Choosing the Location of the Best Air Cargo Hub in South East Asia

This paper seeks to explore the ideal location of an air cargo hub in Southeast Asia block of countries. Critical to this examination will be the study of general aviation industry in Southeast Asia, the study of air cargo industry within general aviation industry and the increasing need for air cargo freight in the Southeast Asia. In particular, this paper will seek to explore the correlation between the export business in Southeast Asia and its influence on the location of the air cargo hub.

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Introduction

Air cargo industry is an intricate web of various players and several activities. Some of the industry players include manufacturers and freight forwarders (Elias 1). Other players are shippers and off-airport freight consolidators (Elias 1). Some of the activities involved in the air cargo industry include loading of the shipments at the source and off loading of the shipment at the destinations (Elias 1; Holloway 564; Radnoti 357; Ruppenthal & Sullivan 167)

Shipment through the air is generally expensive as compared to alternative shipment means. In this context, the goods to be transported through the air must justify the cost involved (Elias 1). The goods that are generally transported through the air include time sensitive goods. The other category of items transported through the air is the high-value commodities (Elias 1; Great Britain Department for Transport 106). Some of the high-value commodities are machinery and the assorted spare parts, and electronic items and their fittings among other items (Elias 1; Schebaera 111; Hecker 48). On the other hand, highly perishable items that are typically transported through the air include vegetables, fish and cut flowers (Elias 1; Groenewege & Heitmeyer 63; Baxter 94). In the context of high-value goods and perishable goods, air cargo freight is seen to offer security and speed respectively which alternative means of transport would not adequately cater for (Steven & Hecker 44; Allaz 308; Behrens 43; Buzdugan 22). In these specific instances the cost involved is then justified.

In addition to the general air shipment, there are also highly specialized air shipment freights (Elias 1). These specialized air shipment freights handle air cargo that is specialized in the sense it can’t fit in the general air shipment freights. Such cargo includes live animals such as thoroughbred horses and specialized machinery (Elias 1).Generally air cargo is often pre packaged into unit load devices before transportation to the airport (Elias1). Unit load devices are special containers that hold the consolidated air cargo (Elias1). The air cargo is generally moved to its final destination through a hub-and- spoke networks of various air ports. According to Encyclopedia Britannica, a hub-and- spoke network is a system where the cargo is transferred to various airplanes in distinctly different air ports until it reaches its final destination (1).

Southeast Asia or South Eastern Asia, which is divided into mainland Southeast Asia and maritime southeast Asia, consists of eleven countries namely Malaysia, Viet Nam, Cambodia and Thailand (Australia’s Department of Foreign Affairs and Trade (ADFAT) 1).In addition to these countries are East Timor, Singapore, Laos, Indonesia, Brunei, Burma (Myanmar), and Philippines (ADFAT1). Malaysia is the only country in both mainland and maritime Southeast Asia that is peninsular (West) Malaysia and East Malaysia respectively (Hirschman & Edwards 74; Strumillo 9; ABC radio 14). The other members of a set with west Malaysia are Burma, Cambodia, Vietnam, Laos and Thailand (Asian Development Bank 6; Tan 143; Hill 36). The countries that compose Maritime Southeast Asia include East Timor, Philippines, and Brunei. Other countries making Maritime Southeast Asia include Indonesia and Singapore (Dowling 462). The Southeast Asian countries, with the exception of East Timor, have formed an umbrella organization amongst themselves called the Association of Southeast Asian Nations (ASEAN) (Sobhan 166; Rashid & Hossain 122; Sparkes et al 160)

In creating a background for the air cargo industry in Southeast Asia, it is impossible to de link it from the general aviation industry. In the ensuing chapters, we will discuss the aviation industry in Southeast Asia as a means of gaining insights on the air cargo industry in the same region.

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Traditionally, a majority of the ASEAN countries had been monopolized by a small number of long established airline companies at the country level. Examples of such airlines included Malaysian Airlines, Garuda Indonesia, Singapore Airlines and Thai Airlines (Nesadurai et al 137). The changing political landscape such as independence of the countries led to a radical shift in government policy as regards to aviation. This governmental shift contributed to the development of the airline industry in Southeast Asia. Among the radical shift in governmental policy was the prioritization of the establishment of a flag carrier to serve the transport needs of individual countries. The establishment of a flag carrier also served as a platform for the newly formed independent governments to boost their respective country’s profiles in the international arena (Nesadurai et al 137).

