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Chapter 2 Freight Viability

Freight Viability

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38 views27 pages

Chapter 2 Freight Viability

Freight Viability

Uploaded by

kughaneshwaran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 2:

AIR FREIGHT
VIABILITY
ACG 2204/ ACO 1204
PREPARED BY:
NUR NABILAH BINTI MOHD YUSOF
WHAT IS
VIABILITY?
INTRODUCTION

 Factors driving market growth include increasing globalization, e-


commerce expansion, and demand for time-sensitive goods.

Demand
(time-
E-commerce sensitive
expansion goo)
Globalisation
CURRENT
AIR
CARGO
HTTPS://WWW.YOUTUBE.CO
M/WATCH?V=TCSTPRCMB30
Air Cargo Market
Analysis
 April 2024 reveals significant growth in the
air cargo sector, demonstrating resilience
despite economic uncertainties.

1. Strong Demand Growth:

Air cargo demand (cargo tonne-kilometers


(CTKs) increase of 11.1% in April 2024
compared to the same period in 2023.

This marks the fifth consecutive month of


double-digit growth, indicating strong
market momentum.
Air Cargo Market
Analysis-cont’d

2. Capacity Expansion:
The available cargo tonne-
kilometers (ACTKs) also grew by
7.1% year-over-year.

10.2% increase in capacity,


primarily due to the recovery in
passenger flights, which
provided additional belly
capacity for cargo
(International operation).
Air Cargo Market Analysis-
cont’d

3. Economic Indicators:
The Purchasing Managers Index (PMI) for global
manufacturing output and new export orders turned
positive for the first time in two years, suggesting an
uptick in economic activity.
Specifically, the PMI for manufacturing output was
51.5, and new export orders were at 50.5, indicating
expansion.
Air Cargo Market
Analysis-cont’d
4. Inflation and Trade
Inflation rates remained
relatively stable across
major economies, with
slight variations in the US,
EU, Japan, and China.
Global cross-border trade
showed a slight
contraction of 0.8%,
though industrial
production saw a year-on-
year increase of 1.6%.
Air Cargo Market Analysis-cont’d

Resilience : the air cargo industry in


adapting to fluctuating global
economic conditions.
MARKET VIABILITY - EXTERNALLY

AIR SURFACE
FREIGHT VS TRANSPORT
MARKET VIABILITY -
INTERNALLY

 Passenger airlines vs. freighter.


 Largest cargo proportion goes into belly hold
 E.g B777 up to 25mt belly capacity
 Less than 1/3 cost and can sell at give-away
(covered by tix price)
7. Value

1. 6. Local
Urgency conditions

Viability VIABILITY
Factors
2. Cost of
Transport
5. Nature FACTORS

3. 4. Weight/
Sensitivity
/Life span Density
VIABILITY FACTORS – cont’d

1. Urgency
 Life-saving- medical equipment, vaccines, body parts, blood,
 Repair Parts
 Contract deadlines
 Disruption Management
 Qatar blockade, Berlin Airlift
 Time sensitive logistics
 Thai rescue, crash recovery, Red Cross
 E-commerce- timely delivery
VIABILITY FACTORS – cont’d

2. Cost of transport
 Modal pricing competitiveness.
 E.g. LON-MAN via air train.
 Eurostar vs. air to Paris / Brussels.
 Must capture total supply chain/ door-door costs.
VIABILITY FACTORS – cont’d

3. Sensitivity/ Lifespan
 Perishable goods-need certain temperature, special
handling
 flowers, fruits, pharmaceuticals, vegetables, newspapers,
fashion,
VIABILITY FACTORS – cont’d

4. Weight/ Density
 Positive for outsized cargo
 But more negative for freighters as
Belly Hold capacity increases.
VIABILITY FACTORS – cont’d

5. Nature
 Fragile, hazardous, delicate and vulnerable to sea
rough handling, piracy.
 E.g. cash vulnerability to piracy, robbery.
VIABILITY FACTORS – cont’d

6. Local Conditions:
 War, Natural disasters, topography, infrastructure,
Subsidy
 Myth/ Phobia
VIABILITY FACTORS – cont’d

7. Value
 High value, low weight/ size : phones, electronic
components, branded fashion, med equip etc needs fast
delivery to keep low inventory/cost, free capital, get
faster RoI.
 Medium value, light weight e.g. toys, auto parts
favoured but cost becomes critical.
 Low value, low weight if subsidised- e.g. Airmail
VIABILITY FACTORS – cont’d

8. Others
 Globalisation: Production Off-Shoring to distant
places.
 Universal market
GROUP ACTIVITY – ROLE PLAY

Each group will represent a different stakeholder in the air freight industry,
Task : Assess the viability air freight operation.
Each group must assign :
•Airline CEO: Focused on financial viability and long-term
strategy.
•Chief Operations Officer (COO): Concerned with
operational efficiency and logistics.
•Chief Financial Officer (CFO): Focused on cost
management and investment.
•Environmental Consultant: Concerned with
sustainability and regulatory compliance.
•Marketing Director: Focused on market trends and
customer satisfaction.
•Government Regulator: Focused on compliance and
public safety
PICK ONE CARGO AIRLINES

 DHL
 Amazon Air
 Cargo Lux
 Qatar Airways Cargo
 UPS
 Cathay Pacific Cargo
 Ethiopian Cargo
 MASKargo
 Emirates SkyCargo
 Singapore Airlines Cargo
QUESTIONS

 Situation : Your air cargo company planning to open new routes for cargo
services.

 Question : Discuss and analyze this situation in terms of :


 Profitable/not
 Planning
 Etc

 Based on your role in the company, decide on this planning accordingly.


EXIT TICKET

In your own words, explain the


viability factors of air freight.
Give example for your
statements.
THANK YOU!

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