Handling Airfreight 101 Michael Ford/Anne Kelly

Benefits of Airfreight •

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To speed delivery on: – Perishable goods or lengthen useful market life. – Production items, no downtime. – Products/services seeking wider market from a fixed facility. – Mobile production units. To cut inventory and storage costs: – Where market is untested, demand undeterminable. – Where value loss through style change or perishable can be prevented. –

Where lower levels of inventory reduce service requirements.

Benefits of Airfreight •

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To take advantage of: – Superior conditions of carriage where there is heavy or costly packaging. – Superior conditions of carriage where there are higher insurance costs than other transportation modes. – Superior condition of carriage where premium handling, difficult coordination and documents prevail in other transports. Airfreight permits: – The seller to keep fewer inventories in fewer locations by responding relatively quickly to market demands from central repositories of stock or even from the production line itself. – Field inventories have freight, duty, administration charges and markup already attached to them; therefore, could be more costly. – The effects of motion and stress are less minimized to the cargo than other modes of transport. – Reduction of the time element in the transit from origin to destination.

Players •Forwarders = Indirect air carriers •Carriers = scheduled and unscheduled –scheduled = passenger / cargo or “all” cargo flights. –unscheduled = Charters and extra sections during peak or busy seasons •Couriers = small packages, simple documentation

Air Cargo Security and Compliance TSA – Transportation Security Administration The Transportation Security Administration protects the Nation’s transportation systems to ensure freedom of movement for people and commerce. The Transportation Security Administration will continuously set the standard for excellence in transportation security through its people, processes, and technology,

Air Cargo Security and Compliance The TSA is responsible for; Law Enforcement Programs Armed Security Officers are specially trained law enforcement officers authorized by the TSA to fly onboard each general aviation aircraft operating around our nation's capital. Detection Canine Team Program Selectively raises and prepares puppies to be future explosive detection dogs within the National Explosives Detection Canine Team Program. Crew Member Self-Defense The Crew Member Self-Defense Training Program provides basic self-defense training to crew members who volunteer for the program. Federal Air Marshals The Federal Air Marshal Service promotes confidence in the nation's civil aviation system through the effective deployment of Federal Air Marshals (FAMs) to detect, deter, and defeat hostile acts targeting U.S. air carriers, airports, passengers, and crews. Federal Flight Deck Officer Program

Air Cargo Security and Compliance Security Programs Air Cargo Programs TSA’s transportation security regime for air cargo is divided into two distinctive program areas: 1) The Transportation Sector Network Management (TSNM) Air Cargo Division charged with the strategic development of programs, and 2) Office of Security Operations (OSO) charged with program compliance. The Air Cargo Division is responsible for working across TSA, Department of Homeland Security, and other governmental agencies (domestic and international) to develop air cargo regulations, technological solutions, and policies that continuously enhance the security of the air cargo supply chain while maintaining TSA’s commitment to ensure the flow of commerce.

Air Cargo Security and Compliance Air Cargo Environment Overview The TSA’s vision for air cargo security is the creation of a layered solution designed to protect against security breaches by using a combination of process along with information and technology-based solutions, while preserving the integrity of the air cargo supply chain. In response to possible threats to air cargo security, TSA uses a multi-layered approach that includes:    

Vetting companies that ship and transport cargo on passenger planes to ensure they meet TSA security standards. Establishing a system to enable Certified Cargo Screening Facilities (CCSFs) to physically screen cargo using approved screening methods and technologies. Employing random and risk based assessment to identify high-risk cargo that requires increased scrutiny Inspecting industry compliance with security regulations through the deployment of TSA inspectors.

Air Cargo Security and Compliance Security Screening In 2007, Congress passed the Implementing Recommendations of the 9/11 Commission Act more commonly known as the 9/11 Act. This law requires that all cargo transported on a passenger aircraft be screened for explosives as of August 1, 2010. TSA continues to encourage businesses to closely examine how they ship cargo on passenger aircraft. TSA recognizes cargo may only be a small portion of your operation, but all businesses must consider how the new requirement has affected their operational continuity, punctuality, and customer satisfaction. Every shipment of cargo carried on passenger aircraft requires screening at piece level, prior to being transported on any passenger aircraft. Skids and pallets will have to be taken apart, screened and reconfigured. The 9/11 Act specifically identifies the types of screening allowed ranging from physical inspection to various technologies. If airlines are forced to screen cargo, similar to how passenger baggage is screened, there is a potential for delays and damage to shipments. The screening process affects all cargo on passenger planes.

