Components of AggregateDemand • Fuel Costs – Fuelis number one concern with regard to all cost components and it has significantlyrisen over the last 15 years. An upsurge in jet fuel costs makes air movement apretty expensive option for cargo transportation.• Road TransportCompetition – Although air transportation is more expensive relative to othermodes of transport, it provides a good level of security and speedy shippingtimes. Nonetheless, on some shortdistances (up to 300…400 km), trucking companies can compete with the cargoplanes.
• Global Trade andEconomy – Economic activity and consumer spending directly influences demandfor air cargo transportation. When warehouse costs are high, air delivery ispreferred (InterVISTAS Consulting Inc., 2011).• Industrial Factor – Companies withsudden changes in their manufacturing base either within a region or betweencountries can shift their distribution networks, and as a result, can increaseor decrease their demand for air cargo at a particular airport. Recent on-shoringof manufacturing activities has been seen as a threat to global air cargoactivity as companies move manufacturing operations to North America (includingMexico) from overseas to save on travel costs. 3D manufacturing (the process ofusing special printers to create mechanical parts and other goods) could alsodisrupt global supply chains by reducing the production and shipping needs ofvaluable, time sensitive products (Copeland, 2012).
• Logistics Scenario– Air transportation has been used for “last-minute” delivery of products,especially for personal effects or retail goods. A company’s supply chainstrategy can affect demand for air cargo, depending on how they structure theirinventory between their local distribution bases and cargo suppliers. Airport Supply Components• Airport Size – Thevolume of passengers and cargo at an airport is an important determinant forthe scale of activity around airports. The larger the airport, the greaterdemand for a range of freight operators involved in air cargo such asintegrators and freight forwarders. Airports which have a limited flightnetwork or small passenger volumes require less diversity in terms of air cargoproviders.• Connectivity andMulti-modal Infrastructure – The availability and access to differenttransportation modes can also increase demand for air cargo. Sea-to-air andrail-to-air connections for example are methods whereby goods come off an oceanvessel or intermodal rail yard and go onto a pallet at an airport.
Thisprovides more expedient delivery than transporting strictly by sea or rail;however, it is less expensive than transporting by air only and airports cangreatly benefit from these connections.• Capacity – The sizeof airport facilities, the size of the airplanes and the infrastructuresurrounding an airport are key components for airport demand. Freight often isincluded in passenger trips in the “belly” of planes and the increase orreduction in plane size and/or passenger capacity can affect total cargovolume.• Regulationand Security – taxes, fees and security regulations for air cargo areincreasingly complex, and can affect air transportation. Security regulationsin Canada for example have increased in line with higher security standards setby the US.