MANAGING AIR CARRIERS

      How do the changes in the industry affect shippers who want to use air cargo services? This has be a rapidly growing industry for a few reasons:

• Increased demand for premium service. There is an increasing number of people in the world who can afford the benefits of premium service and want the luxury goods that can afford the benefits of premium service and want the luxury goods that can best be provided by air cargo.

•  Increased service. There has been an overall increase. There has been an overall increase in the flight industry, including many new routes and increased services on routes.

• More competitive service. The business environment is less regulated and more competitive, which translates into reducing costs.

•     Carrier integration. Air cargo carriers, rather than operating independently as airlines used to do, are now part of integrated carriers that increase the value of air cargo services.

Carriers are becoming much more advanced and the range of services has been increasing. The variety of services range from next flight out to next day delivery to the cheapest and slowest service available.  In Hong Kong, one air express company is now using convenience markets to drop off urgent packages where they pickup three times daily.

Shippers make a choice on how to transport cargo, so it is helpful to see how air cargo compares to other modes of transport. Competition among the different modes of transport has caused them to change their operating methods. One reason ships are more schedule conscious is because of competition from air cargo service. This competition between air and sea is not very strong for the simple reason that there is a very large difference in the cost and service provided by the two. Small differences in air cargo rates are not going to have much of an impact on ocean cargo that is only a fraction of the cost. The service provided by ocean carriers could not come close to the speed of air cargo.

There is more competition between air service and trucking service over short distances. As already mentioned, air cargo is sometimes trucked if the distance is not too great, and there are no natural barriers. This is common in the US and Europe. Trains are rarely a viable alternative because their service is too slow and inflexible. Air cargo is seeing some competition from non transportation industries, particularly the fax and internet. These new technologies are the main threat to air express, mail and courier services.

Air cargo carriers can save money in the planes used, and the fleet selected. Older planes can be acquired more cheaply, but use up to 40% more fuel than new models. Having a standardized fleet makes maintenance and personal cheaper. Cargo planes may either be retired passenger planes, or custom designed cargo planes.   

                                              

   

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VESSEL TRAFFIC MOVEMENT

SHIPS are specifically designed and built to move safely through the water while carrying cargo. But when travelling either without cargo or only partially laden, ships must take additional weight on board to enable them to operate effectively and safely. This weight, known as ballast, is crucial to maintain safe operating conditions in shipping voyages as it reduces stress on the hull, provides transverse stability, improves propulsion and manoeuvrability, and compensates for weight lost.

Cross section of a ship showing ballast tanks and ballast water cycle (left). According to the International Maritime Organisation (IMO), the spread of invasive species in ship’s ballast water is largely due to expanding global trade and traffic volumes.

Although essential for shipping operations, ballast water may pose serious ecological, economic and health problems from the multitude of marine organisms/species carried from one port to another. Species that have been moved, intentionally or unintentionally, due to human activity into areas where they do not occur naturally are called ‘introduced species’ or ‘alien species’.

The International Convention for the Control and Management of Ships’ Ballast Water and Sediments (BWM) was adopted at a Diplomatic Conference held at the International Maritime Organisation (IMO) Headquarters in London on 13 February 2004. The Convention will enter into force 12 months after ratification by 30 states with 35 % of world merchant shipping tonnage. As of 31 October 2012, 36 countries representing about 29 % of world tonnage have ratified the Convention. As only about 6 % of world tonnage needed to fulfil these requirements remains, it is envisaged that the Convention would soon come into force. Malaysia ratified the Convention on 27 September 2010.

 With more than 70,000 ships passing through the Straits of Malacca annually making it one of the busiest shipping lanes in the world, the threat of marine environment contamination from ballast water is serious and needs proper management and regulation.

Several strategies have been developed and used globally, often including one or several of the following:

• ·         Minimising uptake of organisms into ballast water tanks by avoiding ballast water uptake in shallow and turbid areas for instance in areas where propellers can stir up sediment, and avoiding uptake at night when many organisms migrate vertically in the water column to feed to reduce the number of organisms that enter ballast water tanks.
• ·         Removing ballast sediment through routine cleaning of ballast water tanks and removal of sediment in mid-ocean or at specific facilities provided at ports to reduce the number of organisms that could potentially be transported.
• ·         Avoiding unnecessary discharge of ballast water. In circumstances where cargo handling demands uptake and discharge of ballast water within a port, water taken up in another area should not be discharged if possible.
• ·         Conducting ballast water exchange either between ports, mid-ocean or in deep water to reduce the risk of invasions.

