Through their membership, these airlinesnot only gain access to the vast resources and expertise offered by IATA but alsocontribute to the collective efforts aimed at shaping the future
CHARACTERISTICS
Air freight transportation
Transporting goods by air is the process of moving goods from one point to another through the use of aircraft as the main means of transportation This process includes packing, loading, unloading, transporting, and delivering goods from the origin airport to the destination airport.
Freight cost
Airfreight typically accommodates high-value and time-sensitive shipments, as the elevated costs associated with air transportation make it impractical for routine, low-value commodities This exclusivity is maintained unless emergency circumstances necessitate their expedited delivery.
For emergency shipments, the cost of air transportation is often inconsequential compared to the cost of delaying the goods For example, an urgently needed part for an assembly line might have a $20 value, but if the air-freighted part arrives on time to prevent the assembly line from stopping, the opportunity value of the part might become hundreds of thousands of dollars Thus, the $20 part might have an emergency value of
$200,000, and the air freight cost is a small portion of this emergency value.
Air freight services transport high-value commodities such as mail, clothing, electronics, equipment, flowers, industrial machinery, livestock, automobiles, and jewelry These shipments are typically cost-effective due to their high value, which justifies the premium for air transportation In contrast, commodities like coal, lumber, iron ore, and steel are generally not shipped via air due to their lower value and bulky nature.
Speed of delivery
The major service advantage of air transportation is speed, especially over long international movements due to rapid airport-to-airport transit times over these longer distances The terminal to terminal time for a given trip is lower via air transportation than via any of the other modes
The shippers that use air carriers to transport freight are primarily interested in the speed and reliability of the service and the resultant benefits, such as reduced inventory levels and inventory carrying costs Acceptable or improved service levels can be achieved by using air carriers to deliver orders in short periods Stock-outs can be controlled, reduced, or eliminated by responding to shortages via air carriers.
Despite the advantage of high terminal-to-terminal speed, overall delivery times may suffer due to airport congestion and handling delays Airport congestion, especially at major hubs, leads to delays in take-offs, landings, and taxiing Handling procedures such as baggage handling, security checks, and customs clearance further contribute to these delays Additionally, paperwork and customs procedures, while necessary for international travel, can add significant time to the journey, particularly for freight transportation with stringent compliance requirements.
Service reliability
The reliability of air freight is usually high due to the more predictable schedules, lower risk of loss or damage, and better tracking and tracing capabilities Airlines operate on strict schedules with daily flights across the globe which leads to more consistent delivery times for air freight Moreover, advancements in tracking allow for real-time monitoring of shipments throughout the entire air freight journey, providing greater transparency and assurance for businesses While air travel can be impacted by severe weather, flights are usually rerouted or delayed for shorter periods compared to other modes that can face unpredictable ocean conditions.
Location flexibility
Air transportation provides unparalleled access to virtually any location worldwide This enables businesses to tap into global markets and reach customers or suppliers across continents with relative ease Moreover, the ability to access numerous countries and markets quickly and easily allows businesses to adapt to changing market conditions rapidly Whether it is responding to shifts in demand, exploring new business opportunities, or sourcing materials from international suppliers, air transportation offers unparalleled market flexibility.
In addition, air transportation becomes even more flexible when seamlessly integrated with trucking services Airports are typically connected to extensive road networks, allowing for smooth transfer of goods between air cargo terminals and distribution centers via trucks Trucks play a crucial role in providing last-mile connectivity, delivering goods from airports to their final destinations, whether it is retail stores, warehouses, or directly to consumers This integration ensures that air transportation remains a viable option for businesses seeking fast and reliable delivery,even for locations not directly served by airports The combination of air and truck transportation enables the development of multi-modal logistics solutions that optimize supply chain efficiency Therefore, businesses can leverage air transportation for long- haul, time-sensitive shipments, while relying on trucks for local distribution and door-to- door delivery, resulting in streamlined operations and reduced transit times.
Poor accessibility is a key disadvantage of air transportation Airports are often located outside urban areas, requiring additional transportation for passengers and freight, leading to inconvenience and increased costs Unlike other transportation modes, airports are not directly connected to the transportation network, adding an extra layer of complexity to travel arrangements Airports in remote or rural areas may face limited accessibility due to fewer transportation options, posing challenges for residents and businesses dependent on air connectivity.
Capability
Air transportation offers unique advantages for certain types of goods due to its speed and efficiency, but there are also limitations and considerations to take into account, including size and weight restrictions as well as security and safety concerns. Goods that have a high value relative to their weight benefit greatly from air transportation This includes items such as electronics, pharmaceuticals, luxury goods, and certain types of machinery Despite potentially higher transportation costs, the speed of air travel ensures quick delivery, reducing inventory holding costs and improving overall supply chain efficiency Perishable items like fresh produce, seafood, flowers, and pharmaceuticals often require rapid transportation to maintain their quality and shelf life.Air transportation provides the necessary speed to ensure these goods reach their destination quickly, minimizing the risk of spoilage and maximizing market accessibility.Furthermore, fashion industry relies heavily on timely delivery of products to meet consumer demand and stay ahead of trends Air transportation enables fashion brands to quickly move seasonal collections, new releases, and time-sensitive merchandise to markets around the world, ensuring they remain competitive in the fast-paced industry. Industries such as automotive, aerospace, and manufacturing rely on air transportation for urgent delivery of spare parts and critical components to minimize downtime and production delays The speed of air travel ensures that essential items reach their destination quickly, keeping operations running smoothly.
On the other hand, while air cargo planes vary in size and capacity, they are generally limited in terms of the volume and weight they can carry compared to other modes of transportation such as ships or trains This means that large or bulky items may not be suitable for air transportation unless they can be broken down into smaller, more manageable shipments Even if the weight of a cargo is within the allowable limits, its size may pose challenges for air transportation Cargo compartments on aircraft have specific size limitations, and oversized or irregularly shaped items may require special handling or may not be feasible to transport by air.
Air cargo transportation is subject to strict regulations and security protocols to ensure the safety of passengers, crew, and cargo Certain types of goods, such as hazardous materials or live animals, may require special permits and compliance with stringent safety standards Security measures, including cargo screening and inspection,are implemented to detect and prevent the transportation of prohibited or dangerous items While these measures enhance safety, they can also introduce additional processing time and logistical challenges for shippers Some cargo, such as perishable goods or pharmaceuticals, may require temperature-controlled environments during transportation to maintain product integrity Air cargo carriers can offer specialized facilities and equipment to meet these requirements, but additional costs may be incurred for such services.
Security
Security is a critical aspect of air transportation, offering several advantages compared to other modes of transportation in terms of protecting consignments from damage, breakages, theft, and other security threats.
Air cargo undergoes relatively minimal handling compared to other modes of transportation such as maritime or road transport This reduces the risk of damage and breakages during transit, as consignments are less susceptible to rough handling, impacts, and vibrations that may occur in other transportation modes Cargo compartments in aircraft are typically pressurized and temperature-controlled, providing a stable environment that helps preserve the integrity of sensitive or fragile goods This controlled environment minimizes the risk of exposure to extreme temperatures, humidity, or other environmental factors that could potentially damage consignments.
Air cargo shipments often require strict adherence to packaging and sealing standards to deter tampering and ensure the integrity of the cargo Tamper-evident seals and packaging techniques help detect and deter unauthorized access to consignments,providing an additional layer of security during transit Besides, airports and air cargo terminals are equipped with robust security measures, including surveillance cameras,access control systems, and security personnel, to safeguard cargo against theft,vandalism, and unauthorized access These secure facilities provide a controlled environment where consignments are less vulnerable to security breaches Airlines and air cargo operators assume custodial responsibility for the security of cargo from the moment it is accepted for transport until it is delivered to the consignee This accountability ensures that adequate security measures are in place throughout the transportation process to mitigate the risk of theft, damage, or loss.
OPERATION IN AIR TRANSPORTATION
Structure of the industry
1.1 International Civil Aviation Organization (ICAO)
The International Civil Aviation Organization (ICAO), a specialized agency within the United Nations, fosters collaboration among 193-member countries to optimize airspace use Since its establishment in 1944, ICAO has promoted diplomatic and technical cooperation, resulting in a robust global air transportation network WhileICAO sets international aviation standards, it respects national regulatory frameworks, emphasizing sovereignty Vietnam, an active member of ICAO since 1980, not only contributes to enhancing global aviation standards but also benefits from the expertise and resources provided by ICAO.
1.2 International Air Transport Association (IATA)
As the leading trade association in the global airline industry, IATA boasts approximately 290 member airlines representing 82% of global air traffic Its comprehensive role includes supporting airline operations, establishing industry policies and standards in areas like safety, security, and training, and developing unit load devices (ULDs) By setting and upholding these standards, IATA aims to enhance operational efficiency, promote safety, and ensure seamless connectivity within the global aviation network Notable members include Vietnam Airlines (joined 2006), Vietjet (joined 2017), and Bamboo Airways (joined 2020), who gain access to IATA's vast resources and contribute to shaping the future of the airline industry for the benefit of all stakeholders.
