Facilities for Effective Air Cargo Terminal

Introduction

Air Cargo is without a doubt a significant aspect of global trade especially in the current contemporary global market place. According to IATA (2021), airlines transport up to 52 million metric tons of goods annually representing 35% of global trade value which is equivalent to $6.8 trillion worth of products or 18.6 billion worth of goods on a daily basis. This indicates the criticality of airfreight in the global trade environment and as such the necessity of developing cargo terminals and enhancing airfreight. Further the demand for airfreight has significantly increased over the last decade (see figure 1) as a result of key drivers such as globalization, free trade, regional specializations, inventory management, consumer preferences as well as e-commerce and technological innovations.

However, despite the increase of airfreight demand overtime leading to its adequate contribution in the transportation of goods across the globe, the airfreight industry faces stiff competition from other forms of international and national cargo transportations such as sea freight and high speed rail freight. IATA (2021) assert that while airfreight transports more than 35% of goods in global trade by value, this only makes up 1% of the world trade by volume, indicating a limitation when it comes to carrying heavier and more goods in comparison to its competitors, specifically the high speed trains. This reports looks critically into some of the key facilities required for an effective and efficient air cargo terminal as well as the factors that limit the development of airfreight as opposed to high speed rail freight.

Different airports have engaged in developing specialized cargo terminals with specialized equipment and facilities for airfreight to attract businesses and individuals intending to transport their products through airlines. Such airport facilities play a key part in airport selection among freight forwarders in an effort to decrease dwell times and fasten the logistical processes. This report looks at some of these facilities that are necessary for effective and efficient cargo terminals.

Figure 2: Percentage of total retail sales due to E-commerce (IATA (2019)

Cargo Terminal Facilities

Cargo terminals engage in handling a wide volume of products and goods for freight throughputs. Given that most of these products are unloaded from other aircrafts, stored and loaded back into other aircrafts for transportation, cargo terminals need a wide range of facilities for their ultimate effective and efficient operations. These include, but are not limited to Warehouses, Specialist ramps and loading equipment, customs and security facilities, combined volumetric and weight scanners and cargo tracking facilities. The development of the cargo terminal especially for a more contemporary terminal takes into account a developmental process (see figure 3) that considers not only the expected capacity of the terminal but also the market analysis, tenant survey and Facility inventory.

Warehouses

Warehouses are a significant facility for cargo airports given their wide range of uses within the terminal. They not only provide storage facilities for cargo on transit to keep them out of the ramp area, they also provide a holding area for goods waiting airfreight and connections to final destinations (Smith, 2017). In addition, these facilities also function to help airfreight control and freight forwarders to sort out and inventory the goods on transit making them necessary for effective and efficient airfreight terminals

Specialist ramps and loading equipment

In countries with cheap labor options and low volume airfreight terminals, freight-handling systems and equipments designed around manhandling concepts including equipments such as forklifts, stackers, tugs and trucks can be used. These mobile human-controlled mechanical systems however become less viable and efficient in large volume terminals where labor costs are high as such necessitating the need for complex fixed stacking and movement systems and equipments for effectiveness and efficiency (Sales, 2017).

Customs and security facilities

A majority of cargo transported through airfreight often goes across borders to other countries and international trading partners. These goods must be inspected by the UK customs personnel whether they are outgoing or incoming. As such having a customs facility on airports and airfreight terminals enhances the timely and efficient international transfer of cargo. Without this capability, cargo must be moved to off-airport facilities to be inspected, thereby minimizing on the air cargo terminals efficiency.

Combined volumetric and weight scanners

Goods transported through airfreight not only need to be inspected for illegal products but determining their weight and volumes is also of immense significance for the ultimate efficiency in their transportation. Airlines often have a threshold for product volume and weight and as such it is necessary for airports and cargo terminals to have volumetric and weight scanning facilities.

Cargo tracking facilities

Given the significant value of the products transported through airlines along with the need to maintain a significant supply chain and inventory management, freight forwarders often need to be able to track their products effectively to ensure they reach their final destination. Sales (2017) as such highlight this as the reason for having cargo tracking facilities for the ultimate efficient and effective airfreight terminal.

Other Facilities

Cargo terminals also need other facilities such as animal facilities and cool rooms for storage of perishable goods with a significant temperature requirement. In addition to this, the terminal also needs to have significant infrastructure within it in terms of an adequate stretch of runway, up to 11,000 feet (Smith, 2017) alongside infrastructure such as roads leading out of the airports to other locations.