These flag carriers catered for both passenger and cargo transportation needs making immense profits in the post independence era due to several factors. Chief amongst them was the ASEAN countries’ reputation as a favorite tourist destination, and government protection that shielded them from competitive market forces. Governmental protection enabled the airlines to charge exorbitant prices for their services. The case of Thai airlines highlights the extent of governmental protection. The government limited the establishment of competing domestic airlines thus propelling Thai airlines as the dominant domestic airline carrier (Nesadurai et al 137).

The aviation industry in Southeast Asia has changed significantly in the last decade or so. The 1990s brought in new insights into the aviation industry as a result of the economic crisis sweeping Asia at the time. Economic crisis contributed to declining business for the airlines forcing some of them to be restructured. The declining business was evidenced by falling international arrivals and departures to and from the Southeast Asia. For example the international departures and arrivals from Singapore fell by five percent while passengers on international route into and from Indonesia fell by 20 percent (Damuri et al 1). These factors contributed to financial difficulties to the airlines shielded by the government from market forces resulting in the need for change in government policy as regards aviation. To a certain extent and in various Southeast Asia, the dominant airlines restructured to reflect the emerging economic dispensation. For example, Garuda Indonesia underwent forced restructuring programs before being scheduled for privatization (Damuri et al 1). The restructuring of the airlines came along with liberalization of the aviation industry as well as limited regulation in the industry. The net effect was the creation of a more robust and competitive environment in the Southeast Asian countries’ airline industry. This led to the emergence of several new airlines in different ASEAN countries such as Tiger Airways (Singapore), Nok Air (Thailand), Lion Air (Indonesia) , Value Air (Singapore), Lion Air (Indonesia), and One to Go (Thailand) amongst other airlines.

Statement of the problem

At the international stage, the ASEAN countries are reputed for trade in electronics and ICT products which provide a major business opportunity for the air cargo industry. However, countries with relatively weak air cargo infrastructure have often depended on their counterparts within the ASEAN community to provide them with airfreight into the international market. With this context in mind, this paper will seek to identify an ideal location of the best air cargo hub based on the geographical location of the country, its economic strengths and infrastructure development.

Literature Review

Air Cargo Industry

Air Cargo refers to airlines involved in the transportation of cargo as opposed to passengers. Air Cargo which can be perceived as a derivative of the terms ‘cargo airlines’ or ‘airfreight carriers’ can be constituted as a subset of the larger passenger airlines. Basically, the air freight industry can be grouped into five major sets that include freight forwarders and passenger/freight carriers (Wall 4). Other members of the set are the integrated freight carriers, non integrated freight carriers and postal services (Wall 4).

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Integrated air freight carriers basically offer an end to end solution to cargo transportation. Integrated air freight carriers are capital and human intensive ventures. They basically provide a complete solution to the cargo movement through having delivery trucks to collect customer cargo at their drop off points or from their offices (Wall 4). After picking the cargo, the integrated air freight carriers have terminals for sorting the cargo dependent on size, destination and other variables that vary from a carrier to a carrier (Wall 4; Gesell & Dempsey 879)The carriers may then have long haul vehicles for inter hub transportations and airplanes for inter airport transportation.

On the other hand, non-integrated freight carriers are usually smaller in comparison to the integrated air freight carriers; they are more specialized and serve smaller geographical reach (Wall 4; Wensveen 467; Kane 508). Non-integrated freight carriers are usually outsourced by freight forwarders for inter airport transportation. The cargo is usually transported to large airports for intercontinental or interstate flight.

The freight forwarders act as the link between the airlines and the end customer (Shepherd & Grosso 9; Rau & Herwig 76; Knight & Rath 27). The freight forwarders may lease space in aircraft for the transportation of client’s goods and contract ground transportation for efficient delivery of the cargo (Shepherd & Grosso 9). In essence, the freight-forwarders buy bulk space in aircraft and provide supportive logistics for the movement of cargo between two locations which may also include warehousing and ground transportation (Wall 7; Schwieterman 54; Pierce 59). Freight forwarders are estimated to serve 80 percent of the global air cargo industry (Wall 7).

