Nanyang Technological University

School of Mechanical & Aerospace Engineering (MAE) : Jan 25/Feb 1, 8 & 15, 2024

Master of Science (Supply Chain Engineering)

Specialized Logistics Operations (MA6714 )
[ by Edward Lau – FCILT ]

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Instructor Profile

Mr. Edward Chung-Wai LAU

! Part-time lecturer – Nanyang Technological University, MAE-NTU
! Associate Faculty – Logistics, School of Business, SUSS
! Post Graduate Award in Management and Business Studies, The University
of Warwick – Warwick Business School
! Chartered Fellow, The Chartered Institute of Logistics and Transport
Teaching interests: aviation management, supply chain management, global
logistics, business management, e-commerce distributions.

Email: [email protected]

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Course Aims and Objectives :

! The objective of this course is to apprise students of the challenges associated with
specialised logistics operations and processes for managing such operations. While
operations such as warehousing, transport and freight forwarding for commonly transported
goods have well-established processes and service providers, specialised logistics
operations such as cold supply chains transporting perishables, pharmaceuticals, and
vaccines, and hazardous substances require special handling and dedicated service
providers and processes.

! The course will also cover topics such as transport of oil and gas, air cargo logistics and inter-
modal transport which is becoming increasingly important as additional means of transport
(such as canals and rivers) are used in some parts of the world.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Intended Learning Outcomes (ILO) :

The overall objective of the course is to equip our learners with the necessary conceptual framework
and analytical tools to manage various specialised logistics operations.

By the end of this course, the learners will:

(1) have a clear understanding of air-cargo infrastructure and handling processes, and processes for
handling of specialised cargo.
(2) appreciate and understand transportation functions with regards to multimodal transport,
including ocean freight.
(3) understand issues involved in design of inter-modal transport networks.
(4) understand the challenges involved in storing and transporting hazardous cargo.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Assessment (includes both continuous and summative assessment) :

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered : LO1 – Air Cargo Logistics [ 25 Jan ~15 Feb-2024 ]:

! Global governing agencies, the Various Trade & Industrial Organisations ( incl. regional & national )
! Landscape of the Global Air Cargo Markets
! Cargo Terminals & Distri-Parks
! Broad Categories of Air Cargo
! What is Special Air Cargo
! Types of Special Air Cargo
! Air Freight Options & Cargos Requiring Special Handlings
! Case Studies

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered : LO1 – Air Cargo Logistics [ 25 Jan ~15 Feb-2024 ]: (con’t)

! Modes of Transport – Special Cargos

! Global Air Cargo Market Trends
! Geo-economic Shifts & Implications to Air Transport
! Commercial & Operational Models
! Performance Management & Selection Criteria
! Fit-for-Purpose Applications
! Safety First, ALWAYS
! CA-1; Quiz-1

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered [LO1, Week -- 2]:

! Global Governing Agencies, the Various Trade & ! Cargo Terminals & Distri-Parks
Industrial Organisations ( incl. regional & national ) ! Location & Accessibility ; Intermodal Connectivity
! Landscape of The Global Air Cargo Markets ! Demand Analysis ; Flexibility & Scalability

! Key trends 2021 ~ 2027 and observed developments ! Efficient Layout & Flow Planning

! Competitive landscape ! Advanced Technology & Automation

! Freedoms of Aviation ! Customs & Regulatory Compliance

! Type of cargo aircraft, unit load devices ! Security Measures

! Different types of air cargo, and their acceptance ! Public-Private Partnership (PPP) ; Stakeholder
Collaboration ; Proximity to Industrial Clusters
! Broad Category of Air Cargo ! Financial Viability and Return on Investment
! Choice & considerations – pros & cons of the
respective mode
! Case Studies
! During COVID, and its impact to the anticipated
developments

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered [LO1, Week -- 3]:

! What is Special Air Cargo

! Definition & classification
! Categories

! Types of Special Air Cargo

! Dangerous goods, hazmats
! Pharma, vaccines, medical substance
! Live animals
! Live fish

! Air freight Options & Cargos Requiring Special Handlings

! Charters & leasing arrangements
! Pharma, cold-chain air freight
! Technology assets, vulnerable cargo
! e-Commerce shipments

! Case Studies

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered [LO1, Week -- 4]:

! Modes of Transport – Special Cargo

! Air Vs. sea freight
! Other modes of transport
! Intermodal transport

! Global Air Cargo Market Trends

! Global pharma transport trends
! Cargo Hubs & Integrators Vs. Freight Forwarders
! Digital Freight Marketplace; Air Cargo Management Systems
! Drones & Unmanned Aerial Vehicle Services (UAV)

! Geo-economic Shifts & Implications to Air Transport

! Commercial & Operational Models
! Case Studies

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Topics to be Covered [LO1, Week -- 5]:

! Performance Management & Selection Criteria

! Scope of work
! Vendor selections
! KPI, and continuous improvements

! Fit-For-Purpose
! Application management
! Vendor engagement

! Safety First, ALWAYS!

! CA-1, Quiz-1

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Participants’ Inputs

Your Current Profession & Industry Sector, and Experience

Your Expected Takeaway from: MA6714LO1

" Key learnings
! Important insights
! New ideas
" Any pressing questions you’d like to raise?

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 People – Quality – Process

-Safety First, Always

-Fulfilling & Creating Needs
-Always Innovates & Improves
-Never Stops Learning
-Strives to Better Yourselves
-High Integrity

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 What Are the Parallel / Uniqueness :

! Air Cargo Vs. Sea Freight

! Governing bodies
! International Vs. local
! Charters and mandates

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 International Civil Aviation Organization ( ICAO )
! The ICAO is a specialised and funding agency of the United Nations. It changes the principles and techniques of
international air navigation and fosters the planning and development of international air transport to ensure safe and
orderly growth. Its headquarters is located in the Quartier International of Montreal, Quebec, Canada.

! The ICAO Council adopts standards and recommended practices concerning air navigation, its infrastructure, flight
inspection, prevention of unlawful interference, and facilitation of border-crossing procedures for international civil
aviation. ICAO defines the protocols for air accident investigation that are followed by transport safety authorities in
countries signatory to the Chicago Convention on International Civil Aviation.

! The stipulations ICAO standards contain never supersede the primacy of national regulatory requirements. It is always
the local, national regulations which are enforced in, and by, sovereign states, and which must be legally adhered to by
air operators making use of applicable airspace and airports.
! Contrary to many dramatic and media portrayals of UN agencies, they do not have any authority over national
governments in the areas of international priority they are established for.
! ICAO is therefore not an international aviation regulator, just as INTERPOL is not an international police force.
! ICAO is distinct from other international air transport organisations, particularly because it alone is vested with
international authority (among signatory states): other organisations include the International Air Transport
Association (IATA) – a trade association representing airlines; the Civil Air Navigation Services Organization (CANSO)
– an organisation for Air navigation service providers (ANSPs); and the Airports Council International – a trade
association of airport authorities.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 International Maritime Organization ( IMO )
! The International Maritime Organization (IMO) is a specialised agency of the United Nations that is
responsible for measures to improve the safety and security of international shipping and to prevent
marine pollution from ships. The IMO sets standards for the safety and security of international shipping. It
oversees every aspect of worldwide shipping regulations, including legal issues and shipping efficiency.
! The International Maritime Organization is an agency tasked with improving the security and safety of international
shipping.
! One of its key duties is to devise strategies and measures to keep the waterways clean by preventing marine
pollution from ships.
! The IMO’s governing body, the Assembly, meets every two years, with the first meeting in 1959.
! The IMO is not responsible for enforcing their policies. When a government accepts an IMO policy, it becomes a
national law which it is their responsibility to enforce.
! The IMO’s objectives can be best summed up by its slogan — ” Safe, secure and efficient shipping on clean oceans. "
! The IMO sets policy for international shipping, discouraging shippers from compromising on safety, security and environmental
performance to address financial concerns, and encouraging innovation and efficiency.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 International Air Transport Association ( IATA )
! The IATA is a trade association of the world's airlines founded in 1945. IATA has been described as a cartel since, in
addition to setting technical standards for airlines, IATA also organised tariff conferences that served as a forum
for price fixing.

! Consisting of 290 airlines (starting with 57 founding members), primarily major carriers, representing 117 countries, the
IATA's member airlines account for carrying approximately 82% of total available seat miles air traffic. IATA supports
airline activity and helps formulate industry policy and standards. It is headquartered in Montreal, Canada, with
executive offices in Geneva, Switzerland.