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RFID Tecnhnology is Important in Logistics

What is RFID?

RFID stands for Radio-Frequency IDentification. The acronym refers to small electronic devices that consist of a small chip and an antenna. The chip typically is capable of carrying 2,000 bytes of data or less.

The RFID device serves the same purpose as a bar code or a magnetic strip on the back of a credit card or ATM card; it provides a unique identifier for that object. And, just as a bar code or magnetic strip must be scanned to get the information, the RFID device must be scanned to retrieve the identifying information.

RFID Works Better Than Barcodes

A significant advantage of RFID devices over the others mentioned above is that the RFID device does not need to be positioned precisely relative to the scanner. We're all familiar with the difficulty that store checkout clerks sometimes have in making sure that a barcode can be read. And obviously, credit cards and ATM cards must be swiped through a special reader.

In contrast, RFID devices will work within a few feet (up to 20 feet for high-frequency devices) of the scanner. For example, you could just put all of your groceries or purchases in a bag, and set the bag on the scanner. It would be able to query all of the RFID devices and total your purchase immediately.

RFID technology has been available for more than fifty years. It has only been recently that the ability to manufacture the RFID devices has fallen to the point where they can be used as a "throwaway" inventory or control device.

One reason that it has taken so long for RFID to come into common use is the lack of standards in the industry. Most companies invested in RFID technology only use the tags to track items within their control, many of the benefits of RFID come when items are tracked from company to company or from country to country. But the company must invest more to use this technology.

The use of RFID in Logistics.

Asset Tracking

There are many RFID manufacturers in the world. One of them is HID Global, a leader in track-and-trace capabilities, produces advanced RFID tags and components essential to optimizing automated asset tracking and logistics systems. RFID help ensure seamless traceability and reduce losses, while enhancing stock management and processing speed. Passive contactless RFID tags improve data collection speed and accuracy, making tracking more cost-effective while increasing accuracy. RFID also offers low frequency, high frequency and with a broad selection of form factors, chip configurations and memory capacities.

Assisting Warehouse Operation

In order to improve productivity and control, warehouses are seriously considering the use of radio frequency identification (FRID) tags for day-to-day operations. This wireless technology increases efficiency of warehouse management because, unlike bar codes which must be scanned manually to feed in the information on the computers, RF tags broadcast a signal with information about the product they are attached to and about the location of the product in the warehouse. RFID technology provides an interesting option to complement data collection and product identification in the supply chain management and warehouse operation.

A wireless warehouse, that uses RFID Technology, works by linking warehouse workers to the back-end warehouse management application server where warehouse activities are being recorded via wireless handheld devices, scanning bar codes or RF tags attached to the pallets. These devices help employees to identify where to pick, put away, count, or move products within the plant. This translates to a better control over the movement and storage of materials within the warehouse by maximizing the efficiency of the receipt and shipment of goods, optimizing warehouse space utilization and knowing at all times exactly where goods are stored, allowing employees to improve and maintain high customer service levels.

Using RFID to identify product

Example of RFID

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DESCRIPTION OF AIRPORTS

     The number of airports is much greater than most people would guess because passengers are familiar to going to their local passenger airport. Almost all major airports are run by a public agency, usually a local government. This is because airports are important to a community and more likely to be a natural monopoly. The many small airports, though more likely to be privately run. There has been talk of privatizing airports to make them operate more efficiently. The best known example is the Malaysia Airports Holdings Bhd that is run by a private company. 


      Airport administrations tend to look like small town.  They have all the departments of a company as well as their own fire and police departments. Airports are usually divided into two areas, called groundside operations and airside operations. The groundside is what the passengers see, including airline arrival and departure areas, public parking, the restaurants and so on. But there is another area, often bigger, the airside. This is where the airlines operate, the baggage is handled and the cargo moved. The airside tends to be invisible to those who do not work in flight.

      Money earned by an airport comes from a variety of sources. The two most important sources are concessions and carrier fees. The carrier fees, the primary source is landing fees. Although a major income area for airports, it is a small part of a carrier’s costs. Concessions are the companies that rent space in and around the aiport to provide goods and services, such as restaurant and gift stores. Even a small booth in a major airport can earn big amounts of money because of its good location. These concessions then pay the airport a percentage of their revenue.