Airlines are central to the aviation industry, responsible for owning, leasing, and operating aircraft for passenger and cargo transport In some nations, national airlines,known as flag carriers, are government-owned and represent both aviation interests and national identity The airline industry is diverse, with companies offering specialized services to meet specific market demands Budget airlines provide affordable, no-frills travel options Others focus solely on cargo transportation, meeting the increasing demand for efficient freight services Some specialize in heavy-lift air cargo operations for oversized goods The crucial point is that airlines extend beyond their core services, with passenger aircraft often carrying cargo alongside luggage This integration demonstrates the flexibility of modern aviation, highlighting how airlines adapt to meet the increasingly diverse needs of customers and market trends.
As authorized agents of the International Air Transport Association (IATA), cargo agents (freight forwarders) facilitate air freight transportation, bridging the gap between shippers and airlines Operating under IATA's guidance, they adhere to standardized freight handling practices and maintain insurance coverage, guaranteeing reliability to clients By issuing air waybills, cargo agents simplify documentation and enhance efficiency, enabling the smooth flow of air cargo Their critical role underpins the global air freight market, ensuring the timely and secure delivery of goods worldwide.
Airport authorities are responsible for the ownership, leasing, and management of the intricate infrastructure that constitutes an airport This encompasses various elements such as terminals, runways, taxiways, aprons, hangars, and ancillary facilities necessary for the smooth operation of air travel services These authorities play a crucial role in ensuring the functionality, safety, and efficiency of airport operations, thereby facilitating the seamless movement of passengers, aircraft, and cargo within the aviation ecosystem.Additionally, they oversee the implementation of regulations, maintenance protocols, and security measures to uphold operational standards and ensure compliance with national and international aviation guidelines.
Air hubs and spokes
Air hubs play a pivotal role in the global air cargo network, strategically positioned relative to geographical locations and market proximity to optimize the efficiency of transporting goods over vast distances These hubs serve as critical junctions where cargo is consolidated by either freight forwarding companies or airlines before being transported between destinations This process involves the deconsolidation of cargo at intermediate hubs, where it may be transferred onto feeder aircraft or alternative modes of transportation for final delivery While the primary objective is to minimize transport costs, the route taken may not necessarily be the shortest but rather the most cost-effective.
The utilization of air hubs is essential due to the high unit costs associated with air transport, attributed to factors such as lower cargo volumes compared to other modes of transportation, long distances, and the substantial operating expenses of aircraft By leveraging strategically located hubs, airlines, freight forwarding companies, and air cargo customers can maximize carrying capacity and operational efficiencies over extended distances.
It is crucial to recognize that while the hub system is prevalent on major trade routes worldwide, some regions may not be adequately served by this network In such cases, smaller cargo aircraft may be deployed for direct deliveries, provided suitable airport facilities are available Otherwise, cargo may need to be transferred to alternative modes of transportation for final delivery, highlighting the importance of adaptable logistics solutions in meeting diverse transportation needs.
Figure II-2: Hub-and-Spoke
INFRASTRUCTURE IN AIR TRANSPORTATION
Types of air freighter
A diverse array of aircraft is utilized for air cargo transportation, ranging from smaller aircraft like the Piper PA-31 Seneca with a payload capacity of 600 kilograms to larger planes such as the Antonov An-225, capable of carrying up to 250 tonnes of cargo Helicopters are frequently employed, especially in areas inaccessible to fixed-wing aircraft, offering flexibility in cargo transportation, with capacities typically ranging from
4 to 20 tonnes Helicopters also possess the unique capability to sling loads beneath the aircraft, facilitating tasks like positioning equipment atop tall structures or accessing offshore oil installations.
Moreover, many passenger aircraft contribute significantly to air cargo transportation by carrying cargo in their belly holds alongside passenger baggage This dual functionality enables passenger planes to transport a substantial volume of air cargo worldwide.
While Table III-1 provides examples of common large-capacity air freighters, it's important to note that the list is not exhaustive and merely offers a glimpse into the possibilities of air cargo transportation For instance, as of the present, there is only one operational Antonov An-225 aircraft, highlighting the limited availability of certain aircraft models for specific cargo needs.
Table III-1: Common cargo-carrying aircraft types and their carrying capacities
Maximum Load Volume (Cubic Metres)
Air cargo handling
A Unit Load Device (ULD) refers to either an aircraft pallet and pallet net combination or an aircraft container, essential components in air cargo transportation. ULDs are integral parts of aircraft, subject to stringent regulations imposed by civil aviation authorities throughout their lifecycle, spanning from design, testing, and production to operational use, repair, and maintenance (IATA, 2021).
In essence, ULDs serve as the airborne equivalents of traditional shipping containers, facilitating the efficient and secure stowage of cargo while optimizing available space These devices come in diverse forms but share the common objective of enabling cargo transportation Many ULDs are custom-designed to conform to the contours of specific aircraft holds, ensuring compatibility and maximizing loading efficiency.
Air freighters possess main and lower deck sections within their fuselage, accommodating various ULDs (Unit Load Devices) The main deck typically employs flat metal pallets of standardized dimensions, secured with netting In contrast, lower deck ULDs conform to the fuselage shape, utilizing lightweight metal and incorporating doors or netting for efficient cargo loading and stacking.
IATA has established a comprehensive system for identifying ULDs This system includes type coding, utilizing three capital letters to denote container description, base dimensions, and specific physical characteristics For in-depth guidance on ULDs and cargo handling procedures, the IATA ULD Technical Manual offers valuable information encompassing the entirety of the cargo handling system, providing insights into their intricate operations and management.
Figure III-3: Air cargo pallets being loaded on to an air freighter
In response to the physical constraints imposed by aircraft design, sophisticated cargo handling systems have been developed to facilitate the rapid and safe transfer of cargo from airport cargo handling centers to the aircraft itself These systems employ fixed conveying mechanisms comprising tracks equipped with powered rollers, enabling efficient movement of Unit Load Devices (ULDs) within airport facilities Moreover, these conveying systems possess the capability to maneuver ULDs, allowing them to change direction as needed during transportation.
For instance, when ULDs are being transferred into the cargo hold of an aircraft,they may require rotation to ensure proper alignment for safe stowing within the aircraft.
Aircraft holds, accessed through side, front, or rear doors, are subject to dimensional limitations, influencing the handling process.
ULDs, having reached a designated position adjacent to the aircraft, are lifted by powered lifting devices, commonly known as hi-loaders, to the aircraft's door. Subsequently, they are conveyed into the hold, typically equipped with roller floors to facilitate movement Larger heavy-lift aircraft may feature front or rear doors that lower to ground level, allowing cargo to be loaded using fork-lift trucks Additionally, overhead gantry cranes are often installed in the cargo area of these aircraft to aid in the loading process.
Figure III-4: A Cargolux air freighter being loaded through the side door
TYPES OF CARRIERS
Private carriers
Private air carriers, specifically, refer to firms that operate aircraft to transport company personnel or freight in support of their core business operations While the primary focus of private air transportation typically revolves around the conveyance of company personnel, there are instances where these carriers may also transport emergency freight However, it is uncommon for a private air carrier to be specifically established for the routine transportation of freight.
For-hire carriers
The for-hire carriers are no longer regulated on an economic basis by the federal government and cannot be easily categorized into specific types because carriers provide many types of services For our purposes, the for-hire carriers will be discussed according to the type of service offered (all-cargo, commuter, charter) and annual revenue (majors, nationals, and regionals).
The categories used to classify air carriers in terms of revenue are as follows:
- Majors—annual revenues of more than $1 billion.
- Nationals—annual revenues of $100 million to $1 billion.
- Regionals—annual revenues of less than $100 million
Major carriers have $1 billion or more in annual revenues and provide service between major population areas The routes served by these carriers are usually high- density corridors, and the carriers use high-capacity planes The majors also serve medium-sized population centers.
National carriers have revenues of $100 million to $1 billion and operate between less-populated areas and major population centers These carriers operate scheduled service over relatively short routes with smaller planes They “feed” passengers from outlying areas into airports served by the majors
Regional carriers have annual revenues of less than $100 million and have operations similar to the nationals The carriers operate within a particular region of the country and connect less-populated areas with larger population centers
The all-cargo carrier, as the name implies, primarily transports cargo The transportation of air cargo permits the all-cargo carriers to freely set rates, enter and exit markets, and use any size aircraft dictated by the market
Commuter air carriers, regional carriers that operate within specific routes, connect smaller cities with larger ones They often fill the void left by major carriers abandoning low-demand routes Their schedules are carefully coordinated to coincide with connecting flights at larger airports, providing seamless transfers for passengers.
Charter carriers, also called air taxis, utilize small to medium-sized aircraft for transporting individuals or cargo Unlike scheduled carriers, supplemental carriers lack set schedules or routes They charter entire planes for specific origin-to-destination trips,commonly used by travel tour groups and the Department of Defense for personnel and supply transport Rates and schedules are negotiated within contracts.
DOCUMENTATION
Air waybills (AWB)
“Air waybill is a document of cargo carriage by air and constitutes an evidence of the conclusion of the contract, the receipt of the cargo and the acceptance of the conditions stated in the contract." (Article 129, Vietnam Civil Aviation No. 66/2006/QH11) An air waybill, issued by the carrier airline, serves as a formal contract for the transportation of goods via air (Rushton et al., 2014) It delineates the terms and conditions of carriage, including details of the goods being transported and the associated charges for the service provided
In essence, the air waybill acts as evidence of the contractual agreement between the shipper and the carrier airline, documenting the conclusion of the transportation contract, the receipt of the cargo, and the acceptance of the terms outlined therein While primarily utilized for air cargo shipments, air waybills may also serve as through delivery documents in cases where the majority of the journey distance has been completed by air,but further transportation by road is required This document is instrumental in facilitating both domestic and international carriage of goods, ensuring clarity and accountability throughout the transportation process.