Air Cargo Security and Compliance Security Screening TSA developed the Certified Cargo Screening Program (CCSP) as a solution to help industry reach the 100 percent screening mandate. The program enables freight forwarders and shippers to pre-screen cargo prior to arrival at the airport. Most CCSP shipper participants have been able to quickly incorporate physical screening into their shipping process at a small cost to their operation. TSA continues working with companies to examine all their cargo screening options. Shippers should contact their freight forwarders to determine if any of their products are transported on passenger aircraft. Many freight forwarders have already joined CCSP and in many cases will be able to help companies through the screening process. TSA can assist you in assessing the possible impact for your supply chain, both inbound from suppliers as well as outbound customer shipments.

Air Cargo Security and Compliance Indirect Air Carrier (IAC) An Indirect Air Carrier (IAC) means any person or entity within the United States not in possession of an Federal Aviation Administration air carrier operating certificate, that undertakes to engage indirectly in air transportation of property and uses for all or any part of such transportation the services of a passenger air carrier. Each Indirect Air Carrier must adopt and carry out a security program that meets Transportation Security Administration (TSA) requirements. Known Shipper Program In response to the September 11, 2001 attacks on the United States, the United States Department of Homeland Security (DHS) implemented new rules to insure the safety of domestic and international air travel in the United States. .

IATA What is IATA? The International Air Transport Association – works with its airline members and the air transport industry as a whole to promote safe, reliable, secure and economical air travel for the benefit of the world's consumers. IATA’s 230 member airlines comprise 93% of all international traffic. IATA employs 1400 people located in 90 offices that serve over 130 countries around the world. What does IATA do? IATA provides a wide range of services and programs to its member airlines, the broader aviation community and by extension the traveling public. IATA sets standards in many areas of the business - from ticketing to baggage - that make it possible for passengers to travel from one place to another using two or more airlines. It also leads a number of industry initiatives involving safety, security, environment and the quality of air travel. IATA Terms and Conditions are found on the back of either a direct airway bill, a house airway bill or a master air waybill. These Terms and Conditions reflect the Carriers’ Limitation of Liability per air waybill.

Air Waybill

Air Waybill Types The air waybill” acts as a Bill of Lading which is issued by the freight forwarder to the shipper. This document contains information pertinent to the movement of the cargo. There are 3 different types of air waybills. Direct air waybill, Master Air waybill, House air waybill Direct air waybill - represents the bill of lading for the shipment and will show one shipper and one consignee. Direct shipments are generally used when freight and service needs are immediate. Freight is not consolidated with other cargo. Examples of direct shipment would be:  Live animals  Perishable shipments  Oversize cargo  Dangerous Goods  Human remains  Plant shutdown situations where time is critical

House air waybill / Master air waybill HAWB (House Airway bill) Shipments sent on a consolidation basis whereby grouping together various clients consignments under one MAWB being issued by the freight forwarder. Information shown on the air waybill: Master air waybill number House Air waybill Each air waybill will show: Shipper (originating party) Consignee (end receiver of goods) Air carrier and flight information Pieces/Weight/Dimensions of the cargo being moved Commodity Payment terms of shipment (collect or prepaid) Customs information

MAWB (Master Airway bill) While the principal of a Master air waybill is the same as a direct air waybill (one shipper/one consignee). The shipper on the master bill represents the freight forwarder. The consignee on the master air waybill represents the party representing the freight forwarder at destination. This party is usually the destination office of the freight forwarder handling the cargo. Information shown on the air waybill: Master air waybill number Each air waybill will show: Shipper (originating party) Consignee (end receiver of goods) Air carrier and flight information Total pieces and weight of the cargo being moved Payment terms of shipment (collect or prepaid) Customs information

Consolidation vs Direct Shipment Consolidation Shipment Advantage of a consolidated shipment – cost savings Utilizing a consolidated service guarantees the cost effectiveness. Cargo shipping method in which a freight forwarder at the port of origin combines several individual consignments. This arrangement allows multiple shipments to be ‘consolidated’ under one master air waybill. The total weight of the consolidation tendered to the air carrier will drive down the cost of the total shipment. At the port of destination, the consolidated shipment is separated and arrangements are made with the consignee for freight to be cleared through local Customs and delivered to the consignee or documents to be turned other to another broker for clearance.