    Carrier fees can be calculated in two ways. First, there is the balance method. An airport calculates its overall expenses, minus non-airline revenue and charges the airlines remaining the costs. The second way to calculate carrier fees is the compensation method. Airlines pay for the parts of the airport they use. They would pay rent for all the space used. Most importantly, landing fees are charged to the airlines every time a plane lands at the airport.

  Capital improvements to airports can be paid for either by selling bonds or special taxes. Passengers are often charged a fee for arrival or departure. This is usually overseen by the federal authorities because they do not want airports to create special costs for entering or exiting a country that would affect international relations.

   Airport capacity refers to the amount of passengers and cargo that can move through an airport. It is determined by the runway, terminals and facilities and is one of the most critical issues for airports today. Groundsides capacity refers to the number of passengers or cargo that can get to the airport, including parking space. Airside capacity refers to the number of planes that can be handled, including the number of planes that can arrive and take off in a certain period of time. Runway capacity is based on air traffic control, demand, weather, design and configuration of runways.


                                      

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HISTORY OF LOGISTICS AND TRANSPORTATION

      Logistics was originally a military term, because it is a key of factor in the success or failure wars. In fact, many military experts would say that logistics is the key to winning a war. Historically, logistics has been a leading factor in the success or failure of many military conflicts. Transportation gave countries ability to project power domestically, regionally and globally. It was strong the economy by promoting trade that further improved the military powers. Chinese Emperors sent their aircraft throughout Asia to intimidate neighboring countries and appreciate demand.

      Admiral Alfred T. Mahan wrote a famous book, The Influence of sea Power Upon History, 1660-1738 in 1890, that influenced President Theodore Roosevelt to make the US a world naval power. If logistics is a critical part of military operations, it is just as important to many companies. In recent decades logistics has become an important part of business success, and that is the emphasis in this book. It is important to recognize, thought that logistics is done by public and private sector organizations and the ideas are still basically the same. Some of the techniques are different depending on the needs of the organization, but the differences are quite small. Military logistics emphasize quick response and the flexibility to adapt to changing situations. Many businesses work in environment where quick response and flexibility are important for commercial success.

     Logistics was not always a recognized field of study or a career. In a classic book from 1915, the only two functions of marketing were demand creation and physical supply. There were three reasons integrated logistics did not come about at first:

      1)     There was no role for computers seen in integrating functional areas.

      2)      Volatile economic conditions led management to concentrate on cost containment.

      3)     There was difficulty in quantifying the returns that could be gained.

Since then, a variety of things have changed to the point where logistics is now a well-recognized and valuable part of the company. Why did things change? A few reasons can be identified:

Computerization- having the ability to manage vast amounts of information is vital to many logistics function. The problems were simply too complex and there was a limit to the level of advanced.

Quality management- Companies have been looking at ways to improve their operations, and recognized that logistics was one area that had been historically to looked.

Partnership and alliances- There has been a trend for companies to work closer with their supplier, customers and others partners to improve efficiency.

Deregulation- Certain key parts of the logistics profession were heavily regulated, which prevented them from involve in close cooperation with their customers. This included railroads, ocean shippers and airlines.

     Changes in transportation have played a mixed role in the development of the logistics field. It is important not to mistake the changes in the transportation industry for the demand of the trading public that is driving those changes. Ships, trucks and trains have seen little changes in how they operate over the past several decades. However, the major changes in transportation came not from the transport itself but its role in the larger logistics and business practices. The different modes of transport now work together. It is call intermodalism.

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MANAGING INTERMODAL TRANSPORT

        The most transportation aspect of intermodalism is not the equipment, but the operating and management issues. Traditionally, a carrier operated as an independent company. The shipping company worried about shipping, the trucking company worried about trucking, and so on. Intermodalism requires the coordination of multiple carriers. Sometimes these are the same company, but usually they are independent or at least different subsidiaries in the same company.

    Why is this important? Intermodalism requires cooperation and coordination among a variety group of companies on a level that is seldom seen in other industries. We know how difficult can be to run any organization. Running an organization in close cooperation with many others, to the point where every one of hundreds of shipments needs to be coordinated, is quite a task. Also, the different companies are often very different in organization, structure, and culture.