The combination of passenger/freight carriers operate thorough the airline selling space in the ‘belly of passenger aircrafts’ (Wall 6; Ausrotas & Taneja 88; Law 12). These combinations are done for large airplanes such as DC10 (Wall 6; Sproule et al 20; Morton 81; Lord 24). Often these services work best in collaborative business arrangements with freight forwarders such that the airlines only handle the transportation bit while the freight forwarders handle the logistics of cargo movements such as pick up, sorting and transportation to the airport (Gunther & Kim 223; Sletmo 77; Magdelenat 102)

Air cargo industry in Southeast Asia

In a global context, the air cargo industry generated over $50 billion in revenues in 2005 (Kasarda et al 1). This was revenue that was generated in direct revenues and consequently there was significantly more potential for indirect revenues in the ground handling of cargo and related logistics (Kasarda et al 1). It is estimated that almost 30 percent of the international export and import business is transported via air. In 2004, 35 percent of trade with a value of $ 3 trillion was transported via air freights (Kasarda et al 1).

In the recent times Southeast Asia has emerged as a global economic powerhouse in relation to ICT and electronics products (Tongzon 274). This has continually placed a demand for airfreight services in the region. It is impossible to discuss the air cargo industry in Southeast Asia without mentioning the electronics industry in the region. The electronics industry contributes significantly to the air cargo industry in Southeast Asia as well as to the international trade in the region (Barlow 76). The electronics industry in Southeast Asia has also contributed strongly to the respective countries economies.

There are several push and pull factors that drive the electronics industry in Southeast Asia. Among the push factors include the governmental initiatives and foreign investments (Fusion Consulting 4). The governments have taken measures to boost the electronics industry in Southeast Asia. Such government initiatives include sponsorship of technology parks and trade conventions, improvement in educational infrastructure on electronics technology, and creation of a business friendly environment for electronics business (Fusion consulting 4). On the other hand, the electronics industry in Southeast Asia has continually received direct foreign investment due to the low costs in the electronics manufacturing process (Fusion consulting 4). The pull factors driving the electronics industry in Southeast Asia is a strong domestic and export demands of the electronics products (Fusion consulting 4). The domestic and export demands are fueled by the strong technological uptake of new technologies in electronics and specifically in mobile phone technology (Fusion consulting 4).

Among the Southeast Asia countries, Philippines and Malaysia have very strong electronics export business. The electronics export business accounts for more than fifty percent of their total export business (Fusion consulting 6). Singapore and Thailand also have relatively strong electronics export business, with the export business in electronics accounting for more than 30 percent of their total export business (Fusion consulting 7).

The role that air cargo industry plays in the international trade in Southeast Asia can’t be undermined. The industry is critical in keeping production lines running and keeping the labour force in gainful employment. The mostly high value cargo must be transported on time to meet the time deadlines as trade at global stage thrives on meeting deadlines. The air cargo industry is greatly tied to the international trade. Southeast Asia has been a critical component in the international trade after its recovery from the 199Os economic crisis. It has since experienced the highest growth rates in Asia (Senga et al 10). While agriculture makes a substantial contribution to the economic development in Southeast Asian countries, there is a greater sway towards services and manufacturing. The potential for air cargo services in the region cannot be overemphasized. For example, Singapore which has a reputation for efficiency in its manufacturing process and business acumen plays a critical role in air cargo industry (Senga et al 22). It sources components for its manufacturing process from other Southeast Asia and exports finished consumer goods to other Southeast Asian countries as well as other international markets (Senga et al 22).

Among the factors boosting Air Cargo industry in Southeast Asia is the signing of the ASEAN Free Trade Agreements (AFTA) framework (Senga et al 22). According to the Chinese University of Hong Kong, the AFTA framework was signed in 1992, with an aim to ‘…increase the ASEAN’s region competitive advantage as a single production unit’ (1). This resulted in the removal of trade barriers between ASEAN members and as such promoted trade between the member states (World trade law, 3). The increased trade between member states resulted in air cargo movement between the states either as finished goods or as components for manufacturing process.

