The Air Cargo Industry & its specialty – a personal experience

The Air Cargo Industry & its specialty – a personal experience                 by Archie D'Souza

The air cargo industry is quite obviously different from the passenger airline industry. Beyond both offering services that mostly focus on transportation via air the two industries share little else. Let's get into it.

The main focus for a passenger airline is to service passengers.  Cargo is only a bi-product though its revenue earning capacity is sizeable.  Services rendered to passengers are mainly confined to the time s/he is on board.  On the ground, it’s negligible and almost entirely contained within the airport.  Passenger airlines offer airport to airport services for passengers as well as cargo.  Any onward travel and accommodation at the destination is ultimately the passenger’s prerogative.

I started my career with the cargo division of Air India.  Like every passenger airline, it offered an airport-to-airport service.  This meant that an exporter had to get the cargo moved to the airport of departure, get the cargo customs cleared there and hand it over to the airline.  At the airport of destination, once the cargo arrived and was checked, the carrier would send a cargo arrival notice to the consignee, who in turn, either directly or with the help of a customs broker (CHA in India).  Cargo and traffic (dealing with passenger services) were two of the divisions of what is Air India’s Commercial Department.  Both these divisions had their similarities and differences.

Let me look at the similarities first.  Both are important revenue earners for an international airline.  A passenger needs a confirmed seat; cargo needs confirmed space in the cargo hold.  A passenger needs to carry a document called a ticket; cargo is carried by an airline after, among other things, the issuance of an air waybill.  A passenger cannot leave the country without a passport; the shipper requires to file a customs declaration, called a shipping bill in India.  Passengers need to pass through immigration; cargo needs to be customs cleared.  Passengers wait at a passenger terminal prior to boarding; cargo is stored in a cargo terminal.  On disembarkation passengers need to pass through immigration and customs; cargo shipments need to be customs cleared.

While these are the similarities, the differences are far more pronounced.  The facilities required to store and transport goods are far less than those required for waiting passengers on terminals and those travelling on board.  In an aircraft, the passenger needs aisle space, leg, head & elbow room and comfortable seating; cargo on the other hand can be stacked one on top of the other with no space in between.  Cargo doesn’t require refreshments and entertainment as passengers do.  Further, packages do not complain whereas passengers can be very vocal in their complaints.  The list could go on and on.

One of the biggest advantages or air transportation, compared with other modes, is the fact that there is hardly any limit to the number of places where airports – nodes for air transport – can be set up.  Due to this air routes are practically unlimited.  Thanks to greater movements of passengers and freight the density of air routes over the North Atlantic, inside North America and Europe and over the North Pacific is definitely greater.  Constraints with regard to air transportation are multidimensional.  Let’s take some examples.  A commercial plane needs about 3,300 meters of runway for landing and takeoff.  In addition, several other facilities need to be set up at airports.  Therefore, the site chosen must take these into consideration.  Also, airports cannot, for obvious reasons, be set up in densely populated places.  Climate, fog and aerial currents are other constraints that need to be taken into consideration with regard to air transportation. 

Air activities are linked to the tertiary and quaternary sectors.  What exactly does this mean?  The World economy and that of any nation is divided into various sectors – primary, secondary, tertiary, and quaternary.  These terms are used to define the proportion of the population engaged in particular activities.  Let us briefly look at each of these. 

Extracts and harvests - viz. what is mined or farmed is what the primary sector of the economy deals with; in other words, products from the earth.  It includes the production of raw material and basic foods.  Activities associated with it include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying.  The packaging and processing of the raw material associated with this sector is also considered to be part of this sector.  In developed and developing countries, a relatively low proportion of workers are involved in the primary sector; the figure in the US is 3%.  That is the percentage of the labour force engaged in primary sector activity today.  In the mid-nineteenth century, it was more than two-thirds. 

The secondary sector of the economy deals with, among other things, the manufacture of finished goods.  This includes all of manufacturing, processing, and construction.  Thus, activities associated with it include metal working & smelting, automobile production, textile production, chemical & engineering industries, aerospace manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.  The tertiary sector of the economy is nothing but all the service industries, providing services to individuals and business & other organisations.  Retail & wholesale trade, transportation & distribution, entertainment (movies, television, radio, music, theatre, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law are some of the activities associated with this sector.  In most developed and developing countries, a sizeable proportion of workers are devoted to this sector – more than 80% in the USA.  Finally, the quaternary sector of the economy consists of intellectual activities. Activities associated with this sector include government, culture, libraries, scientific research, education, and information technology.

Principal among the tertiary and quaternary sector activities that the airline industry is dependent upon are finance and tourism.  However, if one looks at air cargo in particular, it is the secondary sector that it mainly services.  However, air cargo brings in a lot of ancillary and support services which are part of the tertiary and quaternary sectors.  Passenger services benefit from finance and tourism as they lean a great deal on the long distance mobility of people.  However, cargo services provide the distance mobility of goods.  Since the introduction of the Boeing 747 and other wide-bodied aircraft air transportation services have been accommodating growing quantities of freight.  Airlines are today playing a huge and fast-growing role in global logistics, most often with the help of global service providers.

