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Competitive Advantages and Challenges For Integrated Express Cargo and All-Cargo Airlines Essay

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Updated: Mar 9th, 2022

Speed, efficiency, and reliability have emerged as the competing factors brought about by the integrated express carriers, in addition to the more traditional factors of competition-size and weight of the parcels (Zondag; cited in Air Cargo Asia-Pacific, 2006). Integrators have used their own routes and equipment such as trucks and automated handling and storage facilities (Massimo & Shepherd, 2009) in order to gain these competitive edges. Integrated express cargo handlers have gained advantage over other types of airlines because of the ability to ‘own’ the customers as they provide transport services for goods at local specific areas (door-to-door). In essence, they have been able to come into contact with the customer more than other types of airlines in a specific coverage area. They are able to ‘duplicate’ the airline cargo chain in addition to usage of management tools that airlines do not have (Zondag; cited in Air Cargo Asia-Pacific, 2006). Integrated express market has grown to capture more of the international air cargo traffic with time. For example, it has grown from 5% coverage in 1993 to 11% in 2003 according to the aforementioned author. In particular, the market share has grown to 60% coverage in the U.S. cargo carried in thirty years preceding 2002 (Massimo & Shepherd, 2009).

Integrated express operators have a more favorable market position than other airlines and cargo handlers because the former have taken over business in the end-customer quadrant, a sector that has been described as more attractive. While the all-cargo airport-airport operators have specialized in the provision of cargo services between two points, they do not have an exclusive experience with the customer as do have the integrated express cargo service providers. Third party logistics has been described to be a field that is more rewarding, and by the fact that integrators operate in these routes, they have a competitive edge over all other types of airlines (Zondag; cited in Air Cargo Asia-Pacific, 2006).

All-cargo airport to airport handlers stand at a position of competitive advantage over other types of cargo handlers because they capitalize on operations between the airports which are the biggest place of operation for international cargo transport. They therefore are better placed to serve international markets and regional markets because they may also specialize in offering transport services at a certain region. Thus they can gain advantage in terms of offering services in a more open market rather than local operators. They are better placed to serve international and local businesses such as those operating across the borders because they may have aircrafts fitted for these purposes (for cargo requirements such as weight). They are best fitted to offer transport services for businesses interested in effective distribution to various point as a means to sell more.

The future of both the integrated express cargo airlines and all-cargo airlines (Wraight, 2008) is increasingly being threatened by the expansive efforts of international airline operators to occupy even the remote areas and offer cargo services. The growth of multinational corporations seeking one-stop-logistics solutions will particularly offer a competition for the services where integrators have flourished. With expansion of services such as franchising and company acquisition (to gain local competitive advantages), the future for integrators does not appear as bright. Particularly, network forwarders; have emerged as competitors for these cargo services. These provide expertise in air and sea cargo and road transport and have several offices in the local settings (Zondag, cited in Air Cargo Asia-Pacific, 2006). Airport-to-airport all-cargo operators are also faced with the governmental and traffic rights regulations which also bind their passengers. There are many restrictions touching the aircraft all-cargo business, such as night flight bans, environmental penalties and restrictions among others (Wraight, 2008) which may impede all-cargo operations.

References

AirCargo Asia-Pacific. (2006). Airlines vs Integrators — is it open an open and shut case for IE? Web.

Massimo, G., and Shepherd, B. (2009). Munich Personal RePEc Archive. Web.

Wraight, S. (2008). Cargo airlines & the industry issues. Air Cargo India 2008. Web.

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IvyPanda. "Competitive Advantages and Challenges For Integrated Express Cargo and All-Cargo Airlines." March 9, 2022. https://ivypanda.com/essays/competitive-advantages-and-challenges-for-integrated-express-cargo-and-all-cargo-airlines/.

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IvyPanda. 2022. "Competitive Advantages and Challenges For Integrated Express Cargo and All-Cargo Airlines." March 9, 2022. https://ivypanda.com/essays/competitive-advantages-and-challenges-for-integrated-express-cargo-and-all-cargo-airlines/.

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IvyPanda. (2022) 'Competitive Advantages and Challenges For Integrated Express Cargo and All-Cargo Airlines'. 9 March.

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