Due to strong manufacturing industries in Southeast Asia and removal of trade barriers between ASEAN members, the air cargo industry has grown to facilitate movement of consumer goods to international markets. According to Hong Kong Air cargo Terminals limited, Southeast Asia imported 24 million kilograms of cargo and exported 25 million kilograms of cargo in the month of April, 2011 (5). To further elaborate on the critical role played by the air cargo industry in Southeast Asia, the statistics for February 2011 tonnage for international trade for different countries are provided below. Perhaps it is significant to note the transshipment statistics of Singapore in comparison with other countries. Her geographical location gives her an advantage in transshipment business with an estimated over 60 percent of its exports comprising of transshipment cargo (SIA cargo 3).

In the context of international air freight services, the demand for the same on a country by country basis in Southeast Asia is determined two factors. One major factor is the geographical location of a country’s imports while the other factor is the final geographical destination of its exports (Trace et al 14). Often the air freight is used where other modes of transport are not suitable. The demand for the airfreight services is also dependent on the composition of import and export cargo as air freight is more cost effective for high value-to-weight ratio products (Trace et al 15). Generally cargo whose value is more than 20 dollars a kilogram is considered suitable for air freight (Trace et al 15). Regional airlines in Southeast Asia serve a significant portion of the airfreight traffic. For example, the Singapore-Bangkok route is served by regional airlines as well as the Kuala Lumpur-Bangkok route (Trace et al 15). The Singapore- Kuala Lumpur is served by cheaper alternative means such as road (Trace et al 14).

The demand for air freight services in Southeast Asia is significant. For example, Singapore with a strong electronics industry accounts for over forty percent of Southeast Asia’s electronics exports (Trace et al 14). It also accounts for over forty five percent of Southeast Asia’s exports on ICT products (Trace et al 14). While a substantial portion of the international trade can be alternatively transported, the high value per kilogram of the electronics and ICT products makes them ideal for airfreight (Trace et al 14). The value of these products oscillates between ten dollars a kilo up to as high as 150 dollars a kilo (Trace et al 14).Apart from ICT and electronics goods, textiles and garments form a major component of airfreight business. For example, Indonesia contributes almost thirty percent of the regional supply of textiles and garments within Southeast Asia countries (Trace et al 14). The major consumers of Indonesia’s textiles and garments are Malaysia and Singapore. The two countries jointly consume up to 15 percent of the Indonesia’s output (Trace et al 14). While it is worth noting that quite a substantial amount of the textile and garment products are transported via container shipping, the high end textiles with very high value are typically transported via air (Trace et al 14).

The demand for airfreight services is equally strong in other Southeast Asian countries. Philippines which has the US, Singapore and Japan among other countries as its main international trading partners, exported more than 70 percent (as measured by value) of its cargo through air in the year 2002 (Trace et al 14). It is noteworthy that up to fifty percent of the airfreights were consumer electronics goods (Trace et al 14). Other major trading partners of Indonesia include Republic of Korea and Holland (Trace et al 14). In the same year, Brunei’s international trade cargo totaled up to more than 30 million kilograms for both exports and imports (trace et al 14).

Major air cargo hubs serving Southeast Asia markets

In Southeast Asia some of the largest air cargo hubs include Changi airport in Singapore, Suvarnabhumi Airport (New Bangkok International airport), Kuala Lumpur International Airport and Brunei International Airport amongst other airports.

The Changi airport in Singapore is one of the largest cargo hubs in Southeast Asia handling over 80 airlines (Arabian Supply Chains (ASC) 5). The airlines serve over 180 cities that are located in fifty countries around the world (ASC 5). The airport with an annual capacity of handling three million tones of cargo has been designated as a customs free trade zone (ASC 5). The implication of this designation is that the businessmen can handle all the logistics of the air freight such as sorting and packaging without the necessity of further documentation and legislation (ASC 5). The airport which has its cargo operations established in a forty seven hectare Changi Airfreight Centre (CAC), handled almost two million tones of cargo in 2008. The Changi Airfreight Centre (CAC) is served by three handling agents who operate the nine airfreight terminals in the centre (ASC 5). The agents include Singapore airport terminal services (SATS), and Swiss port Singapore (ASC 5). The other agent is Changi International Airport Services (ASC 5). The handling agents have the capabilities of handling both specialized and niche cargo.

