Deregulation and liberalization of the air transport industry, added to the following factors, have largely contributed to the spectacular growth of the air cargo industry:

• Global interdependence helped by world trade agreements (WTO) or more regional accords such as, EU, NAFTA, ASEAN, etc.

• International production and sales of good and services.

• New inventory management concepts such as "Just-in-Time" and "Zero" stocks.

• New air-eligible commodities.

• The vast development of high value and limited time-consumable commodities.

High value goods are central to today's expanding economy (electronics, computer components, precision equipment, medical supplies, A/C and auto parts, perishables, etc.). Just-in-Time production and Zero stocks inventory management techniques allow manufacturers to significantly reduce their inventory costs and save millions of dollars each year. The availability of quality air cargo services provides a feasible means to move goods long distances quickly. In today's era of fast paced competition, speed of transport is a factor greatly influencing multinational companies in their ability to compete.

Countries, large and small, depend on the air transport and air cargo industries to fuel their economic growth as well as, their financial strength. In 1996, according to the International Civil Aviation Organization (ICAO), over 1.3 billion passengers and 22.17 million tons of freight worldwide were carried by air.

Since 1970, the air cargo market has doubled in volume every ten years and is expected to continue growing at an average annual rate of 6.5 percent over the next two decades. Boeing forecasts that 60 million tons of cargo will be transported by air in the year 2017, thus tripling 1977 volumes.

Studies by McDonnell Douglas and the International Air Transport Association (IATA) predict even stronger average industry growth (7.3 and 7 percent respectively). The air express sector is experiencing explosive growth and is expected to increase by an annual average of 18 percent. By the year 2015 the express market is expected to reach 31.4 percent mushrooming from just 4.7 percent during the late seventies.

As shown in the following chart, the air cargo sector is predicted to outpace both world GDP and passenger growth:

Figure 2 World Air Cargo Traffic is Expected to More Than Triple

Geographic and economic disparity, however significant, is due to local or regional influences. While transatlantic traffic is expected to increase moderately, Asian and Far Eastern traffic is expected to experience increases ranging between 7.0 and 8.0 percent.

With double digit growth rates, the USA/Asia, Europe/Asia and intra-Asian markets are considered by far the most dynamic. Consequently, by the year 2017, the Asian share of the world air cargo market should increase from 42 to 50 percent.

From an air logistics perspective, air cargo represents 13 percent of airline revenues ($40 billion USD) but only 20 percent of the $200 billion USD air logistics market. This market encompasses warehousing, customs, trucking, forwarding, and transportation. Worldwide employment implications are significant. The industry is currently estimated to employ four million people and its growth rate is expected to continue out pacing that of the world's economy.

1.2 THE AIR CARGO CHAIN

Figure 3 Customs Interact at Origin and Destination

1.3.1 Shippers

The shipper constitutes the initial link in the air cargo chain. His or her role is to set in motion the domestic or international shipping process. This function may by executed by the manufacturer, the holder of the merchandise, or the Import/export Company.

1.3.1.a Main objectives

The shippers main objectives are customer satisfaction (the consignee) and limiting the length of time assets are immobilized. Where a shipper is also the manufacturer, an additional objective is to concentrate on their core business and increasingly sub-contract shipping, distribution, assembly lines, delivery and back-up functions to other vendors (value-added services).

1.3.1.b Key Issues

To achieve these objectives, shippers require value-added transport and logistic services from the manufacturer to the consumer. The shipper must be able to assure guaranteed, reliable service and continuous feedback throughout the air logistics chain. It is important to have the capability to monitor the progress of goods until they are delivered to the customer.

Key issues to industry growth and development are essentially related to intermodality and efficient logistics services – EDI/tracking in addition to simplified customs procedures.

1.3.2 Forwarders

For the purpose of this document, the term Forwarder includes all functions dedicated to the realization of shipping, e.g., consolidation, customs brokering, trucking, but excludes airline activities.

The Forwarder is no longer simply a pure shipping agent. His business development is now governed by the need to provide value-added services required by the reorientation of the manufacturers on their core business.

1.3.2.a Main objectives

Forwarders should aim to adapt to the quality and productivity requirements of shippers today.

1.3.2.b Key Issues

Therefore, key issues for forwarders include procedures and performance standards, tariff structures, customs procedures as well as, booking and tracking methods.

1.3.3 Airlines

Airlines whether passenger/cargo or all cargo, naturally strive to offer total customer satisfaction. That customer satisfaction is required by both forwarders and shippers themselves.

1.3.3.a Main objectives

In terms of products and destinations, cargo airlines aim to render their flights profitable by positioning themselves within the highest yield markets. On the other hand, combination carriers aim to fill hold space through effective air cargo pricing policies.

Key issues for airlines include traffic rights, environmental issues, procedures and performance standards as well as, customs procedures.

1.3.4 Air –Integrators

Integrators provide tailor-made door to door express services with guaranteed delivery times. They integrate both forwarder and airline functions within the air cargo chain.

1.3.4.a Main objectives

Integrator's main objectives are centered upon achieving total shipper satisfaction through limiting the length of time assets are immobilized.

1.3.4.b Key Issues

Key issues effecting integrators development are similar to those of the airlines notably, security, environmental constraints, and traffic rights, but also include the availability of efficient and simplified customs procedures as well as, performance standards.

1.3.5 Airports

As we move toward the 21^st century, the airport role moves away from its essential passenger service orientation and becomes a major factor in community growth, economic development, and a link to the global market place.

The air cargo function is key to participation in global markets. Its service requirements differ from those of passengers. In this instance, the airport plays a leadership role where they can provide solutions.

In the case of customs, individual airlines can make little progress in service improvements, reduction of delays or extension of services.

Airports however, as representatives of this community, have the obligation to be the catalyst and spokesperson for those serving the airport and those finding its cargo services crucial to economic health. Airports can seek improvement in the interests of industry, the carriers, the community, and specifically the shipper.

This becomes an important role in the business health of the airport service area.

Air carriers and forwarders are often headquartered elsewhere and their interests are therefore, dispersed. Only the airport has a single-minded interest in local prosperity and the need to be competitive. Airports must assume the lead and take on this responsibility.

New problems arise in air cargo operations. The growing role of intermodal service focuses new attention on airport access. Physical and commercial relationships with ground transport operators are a new and growing challenge.

1.3.5.a Main objectives

To become a central logistic tool serving the economic interest of its region, airports must provide logistic centers that including cargo carrier terminals, freight forwarder warehouses, integrators’ hubs, and regional distribution centers. Airports must contribute to an areas economic development, quality of customer service, and provide adequate links to world markets, as well as providing for intermodal integration.

1.3.5.b Key issues

Key issues for airports are adequate security, simplified customs procedures, adequate cargo access, environmental impact, planned growth, and global visibility.

The overall air cargo transport network of professions is presented in the following chart, each profession dependent upon the other for its growth and survival.

Figure 4 The Air Cargo Industry Players