5/26/2024

Vietnam Logistics Research and Development Institute AIR CARGO TRANSPORT

FIATA Diploma in International Freight Forwarding
-- * -- MODULE OBJECTIVES
The student should be:
• proficient with the basic regulations for Air Transport.

AIR TRANSPORT • able to explain the ground handling and the documentation
procedures of air cargo transport.
• able to demonstrate the familiarity with airfreight pricing with
examples of calculation.
Lecturer: Ms. Pham Le Dung (MIB)
elldypham@gmail.com

1 2

AIR CARGO TRANSPORT CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY

• Chapter 1: THE OVERVIEW OF AIR CARGO INDUSTRY LEARNING OBJECTIVES
• Chapter 2: THE IATA AIR CARGO AGENT The student should…
• Chapter 3: WOLRD GEOGRAPHY (Group No.6)
• Have knowledge on the main international organizations and
• Chapter 4: AIRCRAFT AND ULDs (Group No.5)
conventions related to air transport.
• Chapter 5: AIR CARGO HANDLING
• Chapter 6: HANDLING FACILITIES (Group No.1) • Understand the general liability scheme of carriers in air transport.
• Chapter 7: CARGO BOOKING PROCEDURES (Group No.7) • Be aware of the special regulations and handling issues in relation to
• Chapter 8: AIR CARGO BOOKING ACCEPTANCE dangerous goods.
• Chapter 9: CARGO AUTOMATION (Group No.4) • Understand the difference between an agent and a consolidator
• Chapter 10: RATES AND CHARGES (Group No.3)
• Describe the relationship between IATA cargo agent and member
• Chapter 11: AIR WAYBILL (Group No.2) airlines.
• Chapter 12: CHARTERING AN AIRCRAFT
3 4
 5/26/2024

CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY
CONTENTS CONTENTS
1. The Role of Air Cargo 1. The Role of Air Cargo
2. Challenges of Air Cargo Industry: Air Cargo Security  Evolution and growth of Air Cargo

3. Global Regulatory Framework World Custom Organization (WCO) 2. Challenges of Air Cargo Industry
4. Industry Regulators and Groups 3. Global Regulatory Framework World Custom Organization (WCO)
5. Warsaw Convention & Its Amendments 4. Industry Regulators and Groups
5. Warsaw Convention & Its Amendments

5 6

1. THE ROLE OF AIR CARGO 1. THE ROLE OF AIR CARGO

1.1 Evolution and growth of Air Cargo 1.1 Evolution and growth of Air Cargo (cont.)
• In the early decades of civil aviation - the late 1970s, conventional aircraft were • The World air cargo traffic growth over the next 20 years:
designed specifically for passengers. And cargo space was just a by-product of the
airline's passenger system.
• However, Cargo was never given priority - baggage, mail and emergency spares
came first.
• Worldwide air cargo movement grew tremendously in the 1990s. The dynamics
of the global marketplace underwent dramatic change too - companies focused
increasingly on getting goods to customers in a shorter time.

Air cargo = Freight + Express + Mail

7 8
 5/26/2024

1. THE ROLE OF AIR CARGO 1. THE ROLE OF AIR CARGO

1.1 Evolution and growth of Air Cargo (cont.)
• World Airfreight Market will more than triple in 20 years*
1.1 Evolution and growth of Air Cargo
• In summary, air cargo is a US$ 60 billion business that transports 35% of the value
of goods traded internationally worth some US$ 5 trillion.
• Air cargo is a critical part of the airline business which is the heart of a value chain
that supports 32 million jobs and US$ 3.5 trillion of economic activity.
• Countries with 1% better air cargo connectivity engage in 6% more trade.
Source: VLA 2021

9 10

1. THE ROLE OF AIR CARGO CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY

1.2 The role of air cargo CONTENTS
• When discussing the role of air cargo in the 21st century global marketplace, it is 1. The Role of Air Cargo
stressed to the event participants “the importance of air cargo with respect to
high-value goods, just-in-time freight operators, and the ever-expanding modern 2. Challenges of Air Cargo Industry
e-ecommerce activities we are seeing worldwide...  Air Cargo Security
• ICAO’s data has shown that the air cargo share of items purchased online 3. Global Regulatory Framework World Custom Organization (WCO)
projected to grow to a remarkable 91% by 2025.”
4. Industry Regulators and Groups
• To enable the air cargo industry develop sustainably, it requires the effective
collaboration of the worldwide and industrywide organizations so that the 5. Warsaw Convention & Its Amendments
regulations, the training program and the community between parties form
them.
Source: VLA 2021