The Changi Airfreight Centre also has two express-and-courier centers of which one is operated by SATS. The express-and-courier centre operated by SATS handles non specialized express shipments and has forty thousand tone cargo handling capacity (ASC 5). The other express and courier centre is operated by the DHL as part of its Singapore business (ASC 5). In essence, the express-and-courier centers are meant to serve business aspects of which time factor is critical. This may include perishable commodities.

On the other hand, Suvarnabhumi airport in Bangkok, Thailand with a six million cargo handling capacity, handled over one million tones of cargo in the year 2008 (ASC 8). The airport that started operations in 2006 was constructed to decongest the Bangkok international airport (ASC 8). The airport acts as the main hub for Bangkok airlines, Thai air Asia, and Thai airways international amongst other airlines (ASC 8).

Inaugurated in 1998, Kuala Lumpur International Airport (KLIA) has developed into one of the most important airports in Southeast Asia as a result of governmental support (KLIA, 5). This has been part of Malaysia’s government improvement on its infrastructure to cater for its relatively raising economic growth (Trace et al 16). The airport was constructed as a result of the need to decongest Subang International airport and the government of Malaysia has since then promoted the airport as a cargo hub as well as a passenger hub (Trace et al 16). Kuala Lumpur International Airport has a capacity to handle over one million tones of cargo annually of which the government plans to build a new terminal by the year 2012. It is estimated that Kuala Lumpur International Airport has a capacity to expand and handle over five million tonnes of cargo yearly (Trace et al 16). According to the Malaysian Industrial Development Authority (MIDA), Kuala Lumpur international airport has a designated free commercial Zone (FCZ) (6). Malaysia airlines operate an advanced cargo centre within KLIA. The KLIA advanced cargo centre handled over 600, 000 tonnes of cargo in 2006 and covers over 100 acres of land. Other major international airports within Malaysia include Langkawi International Airport and Penang international airports amongst others (MIDA, 6). Brunei International Airport is relatively small compared to KLIA, Changi and Suvarnabhumi airports, and its critical important is evident in its transshipment services for the region (Trace et al 16). There are also various regional airlines within Southeast Asia countries.

While various countries have struggled and succeeded to a certain degree on meeting the air freight demand, certain challenges exist in the industry. For example, there is need for policy formulation and implementation as regards to handling and transportation of dangerous cargo that may pose significant danger to health and the aircraft when being transported over air. Such dangerous to safety goods may include flammable adhesives, fuels and laboratory testing equipment amongst other items. One way of ensuring safety of such commodities includes the legal provision for the airlines to inspect and screen the cargo it is entrusted to transport. The cargo must also be adequately described in order to ensure its safe transportation. Availability of land for expansion of the airports still pose a major challenge as there is increased cargo traffic.

The relative strengths of various air cargo hubs in Southeast Asia

Convenience and efficiency are critical factors in choosing the best and most ideal location of an air cargo hub in Southeast Asia. Convenience in relation to airfreight has to do with the ease of access to the air cargo hub from the various feeder airports, both locally and regionally, for transshipment business. On the other hand, efficiency has to do with technical expertise of staff, customer service, meeting of time deadlines and prompt execution of customer instructions. Therefore for efficiency and effectiveness, an air cargo hub must be strategically and centrally located for optimal service provision. These are critical components for ensuring a cost effective air and quality air cargo hub services. This should ensure that air cargo is transported swiftly to the destination market at the lowest possible cost.

The economic strengths of various countries within the Southeast Asia is critical in consideration for the location of the best air cargo hub in the region. This is partly informed by the fact that it is much easier to create a strong air cargo hub within a strong international trade environment as opposed to a country with limited international trade. The air cargo hub must be developed to meet the home international trade before it can serve regional international trade.

Air cargo holding capacity is another critical consideration in the location of the air cargo. For the hub to serve regional air cargo traffic, it must be sufficiently big to cater for those needs. Of a necessity to cater for the needs, it must have enough storage capacity to adequate and effectively cater for the perishable commodities. On the structural front, in addition to the standard infrastructure for airfreight, the air cargo hub must have sufficient runaway length to handle all cargo airplanes.

