From vertical to horizontal collaboration in the air cargo sector

Abstract

Transport collaboration has been applied in many different industries both on vertical and horizontal level; to improve transport performance and reduce transport costs. In the air cargo industry currently limited transport collaboration exists both on horizontal and vertical level for inner airport transport of freight forwarding companies. High growth rates and healthy operating margins had limited the need for extensive collaboration in the past. However due to changing dynamics of air cargo transport use and type of shipments that are transported at major established airport in Western Europe, like Schiphol airport, there is an increased focus on cost reductions and improved transport performance. Therefore horizontal transport collaboration could be applied to improve the transport performance and costs for air cargo freight forwarders active at major airports. This research has tried to reveal the potential and main challenges of applying horizontal transport collaboration at Schiphol airport for air cargo shipments. This research has combined both qualitative and qualitative methods to support the potential of horizontal transport collaboration within a large air cargo system, by combining analyses on different major cargo airports with both a case study simulation model and system analysis on specific shipment collaboration at Schiphol as a whole. The results of this study indicate that for many freight forwarding companies, supporting horizontal transport collaboration could significantly improve transport costs and performance. However in order realize the potential benefits of horizontal transport collaboration; companies will have to transport shipments on regular basis that are suitable for transport collaboration. Also forwarding companies will have to be much more flexible and adaptive, regarding the use of different types of transport and the way shipments are collected/delivered, in order to make horizontal transport successful based on costs and performance. With the expected lower growth rates of air cargo and more dynamic transport of air cargo shipments with lower operating margins at major established airports in Western Europe, horizontal transport collaboration is also expected to be effective approach for coming decades. Given the existing overcapacity at most air cargo handlers at different airports and the reluctance of air cargo handlers to invest in more automated systems, due to uncertainty about air cargo growth. Besides this supporting horizontal transport collaboration can also improve the relationships with air cargo handlers, forwarders and transport companies, which can make part of the air cargo transport more stable and effective. It can give the air cargo handler and forwarder the ability to offer different transport concepts to their customers. However to truly realize the full potential of horizontal transport collaboration, the use of horizontal transport has to be frequently assessed and improved, due to changing shipment dynamics of the involved companies. Next to this the remaining single company transport use should also be adapted as well on regular basis, in order to improve the transport costs and performance of the complete transport system. Not all forwarding companies active at a major airport, will be willing or able to support either horizontal or vertical transport collaboration, therefore it is advised to assess the possibility for all air cargo handlers individually, at major airports, to apply segmentation on transport collaboration. This segmentation should be assessed regarding potential and the ability of companies to collaborate within a specific transport flow, between the warehouses of two or more companies. This means that both forwarders and air cargo handlers should support vertical and horizontal transport collaboration when it results in; higher benefits for their own organization, for the other involved stakeholders and all companies are able to effectively support the intended collaboration.