! IATA states that safety is its number one priority. The main instrument for safety is the IATA Operational Safety
Audit (IOSA). IOSA has also been mandated at the state level by several countries. In 2017, aviation posted its safest
year ever, surpassing the previous record set in 2012. The new global Western-built jet accident rate became the
equivalent of one accident every 7.36 million flights. In June 2014, the IATA set up a special panel to study measures to
track aircraft in flight in real time. The move was in response to the disappearance without a trace of Malaysia Airlines
Flight 370 on 8 March 2014.
! The IATA Operational Safety Audit (IOSA) programme is an internationally recognised and accepted evaluation system designed to
assess the operational management and control systems of an airline. It was created in 2003 by IATA. The program is designed to
assess the operational management and control systems of airlines. The auditing standards have been developed in collaboration
with various regulatory authorities, such as the Federal Aviation Administration (FAA), and the Joint Aviation Authorities (JAA). IATA
oversees the accreditation of audit organisations, ensure the continuous development of IOSA standards and practices and manages
the IOSA registry.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 International Federation of Freight Forwarders Associations ( FIATA )
! FIATA is a non-governmental organization representing freight forwarders worldwide. FIATA's
membership includes 109 Association Members and more than 5,500 Individual Members, overall
representing an industry of 40,000 freight forwarding and logistics firms worldwide.
! was founded in Vienna, Austria, 1926 and owes its name to its acronym French: Fédération Internationale des
Associations de Transitaires et Assimilés. Also known as the ‘Architects of Transport’, FIATA has Association Members
and Individual Members in some 150 countries. .
! FIATA has consultative status with the United Nations Economic and Social Council (inter alia ECE, ESCAP, ESCWA),
the United Nations Conference on Trade and Development, and the UN Commission on International Trade Law.
FIATA is recognized as representing the freight forwarding industry by many other governmental organizations,
governmental authorities, and private international organizations in the field of transport such as the International
Chamber of Commerce, the International Air Transport Association, the International Union of Railways, the
International Road Transport Union, the World Customs Organization, the World Trade Organization, etc.
! FIATA is headquartered in Geneva, Switzerland

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Here In APAC & Singapore
! Association of Asia Pacific Airlines ( AAPA )
! The Association of Asia Pacific Airlines, formerly Orient Airlines Association (OAA), Inc. is a trade association of major scheduled
international airlines based in the Asia-Pacific region. Established in 1966 with headquarters in Makati, Philippines, the association
has moved to its present headquarters in Menara Prestige, Kuala Lumpur, Malaysia. The primary purpose of the AAPA is to serve as
a common forum for the articulation of members’ views on matters and issues of common interest, to foster close cooperation, and to
bring about an atmosphere conducive to the stimulation of the travel and tourism industry..
! AAPA retains access to specialised legal and aviation consultants in Brussels and Washington, a reflection of the significant impact
which the profusion of US and EU regulatory developments have on all international carriers including Asia Pacific airlines
! AAPA is run as a not-for-profit association, and is fully funded through annual airline membership subscriptions. Membership is open to scheduled international airlines based
within the time zones between GMT+5 and GMT+12

! Singapore Aircargo Agents Association ( SAAA )

! Established on 21 April 1971, Madam Mary Wu, Managing Director of Singapore Baggage Transport Agency Pte Ltd, formed the
Singapore Aircargo Agents Association (SAAA). Its purpose was to advocate the promotion, protection and development of the
business of carriage of goods by air transportation, as well as enhancing competitiveness of the Air Cargo Forwarding business.
! 2013 marks a significant year for SAAA. A rebranding exercise was completed and on 1 October, SAAA@Singapore was officially
launched by Mrs. Josephine Teo, Senior Minister of State, Ministry of Transport and Ministry of Finance. The significant change is that
SAAA@Singapore can now encompass all air logistics related sectors to better represent the industry.