Considering the above conditions for an ideal location of an air cargo hub within Southeast Asia we are going to examine the suitability of two countries; Malaysia and Singapore. It should be noted that several factors have been used in narrowing down to the two countries. One of the critical components used was the tonnage of transshipment. From the figures given above it was noted that apart from strong import and export cargo tonnage, both Malaysia and Singapore had high transshipment cargo tonnage. In the month of February 2011, Malaysia and Singapore had 1,018,457 and 1,378,286 cargo tonnage respectively (Hong Kong Air Cargo Terminals 5). This transshipment cargo tonnage is substantially larger than the next closest countries; Thailand and Philippines with 887,495 and 834,537 transshipment cargo respectively (Hong Kong Air Cargo Terminals 5). In analyzing the suitability of the two countries, their geographical location and economic strengths will be factored in.

Malaysia with a size of 329, 758 square kilometers is bordered by Thailand, Indonesia, and Philippines to the north, south and east respectively (Encyclopedia of the Nations6). Malaysia is divided into west (Peninsular Malaysia) and east Malaysia consisting of eleven and two states respectively to total to the thirteen states that make up Malaysia (Encyclopedia of the Nations 6; PWC 15). Malaysia’s unique and strategic position gives her an edge over the other Southeast Asian countries when it comes to location of an air cargo hub serving the region. It has capitalized on this advantage to develop a relatively strong transshipment business supported by six international airports. The six international airports in Malaysia are Kuala Lumpur international airport, Kota Kinabalu airport and Senai international airport (Malaysian Industrial Development Authority, 6). The other airports in Malaysia are Penang international airport, Kuching International airport and Langkawi international airport (Malaysian Industrial Development Authority, 6). Of the six international airports, Kuala Lumpur international airport has an extremely well developed air cargo centre. In the international trade, Malaysia exports electronics and textiles (Encyclopedia of the Nations1). Other items that are exported to a certain degree include wood products, petroleum and palm oil amongst other commodities (Encyclopedia of the Nations 6). On the other hand, Malaysia imports food and fuel (Encyclopedia of the Nations 6). Other items that it imports include machinery and equipments.

On the other hand, Singapore consists of 60 islands of which one is a major island and the rest are small islands (Encyclopedia of the Nations 14). The 637.5 square kilometers big country, lies strategically in the middle of a sea route connecting far east to three major economic blocks; Asia, middle east and Europe (Encyclopedia of the Nations 14). The main economic activities include manufacturing, goods transportation and financial services. Singapore is particularly noted for its strong electronics export businesses. International airports in Singapore include Seletar airport and Changi airport (Maps of the world, 12). Changi airport is reputed for efficiency in air cargo handling and is one of the biggest air cargo hubs in Southeast Asia.

Methodology

This last section of the paper elaborates on the data collection methods and the subsequent analysis in order to effectively tackle the statement of the problem and thereafter make a conclusion. This section is thus made up of several parts that include research design, population, sampling, data collection methods and data analysis.

In the context of research design, the study used both the exploratory research design and descriptive research method because of several factors. The exploratory research method was utilized for the purposes of generating essential knowledge in order to yield clarity concerning the phenomena in question. This design was also to aid in revealing variables related to the problem earlier discussed in the paper.

Descriptive method was used because the researcher was to report on the state of the affairs as they are and as such has no control over the variables. It was important not only in the promotion of estimations and predictions but also in the investigation of correlative relationship between strategic air cargo hub location, efficiency and competence in service delivery. In this context, the descriptive study was cross-sectional and was intended to provide insight on the actual situation of the air cargo industry in Southeast Asia outlining various challenges and ideal situation from the respondents’ perspective.

We will use a survey to find out the population’s attitudes, preferences, business requirements and how various airport cargo hubs meet these requirements for us to draw an inference on the best air cargo hub in Southeast Asia. Questionnaires were used of a copy is annexed in this paper.

The population of the survey was drawn from Malaysia and Singapore among freight forwarders. This was considered after having eliminated the suitability of the other countries as the appropriate location of an air hub within the ASEAN community earlier on in our discussion. The drawing of the respondent population from either country did not have a definite ratio, putting in mind the sampling methods that were utilized as highlighted later. Accessibility to all the major air cargo hubs within the ASEAN community was virtually impossible due to time frame and financial constraints. Non probabilistic was used and as such samples were deliberately selected as opposed to selection by chance. Both convenience sampling and snow-balling sampling techniques were used. Snow-balling was to facilitate the identification of air lines with similar and peculiar characteristics, for instance, those primarily engaging in export within the region, outside the region, or both. On the other hand, convenient sampling was utilized in choosing the nearest ‘n’ most convenient person to act as a respondent, mostly in a particular air line with the desired characteristics which would assist in making the relevant inference.