Direct Shipment Advantage – expedited service Disadvantage – premium cost Some shipments with scheduled airlines (IATA members) earn a commission from the carrier. Forwarders acts as the 3rd party in the transaction. Forwarders issue a direct airway bill (AWB) which is considered to be documentation from the shipper directly to the consignee. Airline has full carrier liability issues for carriage.

Chargeable vs Volume Weight Chargeable

Volume

The weight of a shipment (contents and packaging) used in determining air freight charges. The chargeable weight may be the dimensional weight or on container shipments

Dimensional weight refers to the weight per cubic foot of the cargo. The dimensional weight would be considered the actual amount of space the freight takes up when loaded on a plane.

Example:

Example:

1 pallet containing 12 individual pieces weighs 500 lbs or 227 kilos

1 pallet containing 12 individual pieces weighs 200 lbs or 91 kilos

Pallet has dimensions of 24 inches x 36 inches x 38 inches.

Pallet has dimensions of 24 inches x 36 inches x 38 inches

The dimensional weight would be 41472 divided by 366 = 227 kilos

24 x 36 x 48 divided by 366 would be 113 kilos

Air carrier would charge for 227 kilos for airfreight charges

Air carrier would charge 113 kilos to accommodate the extra space that would be taken up

Rates •

Four basic categories for rates that are used in the airfreight industry. – 1. Carrier tariff rates – 2. ULD rates – 3. Contract rates – 4. Ad Hoc or spot rates for large shipments.  Rates are expressed in the currency the origin of the cargo and are not restricted to specific customers.

Carrier Tariff Rates • Carrier specific tariff rates apply for: – Various commodities such as: 

dangerous goods, oversize cargo, perishable goods, valuable goods, live animals.

– Service availability to destination. 

Is the flight direct from origin to destination? Does the flight make multiple stops while enroute to destination?

– Tariff rates may vary by carrier. 

No carrier is permitted to charge more than the rates stipulated by IATA. Rates regulated by IATA are called Tact Rates.

ULD Rates •

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ULD pricing is based on the type of the ULD. – Each ULD will have a flat rate for the use of the ULD – AND pivot rate for amounts over the maximum allowable weight. The tare weight is the actual weight of the ULD when it is empty. The pivot weight is weight over the allowable weight for the container. The amount is payable to the carrier in addition to the flat rate for the ULD use.

Contract Rates •

Rates provided by air carriers for specific flights or commodities. Rates will be in weight breaks. As the weights increase the rates decrease. • For example: Minimum $50.00 – -45 kilos 2.00 per kilo – +45 kilos 1.75 per kilo – +100 kilos 1.50 per kilo – +300 kilos 1.25 per kilo – +500 kilos 1.00 per kilo – +1000 kilos .75 per kilo

Ad Hoc or spot rates •

Ad Hoc rates and spot rates are lower than the average rates offered by carriers. – Rates might be offered for large weight amounts of cargo on flights that might not be filled to cargo capacity. – Rates might be ‘promotional’ rates that help the carrier build up specific lanes of traffic on their routes.

What Types of Air Carrier to Choose? •

Rates and services makeup the profile for carrier selection. – Frequency of flights. Is the flight non-stop or does it have a series of stops along the way. – Arrival ports (consolidation and deconsolidation points in the network). – Knowledge of the airline industry by the carrier (direct or indirect). – Competitive rate structure.

Unit Load Device/Airline Pallet Aircraft Unit Load Device – ULD is an assembly of components consisting of any of the following: 1. Aircraft container 2. Aircraft pallet and pallet net 3. Aircraft pallet and pallet net over a nonstructural container or igloo The purpose of the unit load device (ULD)is to enable individual pieces of cargo to be assembled into a standard-size unit to facilitate efficient loading and unloading of aircraft having compatible handling and restraint systems. ULD’s are primarily used on wide body aircraft. Wide-body aircraft are also used for the transport of commercial freight and cargo.

Packaging •

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All cargo is containerized for flights. – Cargo can be tendered to the carrier as loose pieces or containerized cargo. Cargo is then loaded on the aircraft in ULD’s (Unit Load Devices) or on flat pallets (similar to a cookie sheet) There are approximately 20 different sizes of ULD’s or pallets utilized by air carriers. – The type of ULD or pallet used will depend upon the cargo configuration of the aircraft used for transportation and whether or not the ULD or pallet is designed for use on the main or lower deck of the aircraft. Main deck ULD’s: – would be carried in the cabin section of a cargo aircraft, or on the passenger carrying level of passenger aircraft. Lower deck ULD’s – are designed to be carried below the main (cabin) deck.