! Singapore Logistics Association ( SLA )

! Established as the Singapore Freight Forwarders Association in 1973, the association was renamed Singapore Logistics
Association (SLA) in 1999 to reflect the growth and wide-ranging activities of its members.
! Today, SLA represents over 600 logistics enterprises, and stays anchored in its unwavering mission to support and
sustain a vibrant and thriving ecosystem for the logistics sector through active industry participation and collaborations
with both local and international logistics partners. Offering a wide range of targeted programmes and initiatives to
help enterprises be future ready, SLA also constantly reviews and explores forward-looking initiatives to help logistics
companies implement business transformation improvements to emerge stronger and ahead of competition.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 What Are the Parallel / Uniqueness :
! Air Vs. Sea Freight
! Governing bodies
! ICAO Vs. IMO

! International Vs local
! IATA / IOSA / AAP Vs. FIATA / SAAA / SLA

! Charters and mandates

! UN / Int’l governing bodies Vs. trade cartel ( *e.g. ICAO )
! Operational / safety / security / environmental framework-
guidelines
! Membership binding

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Global Air Freight Market Statistics 2021 ~ 2027

The global air freight market was valued at U$270.2 billion in 2019, and is projected to reach U$376.8 billion by
2027, registering a CAGR of 5.6% :
! The global air freight sector had total revenues of $107.9 bn in 2020, representing a compound annual growth rate
(CAGR) of 1.4% between 2016 and 2020.
! 2020 has been a very bad year for the air freight sector (globally) due to the COVID-19 outbreak.
! Store closures and massive disruptions in global supply chains due to COVID-19 damaged the air freight sector's value and volume
! During Q4-20, the economic implications of the lockdowns of many economics had been very difficult.
! While Q3-22 the overall Air-Trade-Index recovered to 39.5 points; mainly driven by a significant rebound in Air Imports Index to 43.1 points. In
addition, an encouraging outlook on B2C business in Q3-22 was observed (according to the HKPC/DHL studies).
! China’s recovery (+9 points) was more significant which had surpassed the level prior to the fifth wave of the pandemic. Unlike other markets where rebound in the
index was mainly driven by imports, China’s rebound was driven by exports (+14 points).
! Japan’s index improved by 5 points, with a worsening export performance.
! Index for Other Asia Pacific markets also improved by 7 points with improvements in both imports (+9 points) and exports (+6 points).

! While land and maritime-ocean cargo transportation remain as favourable options, goods transport by air is considered
as the quickest and the unhindered mode of transportation. With the COVID-19 pandemic, the air cargo faced significant
challenges in 2020, such as fallen global trade volumes, global economic activity and weakening consumer confidence.
However, as per the data released by the IATA in January 2021, the air cargo demand returned to pre-COVID levels (Jan
2019) for the first time since the onset of the crisis
! Cargo airlines are increasingly embracing multichannel sales approaches as they attempt to cater for all types of customer : e.g. via
“bots”, highly trained staff or booking platforms, carriers want to make themselves easily available to any customer - it's no longer a
case of booking solely via a carrier's own website.

*SARS outbreak 2002 ~ 2004 : WHO reported 8,098 infected, 774 died worldwide.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Global Air Freight Market Statistics 2021 ~ 2027 ( con’t )
Key Market Trends :
! Over the year, air cargo volumes have been supported by strong capacity growth and investment linkages with
Asia. The Middle Eastern carriers reported a decline of 2.2% in year-on-year international cargo volumes in
November 2020. The lack of international connectivity is hampering air cargo recovery in the region, however
seasonally adjusted demand is supporting on an upward trend.

! E-commerce growth creating great opportunities for the air freight industry
! The e-commerce sector is forecasted to grow at 14% globally over the forecasted period creating a great opportunity
for the air cargo industry. The global e-commerce industry, which makes up about 16% of the total air cargo business,
is projected to grow more than double to USD 4.4 trillion by 2025 ( * As shown in the later sections )

! Some global carriers are working to gain a bigger share of the door-to-door delivery market that has been
dominated by online shopping giants, such as : Amazon, Alibaba, and JD.com .
! The air cargo industry is well-positioned to capitalise on the growth in e-commerce. It is built to handle e-commerce,
approximately 80% of business-to-consumer cross-border e-commerce is transported by air. Air cargo has become
the preferred way of shipment for electronics due to relatively small volume or tonnage in comparison to high value
per kilo (VPK).
! Looking into the results in Q3 2022, air traders were more inclined to share the increasing fuel-cost equally with customers in Asia Pacific region (46%); but having customers in
Americas (47%) and Europe (44%) bearing the largest proportion of cost.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Global Air Freight Market Statistics 2021 ~ 2027 ( con’t )