1.1 Making out of air waybill
According to Article 129, Vietnam Civil Aviation No 66/2006/QH11, the preparation of the air waybill involves the creation of three original copies, each serving distinct purposes:
1 The first original copy, signed by the consignor, is submitted to the carrier This document initiates the transportation process and provides essential information about the goods being shipped.
2 The second original copy, bearing signatures from both the consignor and the carrier, is designated for the consignee This copy serves as confirmation of the contractual agreement between the parties involved and outlines the terms and conditions of the transportation service.
3 The third original copy, signed solely by the carrier, is retained by the consignor upon receipt of the cargo This copy serves as a receipt, acknowledging the successful completion of the cargo's transportation and confirming the carrier's acceptance of responsibility for the goods during transit.
The creation of multiple original copies of the air waybill guarantees clarity and accountability during the shipment process This enables seamless communication among parties involved in transportation, ensuring that all stakeholders are well-informed and responsible for their actions This process enhances transparency and accountability throughout the shipment journey, resulting in a simplified and efficient logistics operation.
The function of an air waybill is multifaceted, serving various essential purposes in the transportation of goods by air Unlike a sea-freight bill of lading, an air waybill is considered a non-negotiable document Its primary functions include:
- Receipt for goods shipped: The air waybill serves as a formal receipt for the goods shipped, containing detailed statements regarding the quantity, description, and condition of the cargo This information serves as crucial documentation, forming the basis of any cargo claim in the event of damage during discharge or other transportation-related incidents By accurately recording the state of the goods at the point of shipment, the air waybill facilitates the resolution of disputes and ensures accountability throughout the transportation process.
- Evidence of the contract of carriage: Additionally, the air waybill functions as evidence of the contract of carriage between the shipper and the carrier It serves as tangible proof of the conclusion of the transportation contract, documenting the terms and conditions agreed upon by both parties This aspect of the air waybill is essential in establishing the legal framework governing the transportation of goods by air, providing clarity and certainty regarding the rights and obligations of all parties involved.
In the classification of air waybills, two primary types are commonly utilized:
The Master Air Waybill (MAWB), issued by the carrier airline, serves as the legal agreement governing cargo transportation, outlining the terms and conditions of carriage It encompasses multiple individual shipments consolidated by the freight forwarder and represents the primary contract between the freight forwarding company and the carrier airline.
A House Air Waybill (HAWB) is issued by a freight forwarding company and assumes liability as the carrier Similar to the responsibilities of an airline carrier in a Master Air Waybill (MAWB), each consolidated shipment is detailed in a separate HAWB These HAWBs are then referenced within the overarching MAWB, providing a comprehensive summary of all shipments within the consignment.
In essence, the classification of air waybills into MAWBs and HAWBs facilitates the efficient organization and documentation of air cargo shipments While the MAWB outlines the overarching contract between the carrier airline and the freight forwarder, the
HAWBs provide detailed information on individual shipments, ensuring clarity and accountability throughout the transportation process.
Table V-2: Compare MAWB and HAWB
Master Air Waybill House Air Waybill
Issuer Carrier Airline Freight forwarder
Parties on AWB Carrier Airline and freight forwarder Freight forwarder and shipper
Freight forwarder and freight forwarder’s agent Real seller and buyer
AWB No 11 numbers in which Airline code is the first 3-digit number
Normally numbers and letters included
AWB form Name and logo of Carrier Airline Name and logo of Freight forwarder
Payment method Normally Prepaid Collect or prepaid
Cargo name Normally “Consolidation shipment as per attached manifest” Specifically named
AWB modification Normally more difficult Normally easier
Other documentation
In addition to air waybills, various other types of documentation are often necessary for the smooth handling and clearance of air cargo shipments These include packing lists, commercial invoices, certificates of origin, and a diverse array of cargo or country-specific documents Airlines, security services, and customs authorities at both origin and destination airports may require these documents to ensure compliance with regulatory requirements and facilitate efficient cargo handling processes.
Packing lists provide detailed information about the contents of the shipment,including descriptions, quantities, and packaging details, aiding in cargo handling and inventory management Commercial invoices outline the financial aspects of the transaction, including pricing, terms of sale, and payment details, serving as essential documentation for customs clearance and accounting purposes Certificates of origin verify the country of origin of the goods being shipped, which is crucial for assessing import duties, taxes, and trade agreements Additionally, various cargo-specific documents, such as hazardous materials declarations or perishable goods certificates, may be necessary to comply with safety regulations and ensure the proper handling of specialized cargo types.
Given the diverse regulatory requirements and operational considerations involved in air cargo transportation, ensuring the accuracy and completeness of these documents is essential for the timely and efficient movement of goods across international borders.Effective coordination between shippers, freight forwarders, airlines, and customs authorities are key to ensuring compliance and minimizing delays in the transportation process.
PRICING IN AIR TRANSPORTATION
Air freight
In air transportation, pricing plays a crucial role in determining the costs associated with shipping goods by air Specifically, air freight refers to the amount payable or charged for the transportation of goods via air, commonly referred to as
"freight costs" or "freight charges".
Air Cargo Tariff, a crucial element in air freight pricing, includes the charges for transporting a unit of weight These rates, set by carriers or industry-wide, reflect market conditions and operating expenses The tariff covers transportation exclusively from airport to airport, excluding any additional services These sectoral rates provide a benchmark for carriers and enable effective pricing strategies.
Furthermore, the Air Cargo Tariff is instrumental in determining the amount documented in the Air Waybill (AWB) This figure serves as the basis for calculating charges related to transporting special commodities, such as live animals, human remains,valuables, and vulnerable goods By incorporating these specific rates into the AWB, the pricing structure for specialized cargo categories is transparently outlined, ensuring accurate billing and adherence to regulatory requirements throughout the transportation process.
In the realm of air transportation pricing, the Weight Charge constitutes a significant component, encompassing various rates and classifications tailored to different types of cargo:
- General Cargo Rate (GCR): This rate applies to the transportation of commodities that haven not been assigned a specific commodity rate or classification It typically comprises a minimum rate (M), a normal rate (N), and a lower charge for higher weights (Q)
Specific Commodity Rates (SCR) are designed for designated commodities on specific routes, providing optimized cargo capacity and potentially more competitive pricing than General Cargo Rates (GCR) SCRs prioritize specific needs and may have minimum weight requirements, taking precedence over GCRs to ensure optimal utilization of airline capacity By tailoring to particular commodities and routes, SCRs aim to enhance efficiency and competitiveness in air cargo transportation.
- Commodity Classification Rate (CCR or Class Rate): CCRs are published for specific classes of commodities from a specified origin to a designated destination. They are usually indicated as Surcharged (S) or Reduced (R) compared to GCR and are expressed as a percentage of the GCR CCRs take precedence over GCR irrespective of comparisons For instance, commodities such as Newspapers, Magazines, Periodicals, Books, Catalogues, Braille-Type Equipment, and Talking Books for the Blind may be assigned a CCR at 50% of the normal GCR The minimum charge will be either the minimum charge for the specified sector or the product of this discounted rate per unit weight and the minimum chargeable weight, whichever is higher.
- Bulk Unitization Charge (BUC): BUC is assessed by carriers to shippers or freight forwarders based on the utilization of Unit Load Devices (ULDs), such as containers or pallets It includes the minimum charge for the sector carried and the ULD used, along with any excess weight charges beyond the pivot weight (the maximum weight permitted at the minimum charge) BUC usage is restricted for certain items, including dangerous goods, live animals, human remains, and valuables.
This comprehensive pricing structure ensures that various types of cargo are appropriately priced and accounted for, optimizing efficiency and transparency in air transportation operations.
The process of calculating the weight charge for air freight involves several steps to accurately determine the cost of transporting cargo between airports:
- Measurement of Actual Volume and Gross Weight: Cargo's actual volume and gross weight are measured and recorded.
Actual volume = length × width × height
- Calculation of Chargeable Weight (CW): CW considers how cargo occupies space on the aircraft It is determined by comparing the actual Gross Weight (GW) with the Volume Weight (VW), and choosing the higher one.
Volume Weight (kg) = Cargo volume (cm3)/ 6,000 = Cargo volume (m3) x 166.67
The weight charge can be determined by multiplying the applicable rate by the chargeable weight, which varies based on factors like the consignment nature, sector, and chargeable weight If the calculated weight charge falls below the minimum charge set for the specific sector, the minimum charge will be implemented to guarantee a minimum fee for the provided transportation service.
Weight charge = applicable rate x chargeable weight
By following these steps, airlines can accurately determine the cost of transporting cargo by air, taking into consideration both the weight and volume of the goods being shipped This ensures fair and transparent pricing for air freight services, reflecting the resources and space required to transport cargo between airports efficiently and safely.
The Valuation Charge is applicable when the shipper declares a value for carriage on the Air Waybill that exceeds a predetermined threshold, such as 22 Special Drawing Rights (SDR) per kilogram In such cases, a valuation charge is imposed as a percentage of the declared value exceeding this specific threshold For instance, if the shipper declares a value for carriage that surpasses the designated threshold of 22 SDR per kilogram, a valuation charges equivalent to, for example, 0.6% of the excess declared value will be levied
The valuation charge mechanism ensures that the carrier is adequately compensated for the increased risk associated with transporting goods that are higher than the value set by their transportation carrier This provides a safeguard against potential losses in the event of damage, loss, or other unforeseen circumstances during transit It also incentivizes shippers to accurately assess and declare the value of their goods,promoting transparency and accountability in air cargo transportation.