Air cargo, in many ways, is a unique service.  There are many segments involved in it.  Among those we can list out are airport-to-airport, door-to-door, door-to-airport and airport-to-door.  Most of the World’s carriers (airlines) offer an airport-to-airport service.  The shipper (exporter) needs to hand cargo over to the carrier ready for carriage at the airport of origin.  This means, among other things, cargo has to be customs cleared.  The carrier, either on its own or using the services of other airlines, ensures that the cargo reaches the airport of destination.  The consignee is informed by the carrier about the arrival of the cargo.  Physical delivery of the cargo only will happen after customs clearance.  We have seen here that customs clearance takes at two points – the airports of origin and destination, the former prior to carriage and the latter prior to final delivery.  This service is not usually provided for by the carrier and the exporter/importer may not have the necessary expertise to carry it out.  So, they appoint customs brokers to do this job.  So, we see here an additional service provider.  I shall, in a future blog, talk about the role of intermediaries.

There exists a kind of carrier called an integrator who offers door-to-door, airport-to-door and door-to-airport services.  They also offer airport-to-airport services.  What distinguishes an integrator from the others is that they have their own fleet of aircraft and offer services which go beyond airport-to-airport.  Passenger airlines mainly focus on carrying people.  Air cargo is a bi-product albeit one that earns a huge amount of revenue.  They carry cargo in bellies of the aircraft.  They may also own a fleet of combi & freighter aircraft.  These terms will be defined in another blog.  Cargo airlines have fleets of only freighters, no passenger aircraft.  All integrators are cargo airlines.

Another type of service provider exists, the express-cargo or courier company.  These companies offer door-to-door plus the other services.  In other words, their representative will come to the exporter’s premises to pick the cargo up.  The cargo will be customs cleared by a customs broker called a custom-house agent (CHA) in India.  There are other service providers like IATA agents, freight forwarders, etc.  These service providers will be dealt with in a later blog.  Here, we have confined our focus on the role of carriers.  These will include passenger and cargo airlines, including integrators.

The Air Cargo Industry & its speciality – a personal experience III

The Air Cargo Industry & its speciality – a personal experience III 

Archie D’Souza

People at large and very often air cargo users and service providers do not have the slightest clue about how cargo is carried in an aircraft.  An incident comes to my mind when I was in the airline industry.  I was loading cargo on a pallet when an agent’s representative walked up to me and remarked, “I’ve cleared my consignment before this one was, why aren’t you loading my cargo first?”  I told him, “I’m loading this cargo for a flight to Frankfurt leaving in a couple of hours.  Your cargo is destined to Singapore and that flight is only tomorrow.”  Yes an IATA agency employee not knowing that Frankfurt and Singapore are in different directions.  It reminded me of a little quote from James Michener – “The more I work in the social-studies field the more convinced I become that Geography is the foundation of all. When I call it the queenly science, I do not visualize a bright-eyed young woman recently a princess but rather an elderly, somewhat beat-up dowager, knowing in the way of power.”   

There was another occasion when something similar happened.  Only this time the two consignments, albeit for different destinations, were booked on the same flight.  I was building a pallet for New York on a BOM-LON-NYC flight and the agent whose cargo was destined to London protested that he’d cleared his cargo first but I was loading the New York cargo before his.  How dare I commit such a sacrilege?

Airline staff too are no exception.  I was once taking a flight to Bangkok.  At the airport I asked the representative of the concerned airline the aircraft being use for the flight.  The answer I got was “Airbus 737.”

I started my career in Mumbai and later moved to Bangalore when it had no international flights and a tiny customs cargo warehouse.  All international cargo, incoming and outgoing, used to be carried on Indian Airlines flights from or to Mumbai or Chennai (Bombay & Madras then).  Often, agents, without checking with the issuing carrier, would cut an air waybill and cargo would be handed over direct to Indian Airlines without prior booking.  The results were often disastrous.  I set up a system to remedy that where cargo couldn’t be customs cleared in Bangalore unless space was confirmed out of Mumbai or Chennai.  This system continued till Bangalore became an international airport.

Air India started operating a freighter flight from Mumbai to Bangalore & back in 1989.  This was with an IL 76 aircraft, carrying 7 pallets.  The task of handling this freighter was given to a senior colleague of mine who had never stepped into the Bombay Airport’s cargo complex.  The work-culture in the company didn’t permit a junior to give a suggestion to a senior.  Ideas from juniors were scoffed at.  The senior handling the flight would load cargo on pallets on a “first-come-first-served” basis.  The result was that every pallet had cargo for more than one destination.  This resulted in delays at Mumbai.  The gentleman was on leave for a month and I was asked to handle this flight.

As I said, the IL 76 carried 7 pallets, of which six could go into a 747-Combi (see my blog on aircraft configuration to know more).  We had combi flights operating out of Mumbai destined to Toronto, Frankfurt and Tokyo.  I’d book cargo on flights connecting three to four hours after our flight landed in Mumbai.  Six of the seven pallets would connect almost immediately out of Mumbai.  Cargo on the seventh pallet would connect the following day as the load on it was invariable for more than one destination.  A little bit of imagination and knowledge of working which helped customers get far better service.  Unfortunately the culture of the carrier I worked for didn’t reward efficiency and performance and I was given an offer I could refuse by the Jet Air Group.

For the benefit of lay readers, cargo is loaded in bellies of passenger aircraft.  Passenger seats are on the main deck.  There also exist aircraft with no passenger seats at all.  The floors are modified to accommodate cargo.  Such aircraft are called freighters.  Combis are aircraft which carry both cargo and passengers on the main deck.  Almost every airline has a cargo division; some like Lufthansa have a separate fully owned subsidiary for cargo services.  There also exist all-cargo airlines like Cargolux and Flying Tigers.  Integrators (please see my previous blog) are all-cargo airlines.

I shall speak a little more about all-cargo carriers in my next blog.