Source: Air Cargo Next – Jan 2024

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Global Air Freight Market Statistics 2021 ~ 2027 ( con’t )
Competitive Landscape :
! Top 25 Cargo Carriers 2021 -- By freight tonne-kilometres flown (millions)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU] *CTK – Cargo Tonne Km
 Global Air Freight Market Statistics 2021 ~ 2027 ( con’t )
Competitive Landscape :
! Top 25 Airfreight Forwarders 2022 -- By freight tonne-kilometres flown (millions)

*CTK – Cargo Tonne Km

Source: https://www.aircargonews.net/data/top-25-air-forwarders-kn-extends-its-lead-on-dhl/
Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]
 What are The Five Freedoms of Aviation ?
These can be categorized into 2 broad classifications:
1. Transit Rights: the right to travel to or through a country without picking up and dropping off passengers there (applies to the first and
second freedoms)

2. Traffic Rights: the ability to pick up and drop-off passengers in a foreign country (applies to the remaining freedoms.)

More than 120 countries have signed on to the treaty calling for transit rights, while traffic rights are generally up to individual
countries to negotiate.
! 1. The Right to Fly Over a Foreign Country Without Landing

! 2. The Right to Land in a Foreign Country Without Embarking or Disembarking Passengers

! 3. The Right to Fly from Your Own Country to a Foreign Country

! 4. The Right to Fly from Another Country to Your Own

! 5. The Right to Fly Between Two Foreign Countries on a Flight Continuing on to Your Home Country

! 6. Sixth freedom
! The unofficial sixth freedom combines the third and fourth freedoms and is the right to carry passengers or cargo from a second country to a third country by stopping in
one's own country. It can also be characterized as a form of the fifth freedom with an intermediate stop in the operating airline's home market. This characterization is often
invoked as protectionist policy as the traffic, like fifth freedom traffic, is secondary in nature to third and fourth freedom traffic. Consequently, some nations seek to regulate
sixth freedom traffic as though it were fifth freedom traffic.
(Source: TNT Airways) ! Sixth-freedom traffic has historically been widespread in Asia, where Southeast Asian carriers such as Thai Airways and Singapore Airlines carried traffic on the Kangaroo
Route between Europe and Australia, and Japanese carriers carried traffic between Southeast Asia and the Americas. More recently, carriers in the Persian Gulf region have
developed intercontinental sixth-freedom hubs, and Copa Airlines has developed a sixth-freedom hub in Panama to connect many cities in North and South America. Another
example is Air Canada, which has pursued a strategy of carrying passengers between the US and points in Europe and Asia through its Canadian hubs.
! Cabotage is the transport of goods or passengers between two points in the same country by a vessel or an aircraft registered in another country. Originally a shipping term,
cabotage now covers aviation, railways and road transport. It is "trade or navigation in coastal waters, or, the exclusive right of a country to operate the air traffic within its
territory".

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 What are The Five Freedoms of Aviation ? (con’t)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Types of Cargo-Aircrafts / Freighters
A cargo aircraft (also known as freight aircraft, freighter, airlifter or cargo jet) is a fixed wing aircraft that is designed or
converted for the carriage of cargo rather than passengers. Such aircraft usually do not incorporate passenger amenities and
generally feature one or more large doors for loading cargo. Freighters may be operated by civil passenger or cargo airlines, by
private individuals or by the arm-forces of individual countries:

! Air Freight, also known as air cargo, is the mode of transport used to transport cargo swiftly by air. Airfreight is the most valuable
form of transport when shipping or transporting goods in the fastest time around the globe.
! The main types of goods that can be transported by air include special and general air cargo. Special cargo includes over-dimensional
and heavy weight items, dangerous goods / hazardous materials ( HAZMAT ), and temperature controlled goods.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Types of Air-Freight Containers ( ULDs )
Two forms of ULDs for air-cargo:
! Unit Load Devices (ULDs) come in two forms: Containers and Pallets. Both pallets and
containers allow a large quantity of cargo to be bundled into a single unit, which can be
used on wide-body aircraft and certain narrow-body aircraft:

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Broad Categories of Air Cargo
! General Cargo – This is the most common type:
• Everyday items : garments, electronics, and furniture.
• It does not require special handling or documentation.
(Source: Altas Air)