Other charges
In addition to the base freight charges, various surcharges may be applied to air freight shipments, each serving specific purposes and reflecting additional costs incurred in the transportation process:
- Fuel Surcharge (FSC): This surcharge, imposed by carriers, is typically calculated based on the chargeable weight of the cargo It is designed to offset regional or seasonal fluctuations in fuel costs, providing carriers with a mechanism to manage the impact of volatile fuel prices and maintain financial stability.
- Security Surcharge (SSC): Levied by terminal providers, the security surcharge is implemented to cover the expenses associated with enhanced security measures mandated by airport authorities These measures are essential for ensuring the safety and integrity of air cargo operations in compliance with regulatory requirements.
The airline terminal fee, levied by terminal providers, covers costs related to cargo handling and processing at airport terminals This fee supports operational expenses incurred by terminal operators to ensure the efficient movement of air cargo.
- Delivery Order Fee (D/O fee): Carriers or freight forwarders may impose a delivery order fee to cover the administrative costs associated with issuing a delivery order, which authorizes the consignee to retrieve the goods from the airport upon arrival This fee reflects the paperwork and coordination efforts involved in facilitating cargo release to the consignee.
- Air Waybill Fee: Carriers or freight forwarders may charge an air waybill fee for issuing the air waybill, a crucial document that serves as a contract of carriage and provides essential information about the shipment This fee compensates for the administrative and documentation-related tasks involved in preparing the air waybill.
- Screening Fee (X-ray): A screening fee may be imposed for conducting X-ray screening of cargo before loading it onto an aircraft This fee covers the costs associated with security screening measures aimed at detecting and preventing the transportation of prohibited or hazardous items, thereby ensuring the safety of air travel.
These surcharges play a vital role in ensuring the sustainability and efficiency of air cargo operations by accurately reflecting the various costs and expenses incurred throughout the transportation process While they contribute to the overall cost of air freight shipments, they are essential for maintaining the integrity, security, and reliability of air cargo services.
LEGAL REQUIREMENTS FOR AIR TRANSPORTATION
Legal requirements
Figure VII-5: International legal framework
The Warsaw Convention is an international convention which regulates liability, in the event of accident, for international carriage of persons, luggage or goods performed by aircraft for reward The convention of 1929 came into force on 13 February 1933 It was the first comprehensive legal framework governing aviation at the international level, playing an essential role in supporting the development of the sector and establishing a set of principles, most of which are still effective and constitute the basis of modern aviation law.
The Hague Protocol 1955 increased liability limits for air carriers, expanded coverage to include various types of international carriage by air, and addressed some limitations of the Warsaw Convention 1929 This includes expanding the application of the regulations to various types of various transportation such as passenger, cargo and mail transportation
Guadalajara Convention 1961 is Convention Supplementary to the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air Performed by actual carrier signed in Guadalajara on September 18, 1961 (Guadalajara Convention 1961) Actual carrier refers to a person authorized by the contracting carrier to perform all or part of the carriage, but is not considered a successive carrier. Guadalajara Convention 1961 focuses on unifying regulations on liability and insurance for the carriage of goods and passengers by charter aircraft of parties other than the contracting airlines It expands the scope of application of the Warsaw Convention to include these cases and defines the rules on court jurisdiction.
The Guatemala City Protocol (1971) supplements the Warsaw Convention (1929) and Hague Protocol (1955) Notably, it modifies documentation for passenger and baggage carriage, adjusting liability limits for carriers in cases involving death, injury, or damage Additionally, it includes provisions for legal proceedings and extends the convention's applicability to military authorities.
The Montreal Additional Protocols 1975 are a set of measures amending and supplementing the Warsaw Convention of 1929, adopted in Montreal on September 25,
1975 These protocols expand and adjust the provisions of the Warsaw Convention,particularly in the areas of cargo and postal item carriage, passenger and baggage carriage, as well as the legal responsibilities of the parties involved in these matters.
Key adjustments include increasing the compensation limits for loss, damage, or destruction of cargo, as well as for baggage and passengers Additionally, the protocols regulate the liability of parties in cases of damage caused by negligent or intentional acts, as well as provisions related to burden of proof and liability limitations for airlines.
The Montreal Convention 1999 (MC99) establishes airlines' liability in cases of passenger injury or death, baggage delays, damage, or loss Consolidating international agreements on airline liability that had developed inconsistently since 1929, MC99 aims to provide a comprehensive, universal framework for regulating airline liability worldwide.
Acknowledging the considerable advantages provided by MC99, the 39th Assembly of the International Civil Aviation Organization (ICAO) in 2016 passed Resolution A39-9, encouraging all nations that have not yet done so to promptly ratify MC99 IATA is endorsing this Resolution and collaborating with governments to advocate for the benefits of MC99 and encourage its ratification.
The international conventions on air transportation, from the Warsaw Convention
1929 to the Montreal Convention 1999, have developed sequentially, from establishing the initial fundamental principles for international aviation to adjusting and expanding regulations to reflect changes and developments in the industry From increasing liability limits and expanding the scope of application to clarifying provisions on liability and insurance, these conventions have played a crucial role in ensuring safety and fairness in international air transportation, while promoting the sustainable development of the industry.
Vietnam's civil aviation industry is regulated by the Vietnam Civil Aviation Law No 66/2006/QH11 (enacted in 2006) and its subsequent amendments, such as the Law 61/2014/QH13 (issued in 2014) These laws establish the legal framework for the industry and align Vietnam with international standards Furthermore, Vietnam is a signatory to the Warsaw Convention (1929) and the Hague Protocol (1955), demonstrating its commitment to international regulations governing liability and responsibilities in air transportation.
Carrier liability
Warsaw System conventions and the Montreal Convention of 1999 apply specifically to air carriage between two Contracting States under the same international air convention Additionally, it encompasses carriage within a single Contracting State if there is an agreed intermediary international stopover In essence, these conventions govern the liability of carriers for incidents occurring during international air travel, ensuring uniformity and accountability in the regulation of air transportation across borders They establish a framework to address issues such as passenger injuries, loss or damage to cargo, and other liabilities that may arise during air carriage, providing legal clarity and protection for both passengers and carriers involved in international air travel.
The concept of the "Period of Responsibility" as outlined in international conventions and the Vietnam Civil Aviation Law No 66/2006/QH11 refers to the duration during which the carrier is deemed accountable for the goods being transported. Specifically, under international conventions, this period pertains to when the goods are under the direct supervision and control of the carrier during air carriage, excluding any transportation conducted by land, sea, or river outside of airport premises.
During this period, the carrier is responsible for safeguarding the goods and ensuring their safe transportation Typically, the carrier's responsibility ceases upon the delivery of the goods to the designated consignee This implies that the carrier must have the ability to manage and protect the goods throughout the transportation process until they are successfully handed over to the recipient.
Similarly, Article 161 of the Vietnam Civil Aviation Law No 66/2006/QH11 defines the carrier's period of responsibility as commencing from the moment the consignor entrusts the cargo to the carrier and ending when the carrier delivers the cargo to the entitled recipient This period does not encompass any transportation conducted by sea, land, rail, or inland waterway outside of an airport or airfield.
In summary, both international conventions and domestic legislation establish a clear framework delineating the carrier's responsibility for the goods during air transportation This framework aims to ensure the protection of cargo and the rights of all parties involved in the transportation process, fostering accountability and legal clarity in air cargo operations.
The basis of liability for air carriers, as defined by international conventions and Vietnamese regulations, outlines the circumstances under which carriers are held accountable for loss, damage, or delay in the transportation of goods:
According to international conventions, air carriers are presumed liable for loss or damage to cargo if the event causing the damage occurred during the carriage by air, even if the actual damage occurred at a later time Similarly, carriers are presumed liable for damages resulting from delays in the transportation of goods Importantly, in both cases, the claimant is not required to prove that the carrier was at fault, simplifying the process of seeking compensation for losses or damages.
In Vietnam, the carrier is held liable for damages in cases of loss, lack of, or damage to cargo, as stipulated in Article 161 of Vietnamese law Additionally, carriers are responsible for damages resulting from delays unless they can demonstrate that they, along with their employees and agents, took all necessary measures to prevent the delay, or that it was impossible for them to take such measures, as outlined in Article 164.These provisions establish a clear framework for determining carrier liability,ensuring that carriers are held responsible for incidents that occur during air transportation, and providing recourse for parties who suffer losses or damages as a result By outlining these principles, both international conventions and Vietnamese regulations aim to protect the interests of shippers and consignees while promoting accountability within the air transportation industry.
Both international conventions and Vietnamese regulations outline exceptions to carrier liability in cases of loss, damage, or delay in air transportation.
Under international conventions, carriers are exempt from liability in instances where the loss, damage, or delay is attributed to inherent defects, quality issues, or vices of the goods being transported, as well as defective packing of the goods Additionally, carriers are not held liable for damages resulting from acts of war or public authorities.
