08/10/2023

INTERNATIONAL TRANSPORT
AND INSURANCE

PHAN VŨ NGỌC LAN – MDE

International Business
Administration Department
lanpvn@huflit.edu.vn

CHAPTER 6

AIR TRANSPORTATION

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In this chapter
1. Air freight transportation
2. Material and technical basis for air
transportation
3. Air cargo operation
4. Import export carriage procedures and
documents of air shipment
5. Laws relating to air transportation
6. International organizations
7. Air cargo and air freight
8. Incoterms for air shipment

1. AIR FREIGHT
TRANSPORTATION
 Importance
 Scope of usage
 Pros and Cons
 Special features

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1.1. Importance
 ~ 20-30% of international trade.
 1st priority for urgent / immediate delivery,
and goods that are time-sensitive.
 Economic and cultural connection between
countries.
 Means of international tourism.
 An important chain in Multimodal transport
organization.

1.2. Scope of usage

 Long distance transport
 Chosen when demand cannot be met by
other means of transport
 Transporting goods of high value, light
weight, for immediate delivery.

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1.3. Pros & Cons

Pros:
 Natural way, mostly straight

 High speed  High transport time  High operation

 Safest means of transport

 High mobility

 Simplified procedures.

1.3. Pros & Cons

Cons:
 High freight

 Limited carriage capacity

 Dependence on geographic, climatic and

weather condition.
 High compensation when accidents occur.

 Not suitable for bulky goods / goods of low

value.
 High investment in technical facilities and human
resources.

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1.4. Special features

 Highly internationalized industry
 A combined business
 Global independence
 Global alliance

2. MATERIAL AND TECHNICAL

BASIS FOR AIR TRANSPORT
 Airport
 Aircraft

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2.1. Airport
 Airport
 Cargo Terminal
 Loading device

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2.1.1. Airport
Airport is an area of land or water (including
any buildings, installations, and equipment) that
is designed for the take-off and landing of
aircraft. Main components:
 Aircraft take-off and landing runways.

 Aircraft parking place.

 Flight control area.

 Pick-up area.

 Administrative area,...

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10 BEST Airports in the World (2023)

1. Changi Airport (Singapore)

2. Hamad International Airport (Doha – Qatar)

3. Haneda International Airport (Tokyo – Japan)

4. Incheon International Airport (Seoul – Korea)

5. Paris Charles de Gaulle Airport (France)

6. Istanbul Airport (Istanbul – Turkey)

7. Munich Airport (Germany)

8. Zurich Airport (Switzerland)

9. Narita Airport (Tokyo – Japan)

10. Madrid Barajas Airport (Spain)

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10 BEST Airports in the World

(2015)
1. Singapore Changi International Airport, Singapore (SIN)
2. Seoul Incheon International Airport, South Korea (ICN)
3. Tokyo Haneda International Airport, Japan (HND)
4. Taipei Taoyuan International Airport, Taiwan (TPE)
5. Hong Kong International Airport, Hong Kong (HKG)
6. Munich International Airport, Germany (MUC)
7. Helsinki International Airport, Finland (HEL)
8. Vancouver International Airport, Canada (YVR)
9. Kuala Lumpur International Airport, Malaysia (KUL)
10. Zurich Kloten International Airport, Switzerland (ZRH)

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10 WORST Airports in the World (2015)

1. Port Harcourt International Airport, Nigeria (PHC)
2. Jeddah King Abdulaziz International Airport, Saudi Arabia
(JED)
3. Kathmandu Tribhuvan International Airport, Nepal (KTM)
4. Tashkent International Airport, Uzbekistan (TAS)
5. Caracas Simón Bolívar International Airport, Venezuela (CCS)
6. Port au Prince Toussaint Louverture International Airport, Haiti
(PAP)
7. Kabul Hamid Karzai International Airport, Afghanistan (KBL)
8. Ho Chi Minh City Tân Sơn Nhất International Airport, Vietnam
(SGN)
9. Islamabad Benazir Bhutto International Airport, Pakistan (ISB)
10. Paris Beauvais-Tille International Airport outside Paris,
France (BVA)
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10 WORST Airports in the World (2019)