Air Cargo Facilities

Introduction

High speed trains have multiple advantages such as being safer and much faster in terms of logistics compared to airlines and airfreight. These aspects of high-speed rails are likely to negatively impact airfreight and greatly minimize the use of airfreight by international businesses and companies especially in Europe. Figure 4 indicates some of the countries already adopting the transportation of Freight by High-speed Rail. This section discussed some of the factors that would lead to this effect on airfreight.

Figure 4: Countries Transporting Freight by HSR (Watson, Ali and Bayyati, 2015)

Ground operations

One of the factors affecting air freight significantly and benefit the adoption and use of High-speed Rail include the efficiency of ground operations. Given that high speed rails operate on the ground between fixed points of transportation, not much ground work is required to ensure adequate and efficient cargo transportation. However, airlines often experience a problem with ground operations due to the huge amount of outsourcing that has occurred over recent years to ensure adequate delivery of goods to their final destination (Morell and Klein, 2019). While this is being solved by airfreight e-commerce and transition into digitization, the transition is significantly slower compared to the adoption of High-Speed rails in the transportation of goods and is likely as such to limit significantly impact the continued development of the airfreight industry.

New Entrants

In addition to the significant competition being offered by High-speed rails when it comes to freight transportation, new market entrants in international digital companies such as Amazon which transport multiple products on the global scale provide a disruption to the market leading to significant competition between airlines for cargo freight contracts. Given that high speed rails operate within different defined routes all across Europe and as such have no need of competing against one another, they are better positioned to take up cargo transportation across the continent and limit the amount of business obtained by cargo freight airlines.

Low prices and faster logistics

Some of the key setbacks of airfreight include longer dwell times as a result of an outdated business model that includes freight forwarders and other intermediaries who lead to the wastage of resources in time and money. While airfreight digitization such as the use of Cargo IQ and e-freight is significantly changing this and making the process much smother with lesser dwelling times, High speed railways come in optimized transportation schedules and business models that enhance faster transportation of goods at much cheaper costs. This makes them a formidable competition to air freight as airlines and freight forwarders have to change cost structures to reflect lower pricing expectations which then ultimately impact their efficiency all together. Figure 5 illustrates the global Railway versus Air dominance in the market share

Figure 5: Global Railway versus Air dominance in the market share (Anguera and Esparrich, 2020)

Environmental Concern

Air freight also still has a tag for environmental concern related to the use of fossil fuels and the degradation of the environment. High-speed trains are taking advantage of renewable energy sources in electric trains which enhances their high speed and faster delivery of goods and at the same time limit the environmental impact of the train due to limited or no toxic gas emissions (Boehm, Arnz and Winter, 2021). Given the corporate sustainability strategy to enhance environmental transportation being increasingly adopted by different organizations across the world, many of these organizations prefer to minimize their carbon footprint and will as such choose the cleaner option in high speed trains for the transportation of their products as opposed to airfreight which still contributes significantly to environmental pollution.

Conclusion

The air freight industry is still a fundamental aspect of global trading and contributes significantly in the transportation of goods across the world. However, it has multiple limitations such as longer dwelling times and high costs which limit its adoption by multiple businesses especially ones involved in relatively larger and heavier goods. This provides a leeway for competitors such as high speed rails which are not only capable to carry much heavier goods across different countries but is also faster in terms of logistical endeavors and uses renewable energy sources which contributes to effective environmental conservation.

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References

Airport Council, 2020. Air Cargo Facility Analysis. [online] Airportscouncil.org. Available at: [Accessed 22 December 2021].

Anguera, R. and Esparrich, X., 2020. Air vs. Rail: can rivals become partners?. [online] Shaping Future. Available at: [Accessed 22 December 2021].

Boehm, M., Arnz, M. and Winter, J., 2021. The potential of high-speed rail freight in Europe: how is a modal shift from road to rail possible for low-density high value cargo?. European Transport Research Review, 13(1).

IATA, 2019. Air cargo and e-commerce enabling global trade. [online] Iata.org. Available at: [Accessed 22 December 2021].

IATA, 2021. Cargo. [online] Iata.org. Available at: [Accessed 22 December 2021].

Mazareanu, E., 2021. Worldwide air cargo traffic 2004-2022 | Statista. [online] Statista. Available at: [Accessed 22 December 2021].

Morrell, P. and Klein, T., 2019. Moving boxes by Air: The economies of International Air Cargo. 2nd ed. [S.l.]: Routledge.

Sales, M., 2017. Air Cargo Management : Air Freight and the Global Supply Chain. 2nd ed. Routledge.

Smith, W., 2017. Airport Cargo Facility Inventory. [online] Florida-aviation-database.com. Available at: [Accessed 22 December 2021].

Watson, I., Ali, A. and Bayyati, A., 2019. Freight transport using high-speed railways. International Journal of Transport Development and Integration, 3(2), pp.103-116.