airport operation and global supply chain - world...
TRANSCRIPT
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Airport Operation and
Global Supply Chain
By WANG, Xiaodong
U of Int’l Busness &Economics
Beijing, China
Air cargo and Global SC
Airfreight is growing as world commodity trade
increases
Why transport by air?
Airport operation efficiency and Quick response
strategy
Case study
Aerotropolis
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Airfreight vs World Commodity Trade
Air transport
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High speed
Low damage
Good control over the operation
High freight rate
Affected by bad weathers
Limited carrying capacity
Passenger aircrafts are widely used in air freight market
(freighter or belly hold)
Why transport by air?
Air transport is shrinking transit time… Air freight is more dependable than
ocean freight in the sense that there was less variability in days early or late
on either end… high frequency helps to make quick response
– To lengthen useful market life
– To prevent down time
– To be flexible to customized, ever changing demand
– To match lean strategy and JIT operation process
Air freight permits the seller to keep fewer inventory locations by responding
relatively quickly to market demand from central repositories of stock or
even from the production line itself
– Support wider markets with a fixed facility
– To cut inventory and storage costs where the market is untested and demand undermined
– Lower inventory cost while keeping availability level unchanged
To take advantage of superior conditions of carriage
– Where higher insurance cost applied in other transport;
– where premium handling, difficult co-ordination or documentation prevails in other
transport
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Air cargo
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High value-weight ratio
Small volume
Goods for emergencies
Perishable goods
Physically
Economically: highly innovative, short product life time,
seasonal demand…
Live animals
Others that are time sensitive
Operation process
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Shippers Consignees Consolidators
Freight forwarders
Airlines
Carriers
Airports
Customs
MAWB
HAWB
Consolidators
Freight forwarders
Integrated Service Providers / Integrators
Customs
Factors affecting transit time
Door to door service
Not only speed, but also variability matters
Consists of
– Flying time
(Decided by distance traveled)
– Surface transport time
(Truck-airline service)
– Terminal handling time
(Airport operation)
– Waiting time
(Frequency may matter) 8
Truck flight
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Speed: door to door
Reliability: Ability to deliver on time without damage
Frequency: Quantity of scheduled movements (schedule; hub or non-hub
airport; alliance airlines; openness of the market, 5th flying right)
Accessibility / availability: ability to service any given pair of locations
Capability: Ability to handle transport requirements, such as load, size or
special materials
Total Cost
– Surcharges, Broker fees
– Cost of extra inventory, warehousing, buffer stock
– Managerial time
Time is the key to successful air freight service
Key Performance Indicators
Outbound operations
Count, label the cargo with shipping marks
Weighing & security checking
Palletizing / packing (Unit Load Devices, ULD)
Custom clearance / pre-shipment inspection
Load on board the aircraft
(Special handling operations: oversized cargo, dangerous
goods…)
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Inbound operations
Unloading the aircraft
Unpack ULD
Check & report any loss and damage
Customs clearance
– (Apply for inspection)
– Release (sometimes on-site inspection is needed)
– Pay import duty
Shipment delivery / collection
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Case: Beijing Capital Airport
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Airport Logistics Park
Airport logistics park
The international logistics center started operation in Sep, 2011.
Airport City Development Co., Ltd (ACL) is responsible for the
project
Being multi-functional with “one-stop customs clearance center”.
Easy access to ground transport network
Companies may carry out port operations, entrepot trade,
international sourcing, international transfers, bonded logistics,
warehousing management, dealing and distribution, consignment
and maintenance, display and exhibition, R&D, and other business
Preferential policies for import tax exemption, export tax refund,
customs inspection, foreign currency exchange applied
Efficient information system helps to accelerate operations
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Jin Guan Project
Project initiated by government back to 1993
Consists of two systems
– Management system within Customs
– Platform for supervising international trade (customs,
ministry of finance, ministry of commerce, foreign
exchange administration bureau, port authority, banks,
transport companies, import & export companies…)
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Aerotropolis
Attract more attention in China as air transport market developed
Hub airports or gateways gain advantage in attracting investment
from high tech industry. Clustered industry calls for more efficient
airport management.
Local authority wish “airport cluster” may stimulate local economy,
upgrade economic structure
Debate on airport management (Concerns about monopoly power)
– Who invest in airport facility?
– How logistics companies get access to the facility?
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To conclude
Air freight serves an important role in international
logistics
It is much more costly than the sea transport---- time
is critical to its success
Regulations affect freight movement
Government intervention in airport infrastructure
investment & management influence its performance 17
= Order Entry Time (through forecasts/direct order from the customer)
+ Order Planning Time (design + communication + schedule)
+ Order Sourcing, Assembly and Follow up Time
+ Finished Goods Delivery Time
Order Entry
Order processing
Order shipment
Order preparation
Order cycle time / Lead time / Response time
CUSTOMER
Retail outlet
Customer
order
transmittal Transmittal of
backorder items
Order
delivery
Express
order delivery
FACTORY
Order processing,
assembly from stock, or
production if no stock
WAREHOUSE
Order processing and
assembly
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ULD Used by International Airlines
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Free Trade Zone / Duty free area
Products from
abroad
Products to
foreign
markets
No duties paid
Cu
sto
ms
To domestic
markets
Duties paid
Manufacturing
and/or storage
Duty free zone
Products from
abroad
Products to
foreign
markets
No duties paid
Cu
sto
ms
To domestic
markets
Duties paid
Manufacturing
and/or storage
Duty free zone From domestic
markets