In Vietnam, similar exceptions apply Carriers are not held liable for damages caused by the natural characteristics or inherent defects of the cargo, or as a result of decisions made by courts or competent state agencies regarding the cargo Furthermore, carriers are exempt from liability in cases of war or armed conflict, as well as when damages occur due to the fault of the cargo escort appointed by the consignor, or as a result of the fault of the consignor or consignee themselves (Article 165).
Exceptions to carrier liability establish clear boundaries and delineate situations where carriers are not responsible for damages beyond their control or caused by factors inherent to the goods These exceptions, enshrined in international conventions and Vietnamese regulations, aim to strike a balance between the interests of carriers and the protection of shippers and consignees in air transportation, ensuring that carriers are not held accountable for circumstances outside their authority.
The limitation of liability for air carriers, as stipulated by international conventions and Vietnamese regulations, sets forth the maximum monetary compensation that carriers are obligated to provide in cases of loss, damage, or delay in the transportation of cargo:Under international conventions, the monetary cap on carrier liability for cargo is uniform across various conventions, albeit expressed in different monetary units For instance, the Warsaw Convention of 1929 and the Warsaw-Hague Convention of 1955 express this limit in gold francs (250 gold francs per kilogram), while subsequent conventions use Special Drawing Rights (SDR), with a limit of 17 SDR per kilogram.
In Vietnam, the carrier's liability for lost, damaged, or delayed cargo with an undeclared value is limited to 17 SDR per kilogram If declared value is provided, they must compensate based on this, unless they prove the value was inflated.
These limitations on liability provide a framework for ensuring that carriers are held accountable for damages within reasonable bounds, while also safeguarding carriers from excessive financial liability By delineating these limits, both international conventions and Vietnamese regulations aim to balance the interests of carriers and shippers, fostering fair and predictable outcomes in air transportation transactions.
2.6 The time limit for suit
The time limits for initiating legal action in cases of damage, loss, or delay to cargo in air transportation are outlined both in international conventions and Vietnamese regulations:
Under international conventions, the person entitled to delivery or the claimant must file a written complaint to the carrier within a specified timeframe after discovering the damage or delay This time frame typically starts from the date of receipt in cases of damage or from the date on which the cargo should have been delivered in cases of delay. Subsequently, the claimant has a period of two years from the date of arrival of the goods at their destination, the expected arrival date of the aircraft, or the date on which the carriage ceased, to initiate court or arbitral proceedings against the carrier If multiple dates apply, the latest one is considered relevant.
COMPARE AIR FREIGHT WITH OTHER MODES
Freight cost
Air transport's high per-ton-mile freight costs are attributed to intrinsic operational expenses Fuel expenses are considerable due to high consumption and fluctuating global oil market prices Stringent safety standards necessitate frequent inspections and repairs, resulting in high maintenance costs Extensive infrastructure, including airports and navigation systems, requires substantial investments Furthermore, personnel expenses for crew and ground staff, regulatory compliance, insurance, and security measures add to the overall cost burden These factors collectively contribute to air transport's comparative expensiveness on a per-ton-mile basis.
The freight cost of road freight is generally reasonable, offering competitive prices, particularly for goods that are not bulky Packaging expenses can be minimized due to the reduced susceptibility of loads to transit shocks compared to other modes. Road freight also allows for flexible pricing and negotiation, accommodating varying needs and circumstances However, it tends to be costlier for heavy and bulky freight compared to other modes, except for air transportation, which maintains its reputation for high-speed but expensive cargo transport. c) Marine freight
The freight cost of maritime transportation is often characterized by its comparatively low expenses Maritime shipping generally offers cost-effective solutions for transporting large volumes of goods over long distances, making it an economical choice for many businesses engaged in international trade Factors contributing to the lower freight costs of maritime transport include the large cargo capacity of vessels, fuel efficiency over extended voyages, and economies of scale achieved through containerization There may be additional costs for packing and loading goods because the characteristics of this vehicle require converting goods to other vehicles many times. d) Rail freight
Rail transportation offers substantial cost savings in freight expenses, especially for bulk materials Its efficiency in handling large volumes over extended distances makes it a competitive option for industries like mining, agriculture, and manufacturing However, the industry's vulnerability stems from the fixed and inflexible infrastructure, which demands significant investment Furthermore, its labor-intensive nature exacerbates its susceptibility to economic fluctuations and changing demand patterns.
In conclusion, air transport is renowned for high-speed delivery but faces high operational expenses, making it costly per ton-mile Road freight offers competitive prices but may be pricier for bulky goods Maritime shipping boasts low costs due to large cargo capacity and fuel efficiency, ideal for long distances Rail freight is cost- effective for bulk materials over extended distances but is vulnerable to economic fluctuations Overall, while air transport is good, businesses must weigh costs and needs when choosing transportation modes.
Speed of delivery
The speed of delivery in air transport is indeed renowned for its rapidity, especially when it comes to long international movements, where airport-to-airport transit times are significantly reduced compared to other modes of transportation This efficiency is paramount for urgent shipments, as air transport ensures swift delivery of goods across vast distances, enabling businesses to meet tight deadlines and satisfy customer demands However, despite its speed advantages, delays can occur due to various factors such as airport congestion, handling procedures, paperwork requirements, and customs clearance processes. b) Road freight
The speed of delivery in road transport can indeed be notably efficient, especially for full truck loads (FTL), facilitating swift movement of freight across extensive distances FTL shipments benefit from direct transportation without the need for intermediate stops, allowing for expedited delivery timelines However, the speed advantage of road transport may diminish when utilized for less than truckload (LTL) shipments LTL shipments typically involve smaller quantities of freight, necessitating consolidation with other shipments to fill the truck's capacity As a result, these shipments often require double handling at both ends of the journey, as well as additional packaging considerations to ensure the safe transportation of goods c) Marine freight
The speed of maritime transport is commonly perceived as relatively low compared to other modes of transportation, largely due to several factors inherent in sea- based shipping Weather conditions play a significant role, as rough seas or adverse weather patterns can slow down vessels and potentially disrupt schedules Moreover, congestion at ports, especially major hubs with high volumes of maritime traffic, can lead to delays in loading and unloading cargo, further impacting transit times Besides, the vast distances covered by maritime routes contribute to longer travel durations than land- based transport options Additionally, the nature of maritime logistics, including the need for transshipment and cargo handling at multiple ports along the route, further extends the overall transit duration. d) Rail freight
The speed of delivery in rail transport indeed varies depending on several factors, including the distance traveled and the type of rail system utilized Rail transport often excels in achieving high average speeds for medium-distance hauls, making it an efficient option for shipping goods across regions or countries However, the flexibility with shipping time can be limited due to the fixed schedules and routes of many rail freight services Besides, conventional rail freight systems may encounter challenges in maintaining high speeds, especially for longer distances or when traversing through complex terrains such as mountainous regions or densely populated urban areas.
Air transport excels in rapid delivery, while road freight offers efficiency for full loads but challenges for smaller shipments Maritime transport provides cost-effective solutions for long distances, albeit subject to weather and port delays Rail freight offers varied speeds and capacities, but may have less flexibility and speed limitations Businesses should evaluate their unique logistical requirements and prioritize critical factors to determine the optimal transportation mode for their operations.
Distance
Air freight is a versatile mode of transportation that offers rapid and efficient delivery for both domestic and international shipping needs Its global reach and speed make it an ideal choice for businesses seeking timely transportation solutions regardless of geographical boundaries.
Road freight finds its niche in domestic or neighboring country shipments, favoring shorter hauls due to time and cost constraints This mode shines in regional trade and distribution networks, seamlessly connecting goods within geographically close areas thanks to its flexibility and accessibility.
Marine freight excels in covering vast transportation distances, making it a preferred choice for international shipping needs With the ability to traverse oceans and seas, marine freight efficiently transports goods across long distances, facilitating global trade and commerce Its extensive reach and capacity make it indispensable for businesses seeking to transport goods between continents and across international borders, providing a reliable and cost-effective solution for long-distance transportation requirements. d) Rail freight
Rail freight is a versatile mode of transportation suitable for both long-distance and short-distance hauls While it can efficiently transport goods over various distances,its economic advantages are particularly notable in long-distance transportation This is due to the ability to handle large volumes and quantities of cargo, resulting in cost efficiencies and enhanced economic benefits over extended routes However, rail freight remains a viable option for shorter distances as well, offering reliable and efficient transportation solutions for businesses across various geographic scales.
In conclusion, the suitability of freight transportation modes varies based on distance requirements Air freight is versatile, offering rapid delivery over long distances both domestically and internationally Road freight excels in regional trade, providing flexibility and accessibility in closer geographic areas Marine freight is crucial for global trade, covering vast distances across oceans Rail freight is versatile, handling both short and long distances with economic advantages over extended routes Each mode offers unique advantages, providing businesses with diverse options to meet transportation needs across different geographic scales.
Air transport excels in service reliability, boasting consistent adherence to scheduled timelines This reliability is particularly valuable for transporting high-value or perishable goods, as airlines prioritize punctuality and flight schedule adherence By prioritizing operational efficiency and timeliness, airlines ensure cargo arrives at its destination swiftly and reliably This reliability is critical for businesses across industries, particularly for time-sensitive shipments that support customer demand and supply chain efficiency.
