Restructuring Air Freight Chains: Strategic Options for Competitive Advantage

Glenn Stephen Baxter, University, My, Paul Bates
International air freight services are a vital revenue stream for international airlines. Notwithstanding, many airlines still consider air freight as an economy of scope by-product of their passenger operations, and have, until now, restricted their air freight service offerings to airport-to-airport transportation. However, there are three key pervasive factors that have significantly influenced the international air freight industry over the past decade and which have created particular
more » ... ures for change in the strategic options developed and implemented by international airlines in air freight transportation. The first is the adoption by business of supply chain management, and more, specifically, their participation in value-driven chain structures involving transactional relationships between corporate players in logistics pathways between sellers and buyers. The second is the rapid market growth of the integrated freight carriers, such as FedEx and United Parcel Service (UPS). The integrators' success has come from the provision of customer-focused logistics solutions, in effect, a 'one-stop shop', whereby they handle all aspects of the air freight transportation, from pick-up through to the final delivery to the end customer. The third relates to what Hamel (2002) has referred to as 'strategy decay' – in the case of international airlines the increasing inadequacy of their air freight strategies to capture and deliver value and thereby achieve competitive advantage that may have in earlier times, been more or less appropriate. This study examines how international airlines deliver and capture value in the air freight transportation of Victoria's southern and Western Australia's western rock lobsters to Hong Kong. These two markets were selected in order to provide different market contextual settings and because the air freight mode is extensively used by both Victorian and Western Australia-based lobster exporters, as the speed of air freight transportation is critical to these shippers ability to sup [...]
doi:10.25904/1912/1049 fatcat:dj46pengzffb5lj62gsfe5ixxu