! Special Cargo – This category covers goods with specific requirements

due to their nature, size, value, or sensitivity; including:
• Dangerous Goods: Explosives, flammable liquids, and corrosive materials require
strict regulations and packaging.
• Perishable Cargo: Fresh fruits, vegetables, and pharmaceuticals need temperature
and humidity control.
• Live Animals: Transporting animals involves specific permits and handling
procedures.
• Valuable Goods: Artworks, jewellery, and high-tech equipment require secure
packaging and security measures.
(Source: AN225-Mriya)
• Oversized Cargo: Aircraft parts, wind turbine blades, and heavy machinery need
special aircraft and loading procedures

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Broad Categories of Air Cargo (con’t)
! Within Special Cargo :
• Further subcategories: Each of the main categories above can be further
subdivided into more specific types: Perishable Cargo includes categories like live
seafood, cut flowers, and pharmaceuticals, each with specific handling needs.
• Evolving types of commodities: Due to the constant evolution
• there's no single definitive number for specialised air cargo types.
(Source: USA Today) • estimates hundreds or even thousands of unique types exist, each with its own specific
requirements and regulations.

! Resources for further explorations :

• IATA (International Air Transport Association): Provides information and regulations on
various types of air cargo, including dangerous goods and perishable items.
• TIACA (The International Air Cargo Association): Promotes best practices and standards
for air cargo handling and transportation.
• Airfreight forwarders and airlines: These companies can offer specific details on the
types of specialised cargo they handle and the necessary procedures.
(Source: Aviation Stack Exchange)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Group Discussion #1 : Factors Driving the Air Cargo Industry

• What are the contributing factors to Singapore’s

continuous growth in air cargo and transport
through this recent decade, including the post
COVID-19 pandemic effect?

• What are your key observations pertaining to

Singapore Changi Airport’s competitiveness to
attracting & retaining airlines, and cargo
handling?

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks

(Source: FedEx Memphis Airport, n.d.)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks
(Source: Liege Airport, BE)
! The developments of Cargo Terminals & Airport Distri-Parks: including the design, building, and financing of air cargo terminals
and airport distribution parks, requires careful planning and consideration of various critical success factors. Here are some of the
key factors that play a crucial role in ensuring the success of such projects :
1. Location and Accessibility: Selecting an appropriate location for the cargo airport is crucial. It should be well-connected to major transportation
networks, including highways, railways, and seaports, to facilitate seamless cargo movement and distribution.

2. Demand Analysis: Conducting a comprehensive demand analysis is essential to understand the current and future cargo handling requirements.
This analysis should consider anticipated cargo volumes, cargo types, and growth projections to design infrastructure that can accommodate future
needs.

3. Flexibility and Scalability: Cargo airport infrastructure should be designed with flexibility and scalability in mind. The ability to adapt to changing
market demands and handle increasing cargo volumes over time is critical for long-term success.

4. Efficient Layout and Flow: Designing an efficient layout for cargo terminals and distribution parks is vital to optimise cargo handling processes. It
should minimise the distance travelled by cargo, reduce congestion, and facilitate smooth cargo flows.

5. Advanced Technology and Automation: Incorporating advanced technology, such as automated cargo handling systems, robotics, and real-time
cargo tracking, can enhance operational efficiency and reduce manual errors.

6. Customs and Regulatory Compliance: Ensuring compliance with customs regulations and other regulatory requirements is essential for the smooth
movement of cargo through the airport. Streamlining customs procedures can expedite cargo processing.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks (con’t)
(Source: Liege Airport, BE)
! The developments of Cargo Terminals & Airport Distri-Parks: By addressing these critical success factors, airport authorities and
developers can design, build, and finance air cargo terminals and airport distribution parks that meet the evolving needs of the
logistics industry, provide efficient cargo handling services, and serve as strategic hubs in the global supply chain :
7. Security Measures: Implementing robust security measures to safeguard cargo from theft, tampering, and potential security threats is critical for
maintaining the trust of cargo owners and logistics providers.

8. Intermodal Connectivity: Enabling seamless intermodal connectivity between air cargo, ground transportation, and other modes of transport
enhances the airport's value as a logistics hub.

9. Public-Private Partnerships (PPPs): Leveraging public-private partnerships can be beneficial for financing and developing cargo airport
infrastructure. PPPs allow for shared risks, expertise, and resources between the public sector and private investors.