11 12
 5/26/2024

2. CHALLENGES OF AIR CARGO INDUSTRY 2. CHALLENGES OF AIR CARGO INDUSTRY

2.1 Challenges of Air Cargo Industry 2.2 Air Cargo Security
 Security issues • Vision: 100% secure air cargo supply chains
 High competition from integrators, and other modes of transport of goods • Freight is secured up-stream in the supply chain, then protected by each
 Paperless processes and customized services subsequent supply chain operator
 Environment issues • A global supply chain security solution fulfilling regulatory requirements whilst
minimizing related costs
 Lack of space and airport capacity
• An IATA project to significantly shape regulatory development in cargo security
 Overcapacity of airplane and, simplify and lead its paperless implementation by industry.

13 14

2. CHALLENGES OF AIR CARGO INDUSTRY CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY

2.2 Air Cargo Security CONTENTS
1. The Role of Air Cargo
 Evolution and growth of Air Cargo
2. Challenges of Air Cargo Industry
 Air Cargo Security
3. Global Regulatory Framework World Custom Organization (WCO)
4. Industry Regulators and Groups
5. Warsaw Convention & Its Amendments

15 16
 5/26/2024

3. GLOBAL REGULATORY FRAMEWORK W.C.O. 3. GLOBAL REGULATORY FRAMEWORK W.C.O.

• More regulation will come and if inappropriate, it will significantly add costs and
extend delivery times.
• Industry options are to (i) proactively shape it, or (ii) wait-and-see.
• IATA can provide leadership – option (ii) is a bad idea.
• First estimates suggest minimum cost avoidance (compared to physical/technical
inspection) of circa USD 650 millions p.a.
• More secured: air cargo network + simplified business process
• Compliance with multiple programs through one set of standards
• Each consignment will be tamper-evident & have an e-audit trail
• Each consignment will be identifiable via an electronic code (SPX/SCO)
• All operators who “pass” will be registered, by operator type, in a database
• Future developments may include track-and-trace & e-movement consignment
histories, where practical
17 18

3. GLOBAL REGULATORY FRAMEWORK W.C.O. CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY

• 2006 Stanford University supply chain security report, found benefits of: CONTENTS
 Reduced Customs inspections by 48%
1. The Role of Air Cargo
 A reduction in transit times by 29%
 Evolution and growth of Air Cargo
 Reduced theft in inventory management by 38%
 Reduced customer attrition by 26% 2. Challenges of Air Cargo Industry
 Develop & implement Management Framework  Air Cargo Security
 Standards Manual & handbook ₋ Standards Operating Procedures 3. Global Regulatory Framework World Custom Organization (WCO)
 Audit, certification & registration (for government approval) 4. Industry Regulators and Groups
 Build critical mass of (regulatory & industry) stakeholder support
 Seek amendment to ICAO air cargo security standards
5. Warsaw Convention & Its Amendments
 Seek recognition of equivalence with relevant global & state programs

19 20
 5/26/2024

CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY 4. INDUSTRY REGULATORS & GROUPS

4. Industry Regulators and Groups 4.1 ICAO – International Civil Aviation Organization
 ICAO – International Civil Aviation Organization  Structure:
 National Aviation Authorities • Founded in 1947 under United Nations
 IATA – International Air Transportation Association • Country/ nation members: Permanent member of ICAO mostly members of
 IAEA – International Atomic Energy Agency United Nation
 FIATA- Fédération Internationale des Associations de Transitaires et Assimilés • Headquarter: Montreal, Canada
 WCO- World Customs Organization • Regional / Local Offices:
 TIACA - Int’l Air Cargo Association - Dakar, Senegal (DKR) - Lima, Peru (LIM)
 GACAG – Global Air Cargo Advisory Group - Paris, France (PAR) - Mexico City, Mexico (MEX)
 CASS- Cargo Accounts Settlement System
- Cairo, Egypt (CAI) - Bangkok, Thailand (BKK)
 Cargo Service Conference
 Cargo Agency Conference

21 22

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.1 ICAO – International Civil Aviation Organization (cont.) 4.2 National Aviation Authorities
 Functions of ICAO:  Individual countries have their own civil aviation governing bodies, which
To ensure the safety of anyone affected by aviation regulate the air industry on a national basis.

