WIN-LOG 2013 Campora San Giovanni (CS), 14 November 2013

WIN-LOG 2013
Campora San Giovanni (CS), 14 November 2013
Lorenzo Castelli
Università degli Studi di Trieste
“selling the right product to the right customer
at the right time for the right price”.
! 
! 
RM is a set of techniques aimed at tailoring the amount of a certain
resource to be sold to different classes of users, whose behaviour
we try to predict in order to maximise the profit from the sale.
First developed for air passenger industry, now widely adopted in
hotel, entertainment, freight transport, fashion retail, etc.
T-TRANS CS2 focuses on air cargo
!  Far less developed than air passenger RM (~15 yrs vs ~40 yrs)
!  Computationally, far more complex than air passenger RM
!  A well calibrated RM system can lead up to 3-10% revenue
increase in cargo business
Revenue Management & Air Cargo
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! 
Air cargo is an essential pillar of international trade, accounting for
an estimated 35% of the value of manufactured goods exchanged
worldwide
Air Cargo Traffic Flows
Air cargo RTKs forecast - Top 10 cargo carriers 2012
Most RM decisions are made under high uncertainty level
! 
Demand Forecast: how much cargo (volume and weight) will tender
for a certain flight?
! 
Capacity Forecast: how much cargo space will be available on a
certain flight?
! 
Long-term contract management: should I accept or reject a
contract for a long-term commitment with a certain customer?
! 
Free Sale capacity management: should I accept or refuse a certain
shipment?
! 
High cost of cargo off-loading and re-routing (not enough space
available on the flight)
! 
High cost of capacity spoilage (unused space on the flight)
RM for air cargo: uncertainties
! 
An ontology
explicitly describes
the relationships
among different
items of a list of
concepts
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Revenue Management for air cargo
ITS Areas and applications
! 
Cargo Space reservation
◦  A customer asks for space reservation for a freight with
certain characteristics through the reservation system
◦  RM evaluates the requests and its positive or negative
response is forwarded to the reservation system and, from
there, back to the customer.
! 
Payment for transportation fee
◦  Once the customer’s request is accepted, and cargo space
is reserved within the airline’s reservation system, the
customer pays for the service.
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Source: Schwarz, 2006
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Source: Granados et al., 2011
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! 
Searching-finding platforms.
◦  Designed to match demand for freight to offer (bidding for
organizing the freight transport). They typically strictly
connect the two parties, which are not business partners.
◦  Cargo X (India, Russian Federeation), Freight Tender
! 
Platforms supply chain-oriented
◦  Designed for shippers who have to connect different actors
involved into their supply chain (e.g., manufacturers,
retailers, logistics and service providers, carriers, trading
partners)
◦  GT Nexus, Elogex Network
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! 
Host-to-host systems
◦  carriers database and forwarders are separated and
communicate through an intermediate e-platform.
! 
These systems allow
◦  secure and safe transactions ensuring privacy for both players;
◦  forwarders to book directly from their system rather than via a
web browser.
! 
Main platforms
◦  EzyCargo (by GLSHK, Hong Kong)
◦  Cargo Portal Service (USA-Canada)
◦  GF-X Exchange (UK)
◦  Cargo Community Network (Singapore)
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! 
Reluctance to use e-marketplaces
◦  loose flexibility (forwarders and shippers)
◦  wait for others to join it before do it by themselves (airlines).
! 
Competition between actors
◦  overlapping figures, such as integrators, and alliances
between forwarders and air carriers.
! 
Information assymetry as a competitive advantage
◦  Forwarders and airline carriers are not likely to share
information about prices with their competitors
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! 
Lack of robust tools for easing electronic transaction
◦  policies and
restrictions highly differ from one country to
another one.
! 
e-AWB was designed in 2006, but not implemented yet
◦  The new multilateral e-AWB agreement (IATA Resolution
672) is effective 18 April 2013 and provides a single
standard agreement that airlines and freight forwarders can
sign once with IATA and start doing e-AWB with all other
parties to the Agreement.
◦  e-AWB targets: 20% by end of 2013, 50% e-AWB by end of
2014, 100% e-AWB by end of 2015
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! 
e-freight aims to take the paper out of air cargo and to
replace it with the exchange of electronic data and
messages
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! 
Technologies for FTB are scarcely promoted and new
shippers can experience difficulties in recognizing their
reliability. There is a huge difference of knowledge from
user side about travel booking platform and cargo
booking process.
! 
The FTB market is moreover too much fragmented and
then the perception of its usefulness and the interest
towards e-cargo can be very different among the various
actors.
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Freight Transport Booking
Level of maturity – Development phase
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