10. Environmental Considerations: Incorporating sustainable practices, such as energy-efficient infrastructure and waste management, demonstrates
the airport's commitment to environmental responsibility.

11. Stakeholder Collaboration: Collaboration among airport operators, airlines, freight forwarders, customs authorities, and other stakeholders is
essential for creating a well-coordinated and efficient cargo ecosystem.

12. Financial Viability and Return on Investment (ROI): Ensuring the financial viability of the cargo airport project is crucial. A thorough assessment of
the investment's potential returns and long-term profitability is necessary for successful financing and sustainability.

13. Proximity to Industrial Clusters: Locating the cargo airport close to major industrial clusters and manufacturing centres can attract cargo traffic and
support just-in-time delivery requirements.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks (con’t)
(Source: Liege Airport, BE)

! The developments of Cargo Terminals & Airport Distri-Parks: Human resources play a crucial role in the successful operation and
management of airport infrastructure, including air cargo terminals and distribution parks:
! The Importance of Human Resources:
1. Operational Efficiency: Well-trained and skilled personnel contribute to the smooth and efficient operation of cargo terminals, ensuring timely cargo
handling and delivery.

2. Safety and Security: Trained personnel are critical for maintaining the safety and security of cargo operations, preventing accidents, and addressing
potential security threats effectively.

3. Customer Service: Competent human resources contribute to providing excellent customer service to cargo owners, airlines, and logistics providers,
enhancing the overall experience.

4. Adaptability to Technology: Skilled employees are better equipped to handle and adapt to advanced technologies and automation, improving
productivity and operational effectiveness.

5. Regulatory Compliance: Knowledgeable personnel ensure compliance with regulatory requirements, avoiding penalties and disruptions in cargo
operations.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks (con’t)
(Source: Liege Airport, BE)

! The developments of Cargo Terminals & Airport Distri-Parks: Human resources play a crucial role in the successful operation and
management of airport infrastructure, including air cargo terminals and distribution parks:
! Key Considerations for Human Resources:
1. Training and Development: Ongoing training and development programs are essential to equip the workforce with the necessary skills and
knowledge to handle the latest cargo handling techniques and technologies.

2. Safety Training: Specialised safety training ensures that personnel adhere to safety protocols, minimising the risk of accidents and injuries.

3. Cross-Functional Expertise: Having a diverse team with cross-functional expertise ensures smooth collaboration among different departments,
fostering a more efficient and integrated cargo handling process.

4. Capacity Planning: Adequate workforce planning is necessary to ensure that the cargo airport can handle current and future cargo volumes. Human
resources planning should align with the infrastructure's scalability and long-term requirements.

5. Retention and Employee Engagement: Attracting and retaining skilled talent is essential for the long-term success of the cargo airport. Employee
engagement strategies can foster a positive work environment and improve employee satisfaction.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminals & Airport Distri-Parks (con’t)
(Source: Liege Airport, BE)

! The developments of Cargo Terminals & Airport Distri-Parks: Human resources play a crucial role in the successful operation and
management of airport infrastructure, including air cargo terminals and distribution parks:
! Key Considerations for Human Resources: (con’t)
6. Talent Acquisition: Proactive talent acquisition efforts, including partnerships with educational institutions and training centres, can help identify
and recruit skilled professionals.

7. Diversity and Inclusion: Promoting diversity and inclusion in the workforce fosters creativity and innovation, leading to better problem-solving and
decision-making.

8. Succession Planning: Identifying and grooming potential leaders within the organisation ensures a smooth transition of critical roles and
responsibilities.

9. Performance Management: Implementing effective performance management systems helps track employee performance, provide feedback, and
identify areas for improvement.

" Human resources are a vital component of the successful operation and management of airport infrastructure, including air cargo terminals and
distribution parks. Investing in the development and well-being of the workforce ensures a competent and future-ready team capable of meeting the
demands of the cargo industry, contributing to the viability and long-term success of the investment.

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Cargo Terminal & Airport Distri-Parks( con’t )

Source: FB Cargo Strategy ; Jan 2024

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Airport Ownership & Management
The noticeable global trend towards private sector involvement in airport ownership and management, highlighting its growing
dominance, diverse implementation strategies, and varying management styles driven by ownership structures.
1. Trend towards Private Sector: Public airports are increasingly privatised or commercialised, driven by revenue generation, efficiency, and
infrastructure investment.