Packaging •

ULD’s are designed to accommodate many types of cargo. Some units are: – Temperature controlled for such perishable items as pharmaceuticals, medical reagents, food stuffs – Designed to handle garments which are placed on hangers. – Designed to carry such commodities as live animals, high value goods, human remains, dangerous goods. – Automobiles and oversize cargo would be placed on a “flat pallet.”

Lower Deck/Lower Deck Containers Lower deck is considered to be the lowest cargo holding area of a plane. A lower deck container is specifically designed as an integral part of the aircraft to fit in the cargo compartment of a wide body aircraft. Lower deck containers generally have smaller base dimensions than upper deck containers as a result of the curvature of the airplane body.

Upper Deck/Upper Deck Containers Upper Deck (main deck) is to be considered the highest deck on an aircraft. Since a great deal of cargo is carried on commercial passenger flights, there are generally more lower deck than upper deck containers. The main deck of cargo planes are 79 to 96 inches tall. ULDs with footprints similar to those of 88 inches or 96 inches wide pallets and 62 inches or 125 inches long. A 62-inch wide x 88-inch tall ULD is half the volume of a 125-inch x 88 inch pallet. The 20 foot pallet is 238 inches long and 96 inches wide. There several common types of contoured main deck ULDs, that are contoured (curved to fit in the plane) to provide as much cargo volume as possible. Upper deck ULDs are just like lower deck ULDs that are either the full width of the plane with two corners of the profile removed., Main Deck ULDs and pallets are not only taller than lower deck ULDs, they are frequently two or four times longer. Many air cargo companies use main deck ULDs that have both features called dual-profile, so that on small planes such as the Boeing 727, they are stored widthwise and have two corners contoured, and on the bigger Boeing 767, they can be rotated 90 degrees and shipped in parallel like LD3s, so that only one corner is contoured when being used like an LD3. This greatly simplifies transportation of cargo containers at slight cost of cargo volume.

Cargo aircraft A cargo aircraft is a fixed-wing aircraft designed or converted for the carriage of goods, rather than passengers. They are usually devoid of passenger amenities, and generally feature one or more large doors for the loading and unloading of cargo. Freighters may be operated by civil passenger or cargo airlines, by private individuals or by the armed forces of individual countries. However most air freight is carried in special ULD containers in the cargo holds of passenger aircraft. Aircraft designed for cargo flight use have a number of features that distinguish them from conventional passenger aircraft: a "fat" looking fuselage, a high-wing to allow the cargo area to sit near the ground, a large number of wheels to allow it to land at unprepared locations, and a high-mounted tail to allow cargo to be driven directly into and off the aircraft.

Combi aircraft In commercial aviation, the term “combi” refers to versions of various aircraft that can be used for either passenger, as an airliner would, or cargo duties, as a freighter would, and often have a partition in the aircraft cabin to allow both uses at once. Combi aircraft typically feature an oversized cargo door, as well as tracks on the cabin floor to allow the seats to be added or removed quickly. Typically, configured for both passenger and cargo duty, the passenger compartment is pressurized to a higher pressure, to prevent fumes from cargo entering the passenger area. Combi aircraft is often used to move live animals such as baby chicks, horses or livestock. Each animal has an individual area in the plane that is accessible to their handlers.

Antonov The Antonov is a strategic airlift jet aircraft. It is the world's largest ever serially-manufactured cargo airplane and world's second largest operating cargo aircraft. Weights: Maximum take-off weight: 286,000lb (130,000kg). Empty weight: 145,500lb (66,000kg). Maximum payload: 103,600kg. Dimensions: Length 133ft 0in. Wingspan 144ft 61/2in. Height: 53ft 13/4in. Accommodation: Three flight crew (two pilots and a flight engineer) plus loadmaster, although it can be converted for two-crew operation. Pressurized cargo compartment will accommodate a wide range of rigid or flexible pallets, containers, unpacked freight, wheeled or tracked vehicles or seat up to 170 troops."

Contact information • • • • • •

Contact: Anne Kelly Phone: 215-629-4502 Mobile: 215-888-5627 Email : [email protected] 510 Walnut Street, 13th Floor, Philadelphia, Pa. 19106 To download today’s presentation please make note of the following link: http://www.bdpinternational.com/aboutbdp/customer-support/resource-center/

Next session: Classification March 13th, 2014

Handling Airfreight 101 Michael Ford/Anne Kelly