1. Jeddah King Abdulaziz International Airport, Saudi Arabia
(JED)
2. New York City LaGuardia Airport, USA (LGA)
3. London Stansted Airport, England (STN)
4. Juba International Airport, Sudan (JUB)
5. Santorini International Airport, Greece (JTR)
6. Cairo International Airport, Egypt (CAI)
7. Addis Ababa Bole International Airport, Ethiopia (ADD)
8. Dhaka Hazrat Shahjalal International Airport, Bangladesh
(DAC)
9. Murtala Muhammed (Lagos) International Airport, Nigeria
(LOS)
10. London Luton Airport, England (LTN)

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Changi Airport (Singapore)

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2.1.2. Cargo Terminal

The place built to serve the operation of receipt,
transhipment, and delivery by air.
Specific areas include:
 Land-Side

 Air-Side

 Transfer area

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Rajiv Gandhi International Airport

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Incheon International Airport

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2.1.3. Loading device

 Classification of ULD – Unit Load Devices:
 Aircraft ULDs: interface directly with an aircraft loading and
restraint system
 Non-aircraft ULDs: not interface with the aircraft restraint system.
Must be registered with IATA and conform to lATA standard
specifications.
 Forms of ULD – Unit Load Devices:
 Aircraft container
 Aircraft pallet and net

 Aircraft pallet and net over an igloo

***IATA’s "ULD Technical Manual" contains the specifications

manufacturers usually follow in making containers for airlines.
 Cargo handling equipment: Cranes, tractors, forklifts,
loading and unloading vehicles, cargo conveyors…
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Container under IATA’s rule

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Pallet

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Igloo

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Specialized cranes / trucks

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2.2. Aircraft
Based on carriage objects
 Passenger aircraft

 Cargo aircraft/Freight aircraft/Freighter/Cargo jet

 Combined/Mixed aircraft

Based on engines
 Piston aircraft

 Turbo-Pro aircraft

 Jet turbine aircraft.

Based on producers: Boeing (US), Airbus (EU), Fokker

(Netherlands), ATR (France), Russia, ...
Based on the number of seats
 Small size: 50 – 99 seats.

 Medium size: 100 – 199 seats.

 Big size: > 200 seats.

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Once secured to the floor of their

Airbus A330, Qatar Airways'
the Qatar Airways Cargo A330- precious cargo can either be
200F freighter showed off its accommodated in a single row or
cargo-loading capabilities in a side-by-side configuration

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2.2. Aircraft
Based on aircraft use (1)
 Civil Aircraft
 Military Aircraft
Based on aircraft use (2)
 General aviation aircraft (GA)
 Corporate aircraft (CA) / Business aircraft
 Transport aircraft (TA)
- Short-range transport aircraft (SR)
- Medium-range transport aircraft (MR)
- Long-range transport aircraft (LR)

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Transport aircraft (TA)

SR MR LR
Name Short-range Medium-range Long-range
transport transport transport
aircraft aircraft aircraft
Operation 1,000– 3,000 3,500 - 5,000 > 6,000 miles
distance
miles miles
No. of seats 100 – 200 200 – 400 200 – 400
Examples Fokker 100, Boeing B727- Airbus A340-
Airbus A-320 200, 200,
Airbus A300- Boeing 777-
600R, 200,
Boeing 757-200 Boeing 747-
400

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Aircrafts

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3. AIR CARGO OPERATION

 Air cargo agency

 Airfreight forwarding practices

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3.1 AIR CARGO AGENCY

 Definition & classification

 Legal basis
 IATA cargo agent’s requirements

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3.1.1 Definition & classification

 Definition: Air cargo agency (agent):
 A middleman connecting cargo-owners and air
carriers.
 Receive air freight shipments, supervise loading
and unloading, and keep written records.
 Classification:
 IATA cargo agent
 Airfreight forwarder (middleman like air cargo
agent + organization of consolidation & shipment
+ import/export documents)

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3.1.2 Legal basis

Governing laws:
 Mainly based on contract / agreement
between parties.
 Some carriage is not governed by
international treaties, but available in national
laws.
 For IATA cargo agent: under IATA’s Cargo
Agency Rules in air freight forwarding and
registered as an lATA agent.
.
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3.1.2. Legal basis

General obligations
 Taking good care of cargo and having necessary
precautions.
 Having suitable means and warehouses.

