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This chapter investigates productivity and cost patterns in the all-cargo US air transport sector. We empirically test the productivity growth influence of changes in unexplained technology, air operations movement characteristics, and factor input prices. Findings show productivity trends depicting negative growth for the 1993–2001 sample, then shifting measurably such that productivity trends depict positive growth for the 2002–2014 sample. The post 2001 growth was fueled by changes in unexplained technological advancements. We interpret this finding as an indication of the importance of technological innovation as a performance enhancer in this transport sector. Findings also reveal a lack of productivity change associated with changes in input prices and movement characteristics. We interpret input price findings as indicating increases in factor input prices such as wages and fuel prices are commensurate with enhanced labor and fuel productivity. The movement characteristic findings are attributable to a lack of sustained increases in load factors, stage length, network size and carrying more volume over the network (density).

This study develops a method for categorizing airports based on the amount of cargo each airport handles in relation to its passenger traffic. Such a categorization allows for systematic comparisons of airports largely specializing in cargo with those that have more balanced freight/passenger roles. The results show that cargo-focused hub airports (i.e., major cargo-handling airports that handle little or no passenger traffic) in the continental United States shoulder a growing burden in freight movement. One of the most successful of these, Chicago Rockford International Airport, has risen to become the 15th largest airport with respect to domestic cargo shipments on the US mainland, while Texas's Fort Worth Alliance Airport and Seattle's Boeing Field also rank among the top 50. A considerable amount of volatility, however, has accompanied the evolution of this specialized grouping of airports over the past 20 years. Presently, among the 100 airports on the U.S. mainland handling the most domestic freight, cargo-focused hub airports serve only a secondary role, handling less than 5% of domestic air freight shipments as measured by weight. Most major hubs operated by air-freight integrators, such as those developed by FedEx and UPS at Memphis, TN, and Louisville, KY, respectively, are at mixed-purpose airports that have a greater balance of passenger and freight activity. The findings point to some of the unique challenges facing airports that specialize in the movement of freight.

Assessing air cargo strategy from an airport's perspective is relatively novel, and it seems little attention has been paid to this research area. This chapter will address this research gap by introducing an Airport Cargo Strategy Canvas, designed to help build cargo strategies for individual airports.

The Airport Cargo Strategy Canvas can be used as a tool to analyze and improve the air cargo strategy of an airport. The first part of this chapter will explain the different components of the Airport Cargo Strategy Canvas more in detail. The horizontal axis on the canvas differentiates between exogenous and endogenous drivers of airport competitiveness. The vertical axis distinguishes between the airport product and the airport market. The canvas also considers potential disruptors and principal shareholders' objectives. The different components of the canvas allow the analyst to dig into the main features and differentiators of respective airports. The canvas might also be helpful to structure and compare the strategic components and framework of their own or competitors' cargo strategies.

In the second part, the Airport Cargo Strategy Canvas was applied to Brussels Airport to analyze its cargo strategy. The canvas showed several strengths and weaknesses, opportunities and threats in its current cargo strategy. The completed canvas will let Brussels Airport's executives explore and analyze the strategy of their main competitors and peers' strategy and help them identify potential gaps in their strategies.

The use of air cargo by low-income countries and the effects of freight charges on their export flows are described. This is accomplished by illustrating the difference between export flows from developing countries of perishable products and high-tech goods. Descriptive statistics are used to highlight the importance of trade that travels by air from these countries to the United States and the European Union. Subsequently, costs of air freight are estimated. A gravity model of trade measures the effect of these costs on export flows. Major institutional and regulatory constraints that may be halting additional trade that relies on air transportation, and the implications for economic growth, are identified.

Existing studies about airline productivity and cost competitiveness are focusing on combination carriers, transporting both passengers and cargo in the same aircraft and with the same inputs. Scientific research about the cost structure and productive performance of all-cargo carriers is very limited. However, the importance of air cargo and express transport in our globalized economy, the high volatility of all-cargo carriers (especially since the 2008 economic crisis), and the success of integrators show the need for more scientific attention to this industry. This chapter aims at benchmarking the productivity and cost competitiveness of US integrated and non-integrated cargo carriers, based on total factor productivity and unit cost competitiveness analyses. The results unveil a positive correlation between productivity on the one hand and the size of the carrier and its average stage length on the other hand, indicating economies of scale. Correcting the results for such factors beyond managerial control and input prices allows us to measure the impact of the crisis and the consequences for the management of the individual carriers.

Supply chains deliver goods and services between shippers and receivers, covering collection, transportation, distribution as well as their handling and storage in between. In particular, transportation services are carried out by different transport modes. In some modern supply chains, different categories of air cargo carriers – combinations, freighter-only, and/or integrators – provide critical transport services.

This chapter develops a methodology for estimating the performance of supply chains served by an air cargo carrier network. The methodology is based on indicators of infrastructure use, technical/technological level, operational factors, economic factors, and environmental performance. This proposed methodology is applied to estimate performance of supply chains served by an integrated air cargo carrier – FedEx Express – operating a single hub in the US domestic air network. Results indicate that the methodology may be useful for estimation of overall supply chain performance under the condition that relevant data are available.

Air cargo was traditionally considered as a by-product of passenger air transport. However, in the last decade a defined strategy for air cargo has gained a key position in the strategies of most combination airlines, contributing largely to the cash and profit levels of these airlines. The global air cargo industry is nowadays a mature industry with over 60 billion USD in direct revenues. The strategic context is, therefore, far beyond the basic entrepreneurial framework in which an emerging and young industry tends to operate. This chapter aims to gain an enhanced insight into the strategies of airlines that transport cargo, either in the bellies of passenger aircraft or in full-freighter aircraft. A Cluster Analysis generates a typology of seven representative clusters of air cargo operators’ strategy models. The typology proposes a spectrum of strategies for air cargo, ranging from the cluster group “Carpet Sellers” up to the “Cargo Stars” cluster. While the former tend to be the small airlines or all-cargo carriers which barely manage to cover their costs with their revenues, the latter are profitable, very large globally operating airlines that focus on both passengers and cargo with passenger and freighter aircraft. Within this spectrum there are five other main strategy groups: the “Basic Cargo Operators,” the “Strong Regionals,” the “Low Cost Low Yielder,” the “Large Passenger Wide-body Operators,” and the “Premium Cargo Operators.” Our findings suggest the existence of superior strategy models that could be defined as “winning strategies” that differ according to airline size.

The continued rise in e-commerce has contributed to recent growth of the air cargo industry. In addition, international demand for low volume-high value products as well as time-sensitive goods continues to enhance demand for air cargo services. This volume consists of 11 chapters exploring whether this transportation sector has positioned itself to successfully take advantage of the economic opportunities associated with changing global demand for goods and demand for timely transportation services. Areas of analysis cover costs and competitiveness, shipper services and air cargo demand, along with international competition and economic development. Employing various empirical techniques and theoretical perspectives, these chapters help the reader to understand the methods by which air cargo companies provide efficient and increasingly affordable services, and also how the use of these services enhances economic growth and development.

This chapter examines the unique regulatory environment that trans-border air carriers work within. Using a U.S. perspective the concept of the bilateral air agreement is outlined and discussed. These agreements form the basis for how two countries decide to share their airspaces among their air carriers. The trend has been toward more liberal approaches. To explain this trend the concepts of the Freedoms of the Air and Open Skies are discussed. Other liberalization programs are also discussed; specifically, co-terminalization and cabotage. Finally, the air cargo transfer operations at Ted Stevens Anchorage International Airport are used as an example to highlight a rare example of unilateral liberalization on the part of the United States.