Distribution and Marketing 173
9.1 Marketing Environment 175
9.2 Air Cargo Marketing Strategies 181
9.3 The Air Cargo Product 183
9.4 Air Cargo Promotion 186
9.5 Air Cargo Distribution 186
10 Pricing and Revenues 189
10.1 Cargo Revenue and Yield Trends 189
10.2 The Structure of Yields by Major Region and Type of Service 192
10.3 Air Freight Pricing 192
10.4 Revenue Management 200
Contents vii
11 Airline Costs 207
11.1 All-Cargo Airline Costs 207
11.2 Freighter Aircraft Costs by Aircraft Type 218
11.3 ACMI/Wet Lease Aircraft Operating Costs 224
11.4 Problems of Joint Production on Passenger Services 227
12 Air Cargo Financial Performance 235
12.1 Cargo Airline Profitability 235
12.2 Nippon Cargo Airlines Case Study 239
12.3 Federal Express Case Study 247
12.4 Network Carrier Cargo Subsidiaries 254
13 Air Cargo and the Environment 259
13.1 Background 259
13.2 Aircraft Noise 259
13.3 Air Transport’s Existing Contribution to Global CO Emissions 265
2
13.4 Environmental Taxes and Charges 272
13.5 Emissions Trading Schemes and Air Cargo 274
13.6 Air Cargo and Food Miles 279
13.7 Conclusions 280
14 Air Cargo Forecasting 283
14.1 Air Cargo Forecasting Approaches 284
14.2 Airline Forecasts 288
14.3 Airport Forecasts 289
14.4 Air Traffic Management Forecasts 291
14.5 Aircraft Manufacturer Forecasts 292
14.6 ICAO Forecasts 296
14.7 OAG Forecasts 298
14.8 Other Industry Forecasts 298
14.9 Conclusions 300
15 Air Cargo Issues and Prospects 303
15.1 Air Cargo Issues 303
15.2 Air Cargo Prospects 305
Definitions 309
Bibliography 319
Index 325
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List of Figures
1.1 Passenger versus freight traffic trends, scheduled international
services, 1995–2009 2
1.2 Growth rates for international freight versus mail traffic, 1995–2009 3
1.3 Distribution of world international freight tonne-km traffic by trade
lane, 2009 6
1.4 US inventory to sales ratio vs. scheduled air freight traffic 11
1.5 Air freight tonne-kms traffic variation by month, Hong Kong
Airport, 2007 16
1.6 Air freight tonne-kms traffic variation by month, AEA airlines, 2007 17
2.1 Recent trend in the air share of world containerised trade 23
2.2 Air trade by commodity, 2007: Europe to/from Asia 26
2.3 Air trade by commodity, 2007: North America to/from Asia 28
2.4 Air trade by commodity, 2007: North America to/from Latin America 29
2.5 Air trade by commodity, 2007: North America to/from Europe 30
2.6 Air exports of fresh flowers from Latin America to US, 2007 33
2.7 US air share of trade value (excluding North America), 1965 to 2004 38
3.1 Freedoms of the Air (air traffic rights) 57
4.1 Air cargo carried on freighter aircraft and share in total traffic IATA
international services 78
4.2 Lufthansa Cargo management structure 79
5.1 Operators in air cargo/parcels market 97
5.2 Global freight forwarding market size, 2003 to 2008 110
7.1 Freighter aircraft conversions, 2000 to 2009 135
7.2 Payload-range trade-off 147
8.1 Example of air waybill 156
8.2 Cargolux containers 163
8.3 Forklifting packages at Hong Kong International Airport 164
9.1 Example of multinational off-shoring of production 177
9.2 Total distribution cost model 179