 Carrying out customer’s instruction on transportation.

The agent shall be responsible in case of …

 Delivering not following the customer’s instruction.

 Errors in customs clearance.

The agent shall NOT be responsible in case of …

 Negligence of customer, shipper or anyone acting on their
behalf.
 Inherent defects.

 Riots, strikes, ...

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3.1.3. Requirements to be
qualified as IATA agent
 Ability to develop air cargo services business.
 Suitable working premises and cargo handling
facilities.
 A team of skilled staff, with at least 2 specialists
qualified for handling “dangerous goods”, and
graduated from IATA courses.
 Sufficient financial capacity.

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3.2 Airfreight forwarding practices

1. Booking air freight

2. Size of shipment
3. Packaging
4. Labelling & marking

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3.2.1 Booking air freight

 Must supply the following information to carrier:
 The air waybill number;
 Number of packages;
 Weight, dimensions and volume of the shipment;
 The nature of the goods;
 Airport of departure/ destination;
 Requested routing: flight date, flight number;
 Types of goods and special considerations.
 Advance arrangement requirements for
handling/transporting:
 valuable cargo, live animals, human remains, perishables,
liquids, dangerous goods…

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3.2.1 Booking air freight

 In air transport, shippers/freight forwarders are
responsible for making the goods ready for carriage
(RFC) including:
 Sizing of shipment;
 Packaging and labeling;
 Documentary’s Declaration (for dangerous goods)
 Customs clearance for export (if applicable) ;
 Preparing for security checking;
 Providing accurate special information relating to the goods.

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3.2.2 Size of shipment

 Vital concern of actual size and weight of the shipment =>
due to limitations of aircraft in terms of loading capacity
and necessity of distribution of weight
 Dimensions of packages must conform to the
configurations of the ULDs.
 shippers/freight forwarders should contact air carriers for
the specific capacity issues and improving transport
efficiency.
 ULDs: efficient grouping, assembling, moving,
disassembling, redistributing packages in a wide range of
shapes.
 ULDs: easier handling of shipments on arrival, improving
protection to the cargo, reducing handling costs.
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3.2.3 Packaging
 Our packing of export consignments must:
 Protect;
 Contain;
 Identify;
 Cost-saving.
 Packing method
 Cartons, cases/crates (wooden packaging must be treat-
heated (EU regulations)), bales, drums, sacks
 Airfreight containers, ULDs
=> Seek for specialized advice from manufacturers
(biased)/forwarder/carrier/standards

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3.2.3 Packaging
 Factors affecting choice of packing
 Nature of goods: bulky, fragile, valuable, live animals,
perishables, dangerous goods…=> special packing &
handling
 Destination: travelling distance, specific regulations of
destination country
 Mode of transport: air freight vs. sea freight: packing
for which one is less robust?
 Customer’s requirements: comply with buyer’s choice
but avoid inferior packing
 Cost: avoid solid wooden cases => heavy packing =>
costly (case cost + increased tare weight)
=> Should use second-hand packing to reduce cost?
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3.2.3 Packaging
NATURE OF GOODS
 Live animals: comply with IATA/ICAO/CITES
regulations
 Dangerous goods:
 Safety: comply with IATA Dangerous Goods regulations (more
restrictive than ICAO).
 The one other problem relating to air freight is that of security.

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3.2.3 Packaging
DANGEROUS GOODS
 “Orange Book”:
 Publications by The United Nations Committee of Experts on
the Transport of Dangerous Goods
 For air freight consignments: Fundamental
requirements for all dangerous goods procedures:
 1. Identification of goods
 2. Packing and Marking requirements;
 3. Documentary declarations: the International Air Transport
Association’s (IATA) Shipper’s Declaration => must be
signed by the shipper and not the agent

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3.2.3 Packaging
DANGEROUS GOODS

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3.2.4 Labelling &

Marking/Shipping marks
 Each and every package should be labeled clearly and
legibly.
 The label should contain the following:
 Air Waybill number;
 Destination;
 Total numberofpieces;
 Total weight of consignment;
 Weight of a particular piece;
 Handling Information;
 Transfer stations (i.e. any airport(s) through which the
shipment passes en route to its ultimate destination)