The service reliability of road transport is characterized by its capacity to provide regular, scheduled services, enabled by the flexibility inherent in road vehicle scheduling.This adaptability allows for dynamic routing and efficient utilization of resources,contributing to the consistent availability of transportation services However, despite concerted efforts to uphold reliability, arrival times may still encounter variations due to a myriad of external factors Traffic conditions, for instance, can significantly impact transit times, especially in urban areas or during peak hours, leading to delays in reaching the destination Similarly, adverse weather conditions, such as heavy rain, snowfall, or fog, can pose challenges for road transport operations, necessitating adjustments to travel speeds and routes for safety reasons, thereby affecting delivery schedules Moreover, unforeseen incidents may also disrupt the smooth flow of transportation, resulting in deviations from planned arrival times. c) Marine freight
The service reliability of maritime transport is typically commendable, offering a cost-effective and efficient means of transporting goods across long distances However, it is not immune to occasional delays, which can arise from a variety of factors Adverse weather conditions, such as storms, high winds, or heavy fog, can impede vessel operations and lead to delays in departure or arrival times Port congestion is another common issue, particularly at major hubs with high volumes of maritime traffic, where limited berth availability and inefficient handling processes can cause delays in cargo loading and unloading While delays are an inherent part of maritime transport, proactive planning, and management strategies can help mitigate their impact on operations d) Rail freight
The service reliability of rail transport exhibits a mixed profile While rail systems are generally the least affected by adverse weather conditions compared to other land- based modes of transport, they can be prone to significant unreliability due to various operational factors In many instances, freight trains must conform their schedules to accommodate passenger trains, which are often given priority, leading to substantial delays, and impacting supply chain operations and delivery timelines Furthermore, the arrival of batches of wagons at irregular intervals can further exacerbate reliability issues,making it challenging for businesses to predict and manage their logistics efficiently.When choosing transportation options, businesses must balance service reliability with factors like cost, speed, and the type of goods being transported While air transport offers high reliability and speed, it comes at a higher cost Road freight may face arrival time variations but is cost-effective for short to medium distances Maritime transport is economical for long distances despite potential delays Rail freight efficiently transports large volumes but may face scheduling challenges Businesses should assess these factors to make informed decisions based on their logistical requirements.
The unmatched location flexibility of air transport stands as a cornerstone of modern commerce, offering unparalleled access to a vast array of countries and markets across the globe with remarkable speed and ease This expansive global reach empowers businesses to seamlessly penetrate diverse markets, catalyzing unprecedented market flexibility and presenting unparalleled opportunities for expansion and growth. Leveraging the agility and efficiency of air transport, companies can swiftly navigate through geographical barriers, connecting with consumers and partners in distant corners of the world with unprecedented ease. b) Road freight
Road transport offers exceptional flexibility in location, enabling movement to various small locations such as provinces, cities, and districts It seamlessly integrates with other modes like rail and air, ensuring comprehensive connectivity In situations where countries lack rail continuity or are landlocked, road transport becomes indispensable, playing a vital role in facilitating trade and connectivity across regions.
Maritime transport services constitute a cornerstone of global trade infrastructure,boasting widespread availability along major international trade routes This accessibility facilitates extensive coverage and ensures connectivity to diverse markets worldwide.The expansive reach of maritime transportation not only underscores its versatility but also amplifies its significance as a vital component of global supply chains Businesses capitalize on this extensive network to navigate the complexities of international trade, leveraging maritime transport for their shipping requirements with confidence in its reliability and efficiency d) Rail freight
Rail transport offers certain advantages in terms of location flexibility, particularly in cases where rail lines run directly from city center to city center, facilitating efficient urban connectivity However, the need for trans-shipment from rail to other modes of transport for certain segments of the journey can limit its flexibility, especially for shorter distances where the costs and time associated with trans-shipment become more significant Few companies have railway sidings on their premises due to the high costs associated with their upkeep and operation, further complicating the feasibility of direct rail transport from source to destination.
In summary, each mode of freight transportation offers unique advantages and challenges in terms of location flexibility Air transport provides unparalleled global reach and speed, enabling swift market penetration and expansion opportunities Road transport excels in accessing diverse locations and seamlessly integrating with other modes, facilitating efficient movement of goods Maritime transport, while slower, offers extensive coverage and accessibility to global markets Rail transport provides urban connectivity but may require trans-shipment, limiting its flexibility, particularly for shorter distances Businesses must carefully consider these factors to determine the most suitable mode for their logistical needs.
Door-to-door service
Air freight services traditionally operate on fixed routes and schedules, which often restrict the ability to deliver goods directly to the intended recipient However, recent advancements in logistics have led to the emergence of convenient door-to-door solutions in air transport by leveraging a combination of ground and air transportation networks. b) Road freight
In road freight, the versatility of vehicles enables them to access even the most remote or narrow locations, ensuring direct delivery of goods to the recipient's doorstep. This capability allows road freight services to reach destinations that may be inaccessible to other modes of transportation, providing a comprehensive door-to-door service that meets the specific needs of customers. c) Marine freight
In marine freight, goods are typically transported to designated wharves and ports, as opposed to being delivered directly to the recipient's door This mode of transportation is not ideally suited for door-to-door delivery due to its reliance on maritime infrastructure However, integrated logistics solutions often involve complementary ground transportation services to facilitate the movement of goods from ports to their final destinations, providing a comprehensive door-to-door service despite the inherent limitations of marine freight alone. d) Rail freight
Rail freight, due to its fixed railway routes, is not inherently conducive to direct delivery to the recipient's location Instead, goods are typically transported to train stations and terminals along the railway network To achieve door-to-door service, rail freight must be integrated with other modes of transportation such as road or inland waterway transport This combination of transportation modes allows for seamless movement of goods from origin to destination, ensuring efficient delivery or receipt directly to and from the desired locations.
In summary, door-to-door freight services vary across transportation modes, each with its strengths and challenges Air freight offers integrated ground and air networks for efficient delivery, despite fixed routes Road freight excels in direct access to remote areas, providing customized service Marine freight primarily delivers to ports but integrates ground transport for final delivery Rail freight requires integration with other modes due to fixed routes Overall, each mode contributes to comprehensive logistics,ensuring efficient delivery from origin to recipient.
Capability
The capability of air transport is particularly advantageous for specific categories of goods, including commodities with high value-to-weight ratios, perishable items, fashion goods, spare parts, and products requiring expedited delivery However, air transport does entail size and weight restrictions, limiting the types of cargo that can be transported efficiently Additionally, stringent security and safety considerations further influence the types of goods suitable for air transportation, with certain hazardous or bulky items subject to restrictions Despite these limitations, air transport remains an indispensable choice for time-sensitive shipments and high-value goods, offering unmatched speed and efficiency in reaching destinations worldwide. b) Road freight
Road transport demonstrates strong capability for handling small consignments efficiently, as it significantly reduces the requirement for double-handling and trans- shipping goods and packages Direct, full-load deliveries are particularly advantageous in this regard, as they eliminate the need for intermediate handling However, road transport is less suitable for bulk consignments, as it may not offer the same economies of scale or efficiency as other modes of transportation, such as rail or maritime shipping, which are better equipped for handling larger volumes of cargo. c) Marine freight
The capability of maritime transport is well-suited to accommodate a wide range of cargo types, particularly bulk goods and large packaged consignments destined for long-distance voyages Maritime vessels, with their sizable cargo holds and capacity for heavy loads, are ideally equipped to transport bulk commodities such as grains, minerals, and petroleum products efficiently over extended distances. d) Rail freight
Rail transport boasts significant capability in terms of bulk-handling capacity,surpassing other land-based systems in its ability to efficiently transport large volumes of freight The railway's inherent advantage lies in its ability to carry substantial quantities of goods over any given strip of land of a specific width, making it a preferred choice for industries requiring the movement of bulk commodities such as coal, grains, and raw materials The expansive cargo capacity of trains and the efficiency of rail networks enable cost-effective transportation of bulk goods over long distances, contributing to the vital role of rail transport in supporting various sectors of the economy and facilitating global trade.
In conclusion, each mode of freight transportation offers distinct capabilities tailored to specific types of cargo and logistical needs Air transport excels in speed and efficiency for time-sensitive shipments and high-value goods, despite limitations on size and weight In contrast, road freight is efficient for small consignments but less suitable for bulk cargo compared to rail or maritime shipping Maritime transport accommodates a wide range of cargo types, particularly bulk goods, over long distances Rail freight boasts significant bulk-handling capacity, making it ideal for transporting large volumes of freight efficiently Businesses must consider the factors above finding the most transport suitable for their specific cargo requirements.
Means of transportation
Air freight involves the transportation of goods via specialized cargo aircraft, known as freighters, or within the cargo holds of passenger planes Freighters are specifically designed to carry various types of cargo, offering dedicated space and equipment for efficient transport Additionally, goods can also be transported in the belly of passenger planes, utilizing available cargo space alongside passenger luggage This dual approach provides flexibility and capacity to accommodate different types of shipments, ranging from small parcels to oversized freight, making air freight a versatile and widely used method of transportation for expedited delivery needs. b) Road freight
Road freight encompasses a wide array of vehicles tailored to accommodate various types of goods and transportation requirements This diversity includes cars, trucks, container trucks, trailers, and semi-trailers equipped to pull cargo Each vehicle type offers unique features and capacities suited to different cargo sizes and weights, ensuring flexibility and efficiency in transporting goods over road networks c) Marine freight
Marine freight encompasses a diverse range of vessels tailored to transport goods of varying sizes and weights, including extremely large and heavy cargo Examples of such vessels include container ships, bulk carriers, roll-on/roll-off (RORO) ships, oil tankers, and refrigerated ships These specialized vessels are equipped to handle different types of cargo, ranging from standard containers to bulk commodities, vehicles, liquids, and perishable goods. d) Rail freight
Rail freight relies solely on trains as the primary mode of transportation for all types of goods on specialized railway infrastructure Moreover, trains are equipped with a diverse range of specialized carriages tailored to meet various transportation requirements These include regular freight carriages, containers, oversized carriages, and refrigerated carriages, among others This assortment of specialized carriages ensures the efficient and effective transportation of goods, accommodating a wide range of cargo types and sizes.
