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COMPETITIVENESS ANALYSIS
MBA
75341015
Systematic exploration around the budget structure and productive performance of all-cargo
carriers is very inadequate. However, the prominence of air cargo and express transportation in
our globalized economy, the high instability of all-cargo carriers and the achievement of
integrators display the prerequisite for more scientific consideration to this industry. Obtainable
studies about airline throughput and cost competitiveness are concentrating on combination
carriers, transporting both passengers and cargo in the same aircraft and with the same inputs.
The results disclose a optimistic association between productivity on the one hand and the size of
the carrier and its ordinary stage length on the other hand, indicating economies of scale. This
review aims at benchmarking the productivity and cost competitiveness of US integrated and
non-integrated cargo carriers, grounded on aggregate factor productivity and unit cost
competitiveness scrutinizes.
Many factors have combined to create an optimistic yet challenging climate for the air cargo
industry. One of these is the continued growth of e-commerce globally, which has had a
profound impact on the sector. In a way, air cargo has experienced a renaissance in the last
several years because of skyrocketing international e-commerce amid heightened consumer
expectations and reduced oil prices. Additionally, airfreight has become increasingly competitive
against other modes of transportation in recent years. According to the International Air
Transport Association (IATA), airfreight demand is at its highest level since May 2018, growing
more than three percent in October compared to the previous year. Impressive gains for an
industry that was once—not long ago—on the brink of collapse. Despite favorable
circumstances, sustained performance and an optimistic economic outlook, the air cargo industry
does face challenges ahead. From evolving global trade tensions to continued pressure to
embrace industry-wide digitalization, here are four key logistics issues that will be important for
top performers:
electronic Air WayBill (e-AWB): Nearly 10 years after its first introduction in 2010, on
January 1, 2019, the electronic air waybill is become the default contract of carriage for all air
cargo shipments in a move designed to embrace digital processes throughout the air supply
chain. While this necessary change helps the industry get one step closer to eliminating
inefficiencies, shipment delays and costly errors resulting from paper- and manual-based
processes, it also introduces bigger challenges that cannot be solved overnight. In short, not only
do supply chain stakeholders need to be able to effectively communicate electronically, they also
require access to timely and accurate information. Therefore, data quality and the timeliness of
that data quickly become a top concern, alongside technologies that support mandatory digital
requirements.
Security Filings: From a security filings perspective, more and more nations now require air
carriers to supply advanced information to customs and/or border control on incoming
shipments.
Nations that already have this capability in place realize that they need the information earlier
and with better data quality. As a result, initiatives like Air Cargo Advance Screening (ACAS) in
the US (or, more generically, Pre-Loading Advance Commercial Information (PLACI)) have
been introduced and are becoming mandatory. Along these same lines, the exporting air
forwarder is also required to provide information either to the carrier or directly to customs in the
importing country prior to loading at the airport. The biggest challenge related to security filings
is knowing which information customs agencies internationally will require from one month to
the next.
While customs may be communicating to companies within their own countries, supply chain
partners and their providers are often left scrambling to fulfill new or upcoming requirements.
New Mail Requirements: Entities must now determine how to get the required information
from their mail system into an environment that can be used to complete security filings. Further,
filing for both cargo and mail shipments needs to be provided to customs in a consolidated
manner, requiring even closer cooperation between air carriers’ cargo and mail systems.
E-commerce Glut: While the international e-commerce boom has been good for air cargo, the
sheer volume of e-commerce packages does pose new challenges for both domestic and
international shipments. Chief among them is the requirement of everyone involved in the air
logistics chain—shippers, brokers, forwarders, air carriers and truckers—to execute flawlessly to
accelerate the movement of goods, achieve quick clearances from customs and provide new
levels of visibility to customers throughout the shipment lifecycle. The air cargo industry is in
the midst of a significant transformation, one that grows stronger in lock step with the need to
move cargo more cost-effectively and faster than ever before. Despite challenges ahead,
technology holds the key to helping companies automate processes, simplify compliance
requirements and achieve new levels of data quality and information-sharing with air cargo
partners. For the industry to continue to modernize itself, its processes and systems must also
keep pace with change.
Managerial Implication
Conclusion