Development of a methodical framework for a seamless air cargo supply chain, from a transaction cost perspective, focusing on Direct Trucking Pick-ups

Abstract

The air cargo market is experiencing momentous developments that may impact strongly on future trends. A consolidation shift has been observed, by more integration of the supply chain. Integrators engage in forwarding, forwarding agents operate their own aircraft and airlines bypass the forwarding agents, by striking direct structural deals with major customers. This last development in the field of the air cargo road feeder service (RFS) is also known as Direct Trucking Pick-up (DTP). In the current air cargo business models, all cargo is delivered via a freight forwarder to combination carriers (carrying both passengers and cargo). In the existing organizational cargo structures, there is no direct link from customer to combination carriers. The traditional model of air-cargo transportation, has been challenged in recent years. This stresses the need for research regarding the green field of the DTP model, researched in this thesis. It is important for the combination air cargo carriers to consider how to deal with future competition. Using several theories, such as lean manufacturing and transaction cost economics (TCE), the performance of the current state of an in-depth case study for KLM Cargo was analysed. Based on the measurements and analysis, several problems were identified and a framework had to be developed as a test platform to test several improvement scenarios. Using the discrete event simulation tool Simio, a model was created serving as a test platform. Simulation was used to explore various opportunities of process improvements and the impact of the proposed changes before implementation. The 5 proposed improvement scenarios were tested using the test platform. It can be concluded that all scenarios improve / enhance the DTP supply chain.