In summary, freight logistics encompass a diverse range of transportation methods tailored to meet the unique needs of moving goods across various modes Air freight utilizes dedicated cargo aircraft and passenger planes' cargo holds for versatility and expedited delivery Road freight relies on trucks, trailers, and semi-trailers for flexibility over road networks Marine freight employs specialized vessels like container ships and bulk carriers for transporting goods across oceans and seas Rail freight utilizes trains and specialized carriages for efficient transportation on railway infrastructure Each mode offers distinct advantages, contributing to the seamless movement of goods within the global supply chain.
Environmental condition
Air freight operations are significantly influenced by environmental factors, including storms, natural calamities, and adverse weather conditions These elements often disrupt flight schedules and hinder the smooth transportation of goods Flights may be subject to cancellation or rescheduling when weather conditions deteriorate, necessitating adjustments to ensure safe and efficient logistics management. b) Road freight
The environmental impact on road freight is less dependent on weather conditions compared to other modes of transportation However, adverse weather events such as natural disasters, storms, and floods can still disrupt transportation activities, albeit to a lesser extent. c) Marine freight
The environmental conditions significantly influence marine freight operations, particularly with regard to weather factors such as natural disasters, windstorms, thunderstorms, tsunamis, and rough seas These elements have a profound impact on ships, prolonging transportation times for goods and cargo. d) Rail freight
Rail freight operations are comparatively less susceptible to the effects of weather conditions compared to other transportation modes They are less affected by adverse weather conditions, climate variations, traffic congestion, and road damage Railways' dedicated tracks and schedules ensure smoother operations, minimizing disruptions and making rail freight a reliable choice for transporting goods, even in challenging environmental conditions.
In conclusion, environmental conditions significantly influence the efficiency and reliability of freight transportation across various modes Air freight is highly susceptible to adverse weather, often disrupting schedules and requiring adjustments for safety Road freight, although less affected by weather, can still face challenges during natural disasters Marine freight is heavily impacted by storms and rough seas, affecting transportation times Conversely, rail freight shows resilience to weather and road-related issues, leading to stable transportation outcomes Overall, addressing and managing environmental impacts is crucial for ensuring seamless and efficient freight logistics across all modes of transportation.
Security
Air transport has a lower accident rate than road transport, however, the level of loss when risks occur during air transport is very large The level of cargo safety assurance is higher because aviation security is always tightened, and damage or loss of goods rarely occurs Security in air transport benefits from the controlled and relatively stable environment of aircraft, mitigating the risk of severe physical conditions that could lead to damage or breakages of consignments Moreover, the streamlined handling processes and stringent security protocols in airports contribute to a reduced risk of theft or damage during transit. b) Road freight
In terms of security, road transport benefits from a significantly reduced need for double-handling and trans-shipping goods, thereby saving time and lowering the risk of damage Containers can be secured for added protection during transit, further enhancing security measures However, security levels may vary depending on whether load compartments are sealed; when compartments are not sealed, there is a heightened risk of unauthorized access or tampering, potentially compromising the security of the cargo. Therefore, ensuring proper sealing and security protocols is crucial to safeguarding goods transported via road. c) Marine freight
Maritime transport offers a high level of security for containerized cargo due to the robust design and protective features of shipping containers Containers are securely sealed and monitored throughout the voyage, minimizing the risk of theft, tampering, or damage to the goods inside However, for cargo that requires conventional handling on non-containerized ships, the process of double-handling may pose a higher risk of damage to products This is because conventional cargo handling methods involve manual loading and unloading, which can increase the likelihood of mishandling or accidents leading to product damage d) Rail freight
Rail transport has a commendable safety record, particularly in the carriage of hazardous cargo, where stringent safety protocols are enforced to minimize risks and ensure compliance with regulatory standards However, a notable aspect affecting security is the need to double-handle many loads due to the requirement for the first and last legs of a 'through' journey often being served by road transport The safety of goods is lower because this type of transport requires loading and unloading goods and changing vehicles many times (switching to land transport), increasing the possibility of damage and breakage of goods This process introduces additional handling stages, potentially increasing the risk of incidents or security breaches during transfer between rail and road modes.
In conclusion, security is a crucial aspect of freight transportation, with each mode presenting unique challenges and benefits Air freight stands out for its stringent security measures and controlled environment, minimizing the risk of theft or damage Road freight offers security through containerization, requiring proper sealing and handling protocols for effective risk management Maritime freight ensures security for containerized cargo, although conventional handling methods may pose some risks Rail freight boasts a commendable safety record but faces challenges with double-handling and mode transfers Overall, implementing appropriate security measures is essential to safeguard goods during transit across all freight transportation modes.
Environmental effects
Air transport, while renowned for its speed and efficiency, often consumes substantial amounts of energy and emits significant quantities of emissions These emissions include greenhouse gases like CO2 and pollutants like NOx and particulate matter They contribute to air pollution, smog formation, and the formation of contrails and cirrus clouds, which can further exacerbate climate change by trapping heat in the atmosphere.
Road transportation typically has a greater environmental impact compared to other modes of transport, primarily due to emissions of CO2 and toxic substances from both personal and freight vehicles The widespread use of internal combustion engines in road vehicles, especially those powered by fossil fuels, contributes significantly to greenhouse gas emissions and air pollution Additionally, road transport is associated with various environmental issues such as habitat fragmentation, soil erosion, and noise pollution The extensive network of roads and highways also leads to habitat destruction and loss of green spaces, further exacerbating its environmental footprint. c) Marine freight
The environmental impact of maritime transport is generally considered to be the lowest among different modes of transportation, primarily due to its lower production of CO2 emissions compared to other means of transport This is largely attributed to the fuel efficiency of ships and the large cargo capacity they offer, allowing for the transportation of goods in bulk over long distances with a relatively lower carbon footprint per unit of cargo. d) Rail freight
Rail transport boasts a favorable environmental footprint compared to road and aviation Its energy efficiency per unit of transport surpasses both modes, leading to reduced energy consumption Furthermore, rail transport generates less noise and air pollution due to the prevalence of electric or diesel-electric locomotives These locomotives emit fewer pollutants and consume less energy than internal combustion engines, contributing to improved air quality and reduced noise pollution in surrounding areas.
In summary, different freight transportation modes have varying environmental impacts, highlighting the need to balance efficiency with sustainability Air freight, while fast, contributes significantly to greenhouse gas emissions Road freight poses challenges including CO2 emissions, habitat destruction, and noise pollution Maritime freight offers a greener option with lower CO2 emissions per unit, while rail freight boasts reduced energy consumption and emissions To achieve a greener future, it's crucial to consider these trade-offs and implement sustainable practices across all modes of transportation.
NEW TRENDS IN AIR FREIGHT SHIPPING
The digital revolution in logistics and automation
The ongoing digitalization and automation in the air freight industry catalyze significant efficiency enhancements Leveraging modern tracking systems ensures real- time monitoring, bolstering security and reliability, while autonomous ground handling equipment expedites freight operations Artificial intelligence (AI) emerges as a pivotal tool, optimizing routes through real-time weather analysis, air traffic data scrutiny, and historical insights As digital transformation progresses, customers and partners reap benefits from heightened shipment visibility, streamlined processes, and reduced paperwork, all fostering improved supply chain management The integration of AI further promises to revolutionize logistics, driving down transit times and enhancing sustainability Looking ahead, the synergy between blockchain technology and AI is poised to redefine the future landscape of airfreight, ensuring businesses remain competitive amidst the expanding digital realm.
E-commerce and air cargo
Since e-commerce continues its exponential growth, the reliance on air cargo transportation becomes increasingly pivotal for meeting customers' expectations of rapid and reliable deliveries The surge in demand for air freight services, fueled by the accelerated pace of online retail, underscores the critical role of cargo aircraft in modern supply chains However, despite the undeniable benefits of air shipment in terms of speed and safety, challenges persist in meeting the evolving demands of the e-commerce landscape Customers now expect not only swift delivery but also transparency and predictability throughout the shipping process, prompting the air freight industry to enhance end-to-end tracking capabilities While various tracking methods exist, including airline-based, GPS-based, and freight forwarder systems, each comes with its own set of advantages and limitations, highlighting the ongoing need for innovation and collaboration to ensure seamless air freight operations amidst the dynamic e-commerce ecosystem.
Air transport innovations
The airline industry's need for swift and efficient service drives constant advancements in equipment sophistication Unlike other modes of transportation such as railroads and water carriers, where travel durations span days, airlines measure travel time in mere hours To meet these demands, the industry has embraced automated information-processing systems like the Air Cargo Fast Flow Program, pioneered by the Port Authority of New York/New Jersey This paperless system expedites customs processing for air freight cargo, significantly reducing the 106 out of 126 hours typically spent on international shipments By integrating with customs-clearing systems, this program slashes paperwork and time requirements while enhancing shipment tracking and communication among connecting carriers These enhancements promise customers faster inbound shipment deliveries Meanwhile, the FAA and federal government propose a comprehensive overhaul of the air traffic control system, transitioning to GPS navigational aids This initiative aims to boost aircraft capacity within operating space and shorten travel times between origin–destination pairs However, this shift requires significant investment in new aircraft technology, involving substantial costs and years of development, yet it promises airlines the potential to reduce operating expenses while enhancing service quality.
Sustainable aviation fuel - SAF
The environment is truly a concern in freight transport for all means of transport,including aviation According to the latest data from the International Air TransportAssociation (IATA), the aviation sector accounts for nearly 8% of global gasoline and oil consumption With hundreds of thousands of flights emitting substantial carbon dioxide daily, the aviation industry faces significant environmental challenges To promote sustainable development, it is imperative to explore and utilize fuel sources with lower carbon content to mitigate environmental impact In pursuit of this goal, research institutions and aviation fuel suppliers have actively invested in sustainable aviation fuel(SAF) production technologies SAF, derived from renewable materials, serves as a low- carbon alternative to conventional jet fuel, which originates from carbon-rich crude oil.When burned, traditional jet fuel releases carbon into the atmosphere However, SAF is produced from various raw materials and waste products, offering a more sustainable option The primary sources for SAF production include cellulosic materials, used cooking oil, camelina, jatropha, halophytes, algae, and municipal solid waste Their environmentally friendly attributes position them as a vital component in the transition toward cleaner aviation fuels, aligning with the industry's commitment to sustainability.
INVESTMENT POTENTIAL IN VIETNAM'S AVIATION INDUSTRY
Vietnam's aviation industry plays a pivotal role in the country's economy,particularly in international trade and transactions Despite significant declines in air cargo demand due to the COVID-19 pandemic, the industry has demonstrated resilience and adaptability as the world begins to recover Vietnam's international aviation sector surpassed challenges, even achieving remarkable growth of 21.3% in 2021 compared to the previous year In the first quarter of 2022, the industry maintained stable growth, with international cargo volumes increasing by an impressive 21.1%.
Vietnam's ambitions in the aviation sector are built on investment in airport infrastructure By 2025, airports managed by the Airports Corporation of Vietnam (ACV) are projected to have a total annual cargo handling capacity of 2.5 million tons, increasing to 3.5 million tons by 2030 This ambitious plan includes the construction of
14 international airports and 17 domestic airports Such extensive infrastructure development is crucial to meet the growing demand for air cargo transportation It's worth noting that this plan requires significant investment, estimated at around $17.5 billion in airport infrastructure from 2021 to 2030.
Vietnam's participation in the ASEAN Open Skies Agreement since 2015 has created a favorable environment for the development of the aviation industry This agreement eliminates price controls, capacity restrictions, and flight frequency limitations within the ASEAN region, positioning Vietnam strategically in air cargo transportation activities Furthermore, with the implementation of free trade agreements between Vietnam and the European Union (EU), Vietnam stands to benefit significantly, especially in increasing exports to Europe.
Amid the current economic recovery and development plans, aviation enterprises in Vietnam can benefit from a 2% interest rate for loans from commercial banks and a 50% reduction in environmental protection taxes during the 2022-2023 period These incentives further enhance the business environment for the aviation industry.
However, it's important to emphasize that Vietnam has yet to establish an airline dedicated solely to cargo transportation services The absence of a dedicated cargo airline creates a gap in the market In the context of the pandemic, Vietnam Airlines, the national carrier, has demonstrated agility by utilizing wide-body aircraft to carry cargo in passenger cabins and belly holds This innovative approach, including the removal of seats from narrow-body aircraft for cargo transportation, contributes to the industry's recovery efforts.
With encouraging investment policies and tax benefits, establishing a dedicated cargo airline could present a significant opportunity for investors in Vietnam's aviation industry With increasing demand for cargo transportation regionally and globally, a professional cargo airline could attract large transportation contracts from businesses and organizations.
Vietnam's aviation industry presents promising growth prospects and profitability for investors Its stable growth trajectory and resilience during recent challenges showcase its vast potential Backed by government support, favorable policies, and the financial prowess of investors, the industry is poised to continue its upward trend, contributing significantly to the nation's economic growth.
THE ROLE OF AIR FREIGHT TRANSPORTATION
Enhancing supply chain dynamics
In the intricate web of supply chain management, efficiency reigns supreme for businesses aiming to thrive in competitive markets Air freight emerges as a critical component, significantly cutting delivery times and ensuring the punctual arrival of shipments This rapid mode of transport not only guarantees timely deliveries but also contributes to cost reduction, allowing companies to streamline operations and meet customer demands with precision Without the swift efficiency of air freight transport,supply chains would face crippling delays, disrupting industries and leaving consumers stranded without essential goods Thus, the seamless integration of air freight into supply chain networks is essential for maintaining the fluidity and resilience of global commerce.
Global trade enabler
Air freight transport serves as a vital connector between nations and continents, acting as the linchpin for global trade Ports, airports, and intermodal hubs are instrumental in facilitating international commerce, thereby bolstering a nation's economic prosperity This seamless connection, particularly enabled by air freight, empowers countries to access primary markets swiftly, enhancing their integration into the global economy.
In the context of supporting industries, the surge of globalization necessitates the development of efficient air transport systems to meet the demands of integration This symbiotic relationship between freight transport and economic sectors facilitates the rapid and convenient transportation of raw materials, fuel, and machinery, both domestically and internationally Consequently, it enhances the specialization process and expands the volume and reach of transportation networks.
Efficient air freight transport systems are crucial for expanding business market access They facilitate rapid and reliable transportation, allowing companies to reach wider domestic and global customer bases This increased accessibility attracts investments, drives economic growth, and fosters innovation in products and services.
Job creation
Within the air freight transport sector, a diverse array of employment opportunities flourishes, encompassing roles such as pilots, warehouse operatives, logistics professionals, and maintenance personnel This thriving industry not only offers employment across various skill sets but also serves as a cornerstone for economic stability A robust air transport network not only generates job opportunities but also fosters a conducive environment for sustainable economic growth, providing individuals with pathways to meaningful and rewarding careers while bolstering overall societal well-being.
Stimulating economic growth
Investments in air transport infrastructure serve as catalysts for economic expansion, igniting a ripple effect that reverberates across various sectors By creating jobs, from construction workers to aviation professionals, such investments inject vitality into local economies Moreover, they catalyze heightened economic activity, as improved air transport facilities facilitate smoother trade and commerce, both domestically and internationally As a result, this enhances a nation's competitiveness on the global stage, positioning it as an attractive destination for investment and trade, and fostering sustained economic growth and prosperity.
In summary, air freight transport plays an important role in the development of the national economy It contributes to international trade, accelerating the movement of goods across vast distances with unparalleled speed and efficiency Beyond facilitating trade, air freight enhances supply chain dynamics by ensuring timely deliveries, thereby minimizing disruptions and optimizing operations for businesses worldwide Moreover,the air freight industry serves as a cornerstone of employment, offering diverse job opportunities that contribute to economic stability and growth With its pivotal role in supporting various industries, from manufacturing to retail, air freight fosters innovation and drives economic expansion Finally, a well-developed and efficient air freight network emerges as a vital driver of economic prosperity and global connectivity,solidifying its place as an indispensable component of modern economies.
In conclusion, by delving into emerging characteristics, roles, and trends within air freight and contrasting them with alternative modes of transportation, air freight's pivotal role in fostering global connectivity, economic advancement, and technological innovation cannot be overstated With its unparalleled speed, service reliability, and adaptability, air transport stands out as a vital component of today's business landscape.
Air freight is crucial for modern businesses, enabling rapid and efficient shipping that meets market demands and expands their global reach By facilitating multimodal transport, air freight drives economic growth and international collaboration Furthermore, the continuous expansion of international airports fosters dynamic global trading, connecting diverse markets and regions As a result, air freight plays an indispensable role in empowering businesses to access global markets and enhance their competitiveness.
However, air freight also faces various challenges One of these challenges is the limitation in airport capacity and infrastructure The growth of air freight also translates to increased emissions and environmental impacts To address these challenges and ensure sustainable competitiveness and development, it is essential to utilize available resources effectively in terms of infrastructure, vehicles, and human resources In addition to developing infrastructure and technology, air freight needs new strategies and policies to operate more efficiently in the future.
Additionally, explores new trends in air freight such as the digital revolution in logistics and automation, e-commerce and cargo air transport, innovations in air transport, and fuel utilization Sustainable air freight has changed the way the industry operates These trends represent the need for innovation, collaboration, and sustainability to drive the air freight industry forward.
For Vietnam, a review of air transport's potential has highlighted significant opportunities for growth With a strongly growing economy, growing tourism, and strategic geographical location, Vietnam has the potential to become an important bridge in the global aviation market By investing in infrastructure, improving regulations, and promoting industry cooperation, Vietnam can strengthen its aviation industry, spur economic development, create jobs, and grow lasting.
In total, air freight is a means of global connectivity and a driver of economic development in an increasingly connected world Thus, air freight transcends being merely a component of multimodal transport operations; it assumes a critical role in propelling economic and social progress The combination of innovation, collaboration,and strategic planning will open up vast opportunities for air freight and drive continued prosperity and growth.
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