 The aims of ICAO:  Responsibilities of National Aviation Authorities:

To promote transport by air, international treaties  National aircraft registration.
To control air traffic, study airports, flight routes, traffic control, navigational  Registration & Licensing of air carriers.
aids, communication systems, the international organization for the  Air Worthiness certification.
dissemination of weather reports, logbooks, accidents;
 Route licensing
The requirements to be set for flight personnel and flying equipment,
registration etc. Enforcing national
and international air regulations.
 Aircraft safety and security.
23 24
 5/26/2024

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.3 IATA – International Air Transportation Association 4.4 IAEA – International Atomic Energy Agency
 Structure: • The IAEA is the world’s central intergovernmental forum for Scientific and
• Founded in 1945 Technical co-operation in the Nuclear field.
• Headquarters: Montreal & Geneva • The IAEA was created in 1957 in response to the deep fears & expectations
• Regional Offices: Amman, Beijing, Brussels, Johannesburg, Madrid, Miami, generated by the discoveries and diverse uses of Nuclear technology.
Moscow, Singapore & Washington. • The 2030 Agenda was adopted in 2015 aims at stimulating action in areas of
 Aims to: critical importance for humanity and planet.
 Promote safe, regular and economical air transport • They are integrated and indivisible and balance the three dimensions of
 Provide means for collaboration among air transport enterprises sustainable development: THE ECONOMIC, SOCIAL, and ENVIRONMENTAL.
 Cooperate with ICAO and other international groups • Many countries work with the IAEA to use nuclear technology toward achieving
the United Nations Sustainable Development Goal (SDG) 3 on Good Health and
Well-being for ensuring healthy lives and promoting well-being for all at all ages.
 Mission: “represent, lead and serve the Airline industry”.
25 26

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.5 FIATA - Fédération Internationale des Associations de Transitaires et Assimilés 4.5 FIATA – Int’l Federation of Freight Forwarders Associations (cont.)
 Structure:  Service includes:
• Founded in 1926, Vienna  Customs broker
 Ship/ aircraft brokers
• Headquarters: Zurich
 Warehousing
• Non-governmental association
 Truckers
 Consolidators
 Aims to:  They co-operate with the Institutes and Working Groups, if required,
 Unite the global freight forwarding industry and meet according to necessity.
 Familiarize trade, industry & the public with its services  Summary:
 Improve service quality • the largest non-governmental organization in the field of freight
 Provide vocational training, advice & assistance transportation.
• Worldwide influence
• The global voice of freight logistics
27 28
 5/26/2024

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.6 WCO- World Customs Organization 4.7 TIACA - International Air Cargo Association
 Structure:  Structure:
• Established in 1952 • Headquarters: Miami
• Is independent intergovernmental body • Not-for-profit worldwide trade association
 Mission: • Members: all major segments of the air cargo & logistics industry
• To enhance the effectiveness and efficiency of Customs administrations.
 Responsibilities:
 Aims to:
 Develop global standards
 Simplify & harmonize Customs procedures  Support & assist progressive liberalization of global market
 Trade supply chain security  Enhance trade between developing & developed economies
 Provide procedures & facilitate international trade
 Enforcement & compliance activities, anti-counterfeiting & piracy initiatives
 Capacity Building
29 30

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.8 GACAG – Global Air Cargo Advisory Group 4.9 CASS- Cargo Accounts Settlement System
 Members:  Members:
• IATA, FIATA, TIACA, GSF • The first CASS developed by Members in 1976 in Japan
• ICAO: to set global definitions & standards for air cargo security • Today, worldwide system, covering over 78 countries and larger expansion in
• WCO: Industry & governments to follow WCO’s international standards future.

 Current Priorities:  Objectives:

 Air cargo security, e-commerce,  Simplifying the setting of accounts between cargo intermediaries and carriers
 Customs and trade facilitation and  Reducing cost while enhancing service quality to agents and carriers.
 The sustainability of the global air cargo industry. Offering numerous advantages to both carriers & agents: (see next page)

31 32
 5/26/2024

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.9 CASS- Cargo Accounts Settlement System (cont.) 4.9 CASS- Cargo Accounts Settlement System (cont.)
 Advantages :

Source: Vietnam Logistics Research and

Development Institute, 2021. 33 34

4. INDUSTRY REGULATORS & GROUPS 4. INDUSTRY REGULATORS & GROUPS

4.10 Cargo Service Conference 4.11 Cargo Agency Conference
 Primary Objectives:  Objectives:
 Setting standards for cargo industry procedures
 Developing common industry positions on cargo issues  strengthening industry capabilities,
 Exchanging information promoting industry reputation and
 Providing directions & guidance enhancing commercial success for both airlines and agent participants.
 Liasing with IATA bodies
 Meeting schedules: annual meeting  Meeting schedules: normally once a year in March during the IATA World Cargo
 Membership: All IATA active member and associate members airlines Symposium
 Sub-group:
+ Airmail panel + Dangerous goods board
+ Cargo business process panel + IATA/ FIATA Customs working groups  Membership: All IATA member airlines.
+ Live animals and perishables Boards + ULD panels
 Publications
35 36
 5/26/2024

CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY 5. WARSAW CONVENTION &ITS AMENDMENTS

CONTENTS 5.1 The Warsaw Convention 1929 (12 Oct 1929)
1. The Role of Air Cargo  Conducted in Warsaw Poland in 1929
 Evolution and growth of Air Cargo  The Warsaw is a multilateral treaty, by ICAO
2. Challenges of Air Cargo Industry  Applies to international transport via national law of the signatory countries..
 Air Cargo Security  The convention does NOT apply to domestic air transport.
3. Global Regulatory Framework World Custom Organization (WCO)  For Unification of Rules to International Carriage by Air in respect to carrier’s
liability.
4. Industry Regulators and Groups
 To uniform of procedure dealing with claims, law applicable to such claims, and
5. Warsaw Convention & Its Amendments documentation such as tickets and waybill.
 To limit air carrier’s potential liability in event of accident.

37 38

5. WARSAW CONVENTION &ITS AMENDMENTS 5. WARSAW CONVENTION &ITS AMENDMENTS

5.1 The Warsaw Convention 1929 (12 Oct 1929) cont.
 A legal status to air waybill as evidence of transport contract.
 Details of air waybill requirements.
 Responsibilities of consigner for preparing air waybill and correctness.
 Subject to Carrier and his servant and agents
 Liable for damage, loss, delay or damage caused by delay of the cargo.
 Unless he can prove that:
 Damage caused by error of piloting, handling aircraft, and
 He has taken all necessary measures to avoid the damage.
5.1 The Warsaw Convention 1929 (12 Oct 1929) cont.
 The carrier’s liability is limited to 250 Francs Poincare/kg
 Exception to liability limit:
 High valued cargo declaration, subject to special fee
 Willful misconduct of the carrier
5.2 The Hague Protocol 1955
 The Hague Protocol is 1st amendment to Warsaw Convention
 Main amendments in terms of cargo is
Simplification to documents of carriage
Extension of its application to air carrier’s agent and servants
Giving more meaningful definition to “willful misconduct”

39 40
 5/26/2024

5. WARSAW CONVENTION &ITS AMENDMENTS 5. WARSAW CONVENTION &ITS AMENDMENTS

5.3 The Montreal Protocol 1975 (MP4)
 Special Drawing Rights (SDR) as replacement with Franc Poincare.
 Special Drawing Rights is a mixed sum based since 01 Jan 1981 on a basket of
US Dollars, UK Pound, French franc, German Mark, and Japanese Yen.
 Liability limit: SDR 17 (about US$20) per kilogram.
 Strict liability as replacement with Fault liability (as per Warsaw 1929 and Hague
1955)
 Carrier is only exempted in very limited cases:
 Act of war, act of public authority
 Inherent defect of cargo or defective packing of consignor
 Liability limit remained same for MP4 i.e. 17SDR (about US$ 20/per kilogram)
 MP4 simplifies formality of the air waybill, allowing them to be replaced by
computer records.
 MP4 reduces particulars on an air waybill, eliminates the sanction for omission of
particulars.
41
5.3 The Montreal Convention 1999 (MC99)
 One of the key benefits of MC99: paperless air cargo  efficiency, quality,
security, cost and environmental benefits.
 MC99 entered in to force in 2003 and now has 127 parties.
 Countries that have not ratified MC99 but continue to be subject to the Warsaw
Convention 1929 (WC29) and Hague Protocol 1955 (HP55) regimes  paper
documents of carriage such as the air waybill must accompany the shipment
throughout its journey.
 Under MC99 carrier liability is limited to: SDR 19 per kilogram for destruction,
loss or damage of cargo (changed every 5 years).
42

CHAPTER 1: OVERVIEW OF AIR CARGO INDUSTRY

REFERENCE
1. VLA 2021. FIATA Diploma in International Freight Forwarding, Module 5: Air
Transport.
2. Ho Chee Mun 2009. Guides to International Logistics _ The Practitioner’s
Definitive Guide: Airfreight Forwarding, 4th Edition. Singapore Logistics
Association.

43 44