2. Private Sector Dominance: While 67% of airports remain publicly owned, the 15% privatised and 18% public-private partnership (PPP) airports
handle 50% of passenger traffic.

3. Varying Strategies: Different countries privatise key or all airports while others leave smaller ones public.

4. Management Styles: Publicly managed airports prioritise regulation, while commercialised ones focus on revenue and cost reduction.

5. Private Investors: Investors focus on finance and returns, sometimes through management contracts or capital-intensive concessions.

(Source: Air Transport Research Society, Airport Benchmarking Report – 2015, Steer Davies Gleave analysis)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Airport Ground Handling
The global ground handling market size, outsourcing trends, liberalisation and consolidation
dynamics, and the variety of market entry barriers that exist:

1. The global ground handling market is valued at US$37.2 billion in 2023 and projected to grow at a
CAGR of 9.7% (2024 ~ 2034), with services provided by airlines, airport-owned companies, and
independent third-party ground handling companies. (*According to Visiongain Reports, Nov 2023)

2. Approximately 50% of ground handling services globally are outsourced to 3rd parties, and in the
US, the largest national market, 65% of the market is serviced through major airlines' own ground
handling companies.

3. Liberalisation has facilitated greater market access and some consolidation in the ground handling
industry, with a trend towards larger global companies and niche operators serving only a few
airports.

4. Regulatory, infrastructure-related, and protective measures contribute to barriers to market entry

in ground handling, and the European context is influenced by EU Directive 96/67, allowing access
to the market with limitations on providers at airports with over 2 million passengers per year.

5. Industry consolidation is expected to continue, driven by economies of scale, but smaller well-
established operators may still dominate specific markets due to the localized nature of equipment
requirements.

(Source: Air Transport Research Society, Airport Benchmarking Report – 2015, Steer Davies Gleave analysis; KPMG presentation quoted in CAPA article, 20 Nov 2014; Technavio)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 CS#1 : Airport Competition – London, UK.
The relevant discussion and debate at the CAPA Qatar Aviation Aeropolitical &
Regulatory Summit in Doha (Feb, 2020)
! Views on airport monopolies differ, with one perspective considering most airports as
effective monopolies due to limited competition, while another argues that only a few
possess significant market power.
! ACI Europe's head of economics and competition cites London Heathrow as an example
of an airport with substantial market power, but questions remain about the extent of
such dominance.
! A 2012 study by Copenhagen Economics, sponsored by ACI Europe, found little evidence
of monopoly activities in airports, suggesting that existing regulations might be
inappropriate in a more competitive environment.

! A comparison of landing charges at different UK airports, including Heathrow, Gatwick,

Stansted, Manchester, and Birmingham, reveals variations, with Heathrow having the
highest charges, though marginal, and Birmingham displaying unexpectedly high
charges.

! Ownership structure may contribute to charge variations, with different regulations and
private or public-private ownership influencing the competitive landscape, challenging
the notion that airports are monopolies in the UK context.

(Source: CAPA, 2019; Corporate Travel Community, 2020)

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 CS#1 : Airport Competition – Changi Airport. (con’t)

Changi Airport operated by Changi Airport Group, under MOF-SG

Its total asset in FY2022-23 S$13.31b

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU] (Source: CILT-SG, 2023)
 Group Discussion #2 : Factors Driving the Air Cargo Industry

• What are the contributing factors to Singapore’s

continuous growth in air cargo and transport
through this recent decade, including the post
COVID-19 pandemic effect?

• What are your key observations pertaining to

Singapore Changi Airport’s competitiveness to
attracting & retaining airlines, and cargo
handling?

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

 Handling Special Air-cargo;
Cargo Terminal (Live Animals)

Watch Video #1:

Premium Rush: Inside Air Cargo Singapore -

Seasonal Flyers
(Source: CNA, 2023)

Live Animals
Cut Flowers
Perishable
Pharma
Live Fish

https://www.channelnewsasia.com/watch/premium-rush-inside-air-cargo-singapore/seasonal-flyers-3582751

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]

Specialised Logistics Operations MA6714 Air Cargo Logistics [NTU]