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3.2.4 Labelling &

Marking/Shipping marks
 Non-hazardous goods:
simple, no irrelevant
information
 Dangerous goods:
special labels & marking
in compliance with IATA
regulations
 Special consignments
(live animals,
perishables…): IATA
standard labels also
available

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4. IMPORT - EXPORT
CARRIAGE PROCEDURES &
DOCUMENTS OF AIR
SHIPMENT
 Air freight procedures
 Common documents

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Booking + Shipping instructions

Air Agent /
Shipper /
Shipment + Docs Freight forwarder
Consignor
/ Consolidator
+ docs
Shipmnent

Master B/L

House B/L

Airline
Docs

A/N

Notice of arrival
Air Agent
Consignee Goods receiving at
destination

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Common documents
 Air Waybill (AWB)
 Commercial invoice
 Packing List (P/L)
 Certifícate of Origin (C/O)
 Consolidation Cargo Manifest
 Shipper's Letter of Instruction
 Cargo Arrival Report Form
 Notice of Arrival (A/N)
 Document Release Form

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Air Waybill
 A document made out by or on behalf of the
shipper which evidences the contract
between the shipper and the carrier(s) for
carriage of goods over routes of the
carrier(s). (IATA)
 Issued in pre-printed or electronic document.


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AWB’s functions
 Proof of Carriage contract
 Evidence of Goods Receipt

 Freight Bill

 Certificate of Insurance

 Customs declaration

 Guideline for employees of the airline and

freight forwarder
 “Document of Title”???

 negotiable or non-negotiable document?

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Classification of AWB
Based on consolidation operation
 Master AWB – MAWB

 House AWB – HAWB

Based on issuer
 Airline AWB

 Neutral AWB

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Issuing and distributing AWB

 Original 1 (green) sent to carrier  proof of
carriage contract.
 Original 2 (pink), sent to consignee, (delivered with
cargo).
 Original 3 (blue), sent to consignor / shipper 
evidencing that the carrier has received the goods
for shipment and that the carriage contract has been
signed.

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Issuing and distributing AWB

 Copy 4 (yellow): sent to destination as a delivery
receipt
 Copy 5 (white) for airport of destination.
 Copy 6, 7, 8 (white): for 3rd, 2nd, 1st carrier.
 Copy 9: for agent of the carrier.
 Copy 10 -11: extra copy for carrier.
 Copy 12: for customs authority

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Contents of AWB
 Refer to the textbook

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Common documents
 Commercial invoice
 Packing List (P/L)
 Certificate of Origin (C/O)
 Consolidation Cargo Manifest
 Shipper's Letter of Instruction
 Cargo Arrival Report Form
 Notice of Arrival
 Document Release Form

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5. LAWS RELATING TO AIR

TRANSPORT
 Chicago Convention on International Civil
Aviation (1944)
 Convention for the Unification of Certain
Rules relating to International Carriage by Air
(Warsaw Convention 1929)
 The Hague Protocol 1955
 Guadalajara Convention 1961
 Montreal Convention 1999
 Civil Aviation Law of Vietnam 2006

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The Warsaw System on air

carriers liability
 Unification of private air law of international carriage
by air became a priority very early in the aviation
history, as the first airlines capable to carry
passengers, mail and freight were established very
shortly after WWI.
 By 1923, the government of France attempted to
adopt national laws relating to liability in the carriage
by air and realized that the complex foreign elements
of such issue called for unification of law on a wide
international level to prevent the unforeseeable
conflicts of law and conflicts of jurisdiction.

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The Warsaw System on air

carriers liability
 Delegates had a difficult task, since the rules on liability in the event of
air disasters were different in various countries; some legal systems
were based on the principle of liability tort (ex delicto), while the other on
a contract basis (ex contractu).
 Signed on 12 October 1929, the Warsaw Convention, formally
entitled Convention for the Unification of Certain Rules Relating to
International Carriage by Air, has evolved into one of the most
important instruments of private international law.
 The Warsaw Convention is an international convention which regulates