Question

3. present knowledge that the class may not be aware of. so please give (and take) questions(related with Large cargo aircraft in logistics)

Answer 1

In the recent times the cost of fuel has been reducing due to international condition of the oil exploration nations/companies. This has also resulted in reduction in airfreight and thus the industry has seen an unprecedented growth rate for the last few years.

However, with the advent of e-commerce and globalization of businesses, the expectation was that the airfreight industry would grow more rapidly. This has not happened. One of the key reasons for this is that many of the organizations are moving away from lean principles to the process of managing safety stock. This shift in mindset has constrained the overall freight industry, as one of the main reasons for using airfreight was to order products in case of sudden sock-outs.

Considering this, my key question is “How should airfreight companies handle this constraint that has been caused by the global industrial trend (of keeping safety stock)?”

There is also a general notion that supply chain systems have hidden costs. Cost such as higher transport cost due to increase airfreight, insurance and other costs to protect against uncertainties. Airfreight provides certain benefits against these. However, one of the strategies undertaken by companies nowadays is to open a manufacturing unit in the foreign country to meet the local demands. An example of this is Zara. They have replaced airfreight completely with trucking. It is possible that many of the organizations may too follow suit.

The question is “How can airfreight as a industry fight this phenomenon of globalized organizations that operated across different countries with different set of capabilities?”