Improving demand forecasting in the air cargo handling industry: a case study

Abstract

Air transportation plays a crucial role in the agile and dynamic environment of contemporary supply chains. This industry is characterized by high air cargo demand uncertainty, making forecasting extremely challenging. An in-depth case-study has been undertaken in order to explore and untangle the factors influencing demand forecasting and consequently to improve the operational performance of an Air Cargo Handling Company. It has been identified that in practice, the demand forecasting process does not provide the necessary level of accuracy, to effectively cope with the high demand uncertainty. This has a negative impact on a whole range of air cargo operations, but especially on the management of the workforce, which is the most expensive resource in the air cargo handling industry.Besides forecast inaccuracy, a range of additional hidden factors that affect operations management have been identified. A number of recommendations have been made to improve demand forecasting and workforce management.

Workforce management in operations: what enterprising communities can learn from this?

“…At the level of the size of the organizations, we find that the studies do not focus on a specific size, but rather on diversity, with a substantial portion being on large organizations (Schmidt et al , 2001; Judice et al , 2005; Mirrazavi and Beringer, 2007; Mundschenk and Drexl, 2007; Liou and Lin, 2008; Größler and Zock, 2010; Phan and Matsui, 2010; Bergenwall et al , 2012; Magana et al , 2017; Martinson and Leon, 2018; Sampsona, 2018; Nasirian et al , 2019; Mou and Robb, 2019; Ertogral and Orturk, 2019; Hanumantha et al , 2020; Ciano et al , 2021; Chamberland-Rowe et al , 2021; Simkin et al , 2021; Ullah and Narain, 2021; Smet et al , 2021).…”

“…Several researchers have been dedicated to studying the effective use of the workforce and how it is often the crucial factor in a firm's long-term success over its competitors, especially in technology driven and highly competitive industries (Mirrazav and Beringer, 2007; Mundschenk and Drexl, 2007; Kortbeek et al , 2015; Talarico et al , 2015; Simeunovic et al , 2017). Others have been dedicated to exploring strategies that involve modifying demand patterns so that variable workload can be better matched using an acceptable number of shifts (Magana et al , 2017; Hanumantha et al , 2020; Smet et al , 2021).…”

Determinants of Air Cargo Demand in The European Region

“…The main methods used in the current literature on forecasting the air cargo demand are econometric modeling, exponential smoothing, trend analysis, seasonality indices, time series analysis, etc. (Magaña et al, 2017). Although there are very few studies in which both air cargo and passenger demand are analyzed together for estimating (Chen et al, 2012;Wadud, 2013), more studies are focusing on the price and income elasticities of air cargo demand (Chi & Baek, 2012;Lo et al, 2015;Wadud, 2013).…”

“…As the trade volume and economic activity increase, the demand for cargo increases. In this context, GDP, economic growth, population, unemployment and freight rate are among the most frequently used explanatory variables (Hsu et al, 2009;Magaña et al, 2017). In addition, in many studies, Foreign Direct Investment (FDI) is seen as a competitive factor for the industry of countries and it is stated that there is a positive relationship between air cargo traffic (Kupfer et al, 2017;Suryani et al, 2012).…”