The working sample size was obtained through continually repeating the process. However, the sample size was representative in terms of gender, race and occupation of the respondents for the purposes of eliminating any possible bias and subjectivity among the respondents. This method was chosen due to its convenience and distribution of the respondents. Due to time and financial constraints, data was collected through self administered questionnaires which was convenient and less time consuming. A total of 208 questionnaires were filled up in the different air lines and by diverse informants. The questionnaire entailed structured and unstructured questions due to both the nature of data being collected and also the descriptive research design.

Results and analysis

The male population consisted 57.75 percent of the total survey sample while 42.25 percent of the sample size constituted of the female.

It was found that up to 68 percent of the respondents had been in the freight forwarding business for more than five years whereas the remaining 32 percent had been in business for fewer years. This is likely to suggest that the earlier group would be relatively knowledgeable on the air industry. For the question 10 it was found that it was a partial 21 percent of the respondents who exported within ASEAN block and only 15 percent wholly exported outside ASEAN blocks. This implied that up to 64 percent of the freight forwarders exported both within the and outside the ASEAN blocks.

This would imply that they would be a need of an air cargo hub that is strategically located to serve the ASEAN block countries. This suggests that a location with high feeder airlines is important if the market is to be adequately served. On the issue of the major influence on the location of air cargo hub, respondents were almost equally split on the major influence of the location.

On the other hand, 16 percent of the respondents indicated that the presence of a sea port was the major influence on their choice of location for the air cargo hub. 21 percent indicated that the presence of the feeder airports to the air cargo hub was their major influencing factor in their choice of location while 23 percent considered good road network to the air cargo hub location as a major determinant. Cost of transportation and cargo storage space in the hub were also cited as critical considerations which attributed to 14 percent and 9 percent respectively of the total response. Lastly the nature of goods to be transported was cited by 8 percent of the respondents while 9 percent cited time taken in the packaging and transportation process as a major consideration.

Up to 38 percent did not put political consideration as a major influencing factor in the location of air cargo. 43 percent of the sample respondents were involved in time sensitive commodities like perishable products.

On the assessment of the performance of the air cargo industry in their respective countries using various indicators, three quarters (75%) of the respondents were equally distributed between a good and a fair assessment while 15 percent and 10 percent of the informants considered the performance of the air cargo hub in their country as excellent and poor respectively. Up to 65 percent of the study sample affirmed their satisfaction in the services offered by the air cargo hub in their countries while 35 percent asserted non-satisfaction. Lastly, virtually all the respondents cited the improvement of the infrastructure, lowering of the transshipment cost and improved customer instructions as the key aspects that ought to be improved by the air cargo hubs in order to facilitate quality service delivery.

Discussion and conclusions

Having analyzed the results of our research, it is evident that best air cargo hub in Southeast Asia must be able to meet complex market requirements. Among the major considerations is the fact that a majority of the air cargo business is for both within and outside ASEAN export markets. The hub must therefore have excellent infrastructure such as road and sea ports as well as feeder airports to adequately satisfy the market demands.

In the context of the requirements stated above, Malaysia easily satisfies a majority the set requirements and as such would be the ideal place for the location of the air cargo hub. Several factors support this inference. The country’s location within a central place in the Southeast Asia makes it ideal for the most strategic location for air cargo hub within the region.

Another factor working for Malaysia is its competent and well advanced infrastructure among the Southeast Asia countries. West Malaysia also has a good road network that links major commercial towns as well as industrial towns to the airports. On the sea front, Malaysia is blessed with various international airports including Penang port, Kemaman port and the port of Tanjuag among other ports. The good road network coupled by the presence of international seaports further aggregates Malaysia’s suitability for air cargo hub location. In addition to these factors Malaysia has well established international airports. These airports could act as feeder airports to the main Kuala Lumpur International Airport in addition to handling international air cargo business in their own rights.

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Appendix

Choosing the Location of the Best Air Cargo Hub in South East Asia

Questionnaire

Time started…………………

Time ended………………….