     What are intermodal companies? Sometimes they are asset-based carriers, such as a shipping company that expands into providing intermodal service. This is common for containerized shipping companies, which are mostly carrying cargo that would only move intermodally.  Railroad and trucking companies sometimes provide intermodal service, but it is not so critical for them. Then there are companies that do not control any assets, but only provide intermodal services. They coordinate shipments between the other carriers. Sometimes this is done by buying up space on the other carriers at a wholesale rate.

     One distinctive thing about intermodal carriers is their advance information system. They need to process a lot of information, under time pressure and in coordination with other carriers. This means that information systems tend to be exceptionally important.

        Trucking, rail and to a lesser extent inland shipping are important to intermodal shipments. However, many international shipments go overland that are not intermodal, or they may be containerized but only use one mode of transport. The overland transport is used to link the line haul, such as ocean ship, to the origin or destination.

The Intermodal Move

How exactly does an intermodal shipment work? The shipper decides what size container is needed, and orders it from the carrier. A container is delivered to the customer’s location, and left there for a designated amount of time to be loaded (usually around 24 hours). The container is most likely brought on truck, but very large shippers may have their own rail head where containers are picked straight off train.

   The truck (or train) comes back at the appointed time and takes the container away. It then goes on its journey. At the final destination, it is usually delivered to a building (again, usually by truck but some facilities have their own train platforms), where it is left for a designated amount of time to be unloaded. The container is later picked up and taken to its next customer.

                                    

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INTERMODAL TRANSPORTATION AND CONTAINERAZATION

1. The Nature of Intermodalism

All modes look the other way as its competitors, and have seen the level of suspicion and mistrust. Carriers are trying to retain business and increase revenue by maximizing the distance line under their control. Each mode, especially airlines that operate them, has sought to exploit its own advantages in terms of cost, service, reliability and safety.

Intermodal transportation. Movement of passengers or goods from one mode of transport to another, usually occur at specific terminals for any purpose. In North America, intermodal term is also used to refer to the container rail transport.

Sending all transportation. Movement of passengers or freight transport in the same way. Although "pure" diffusion transport rarely exists and intermodal operations often required (eg: ship to the dockside to ship ) , the aim is to ensure continuity in the same public transport network .

2. Intermodalism form

Intermodalism emergence was brought in part by technology and the need for transportation management units such as containers, swap bodies, pallets or semi -trailer. In the past , the palette is a common management unit , but its relatively small size and lack of a protective frame made ​​their intermodal handling labor -intensive and vulnerable to damage or theft. Techniques and better management unit to transfer goods from one mode to another has facilitated exchanges between modes. An early example of piggyback (TOFC: Trailers on Flat Car ) , in which trailer truck parked on the train, and hit (a lighter on board), where river barges placed directly on board the ship sea .

3. Containerization

Container. A metal box the size of a large standard into a full cargo for shipment aboard specially configured mode of transport. It is designed to move with the normal operation of equipment enabling high-speed inter-modal transfer in large economic units between ships, railcars, truck chassis, and barges using a minimum of labor. The former, therefore, serves as a unit instead of load cargo contained therein. The size of the box reference is 20 feet , 20 feet long , 8'6 " feet tall and 8 feet wide, or 1Twenty foot Equivalent Units ( TEUs ) . Since most of the former is now forty feet long, term Forty foot Equivalent Unit (FEU) is also used , but are less common .

Containerization . Referring to the increasing use of general and container as support for freight transportation. It involves a process in which intermodal containers that are increasingly used because it is either a replacement cargo from another vehicle, received in support of the distribution of goods or modes absorb more space transportation system is able to handle containers.

4. Advantages and Challenges of Containerization

• Warehouse. Former limit the risk of damage to goods it brings because it is resistant to shocks and weather conditions. Packaging products containing Therefore, it is easier, cheaper and can occupy less volume. This will reduce the cost of insurance since the cargo is less susceptible to damage during transport. In addition, the former fit together to allow stacking on board, the train (doubles tacking ) and on the ground. It is possible to superimpose three and six empty containers loaded on the ground. The former is a consequence warehouse itself.

• Security. Contents of the container are anonymous to outsiders because it can only be opened at the origin, the customs and the destination. Grazing, especially precious commodity, thus substantially reduced, resulting in lower insurance premiums. Theft is a serious issue in port before containerization as longshoremen have ready access to cargo.

benefits of containerization

containers stacked ships

containers tacking

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