Instructions:

Please complete the following questionnaire appropriately.

Confidentiality: The responses you provide will be strictly confidential. No reference will be made to any individual(s) or organization in the report of the study. ( administer the consent statement)

Please tick or answer appropriately for each of the Question provided.

Respondent’s bio-data

  1. Name of the respondent (Optional)
  2. Contact details: Tel
  3. Nationality City Street
  4. Gender
    1. Male
    2. Female
  5. AgeOrganization
  6. Occupation
  7. Educational level

Air line’s characteristics

  • How long have you been in freight forwarding business?
    1. Below five years
    2. Over five years
  • Do you export within the ASEAN block of the countries?
    1. Within ASEAN block
    2. Outside ASEAN blocks
    3. Both within and Outside ASEAN block
  • Are you involved in time sensitive commodities?
    1. Yes
    2. No

Please explain your answer in (11) above in terms of the commodities you are involved in. If the answer is NO, go to question 12

  • Does political stability influence your choice of the air cargo hub?
    1. Yes
    2. No
  • What is your major consideration in choosing the air cargo hub (tick appropriate reason )
  1. Presence of a sea port
  2. Connectivity to the hub
  3. Presence of feeder airports to the air cargo hub.
  4. cargo space
  5. Economic factors (cost)
  6. Time deadlines
  7. Nature of the goods
  8. Others (specify)

Assessment of the air cargo industry

With the scale of 1-4, how can you range the performance of the air cargo hub in your country using the specified indicators

NB:

  1. Excellent
  2. Good
  3. Fairly good
  4. Poor
  • Competence in meeting deadlines
    • 1.
    • 2.
    • 3.
    • 4.
  • Customer service
    • 1.
    • 2.
    • 3.
    • 4.
  • Technical expertise of staff
    • 1.
    • 2.
    • 3.
    • 4.
  • Storage capacity
    • 1.
    • 2.
    • 3.
    • 4.
  • Security of the cargo
    • 1.
    • 2.
    • 3.
    • 4.
  • Are you usually satisfied with the services offered by the air cargo hub in your country?
    • Yes
    • No
  • Please explain the answer given in (15) above
  • From your view, what do you think should be improved on the air cargo hub in your country in order to ensure quality service delivery? (Please explain)
  • Any other comment that was not captured in the questionnaire

Please fill in this questionnaire. For any other further guidance or clarification concerning this questionnaire do not hesitate to contact me!

Thank you for your cooperation!!!!

Ideal consent form

Consent statement for respondents

This is a study that is supported by……………………………and it is aimed at understanding the situation air cargo industry in Malaysia (or Singapore). I am interested in getting the information about the above stated industry in the country, being a major part of the economic sector. Being directly involved in this industry, that is why I have chosen you. I would like you to share with me your perception, experiences and expectations in regard to the air cargo industry in this country which will be captured in the questionnaire I am going to give to you.

I assure you that the information that you are going to share with me will not be disclosed or accessed by any other person apart from the researcher and any other person who is part of this project. The participation in this study is purely voluntary and no penalty will be incurred for refusal to participate. The information gathered will be used to write a report and relevant recommendations geared towards the improvement of service delivery in the air cargo industry. There will be no financial compensation for participating in this study.

In case of any questions, concerns or clarifications that you would like addressed, please contact me on the following address (indicate address)

If you agree to participate in this study, please sign below

Name ( Optional)…………………..Signature………………………Date

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1. YourDissertation. "Choosing the Location of the Best Air Cargo Hub in South East Asia." December 17, 2021. https://yourdissertation.com/dissertation-examples/choosing-the-location-of-the-best-air-cargo-hub-in-south-east-asia/.


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YourDissertation. "Choosing the Location of the Best Air Cargo Hub in South East Asia." December 17, 2021. https://yourdissertation.com/dissertation-examples/choosing-the-location-of-the-best-air-cargo-hub-in-south-east-asia/.

References

YourDissertation. 2021. "Choosing the Location of the Best Air Cargo Hub in South East Asia." December 17, 2021. https://yourdissertation.com/dissertation-examples/choosing-the-location-of-the-best-air-cargo-hub-in-south-east-asia/.

References

YourDissertation. (2021) 'Choosing the Location of the Best Air Cargo Hub in South East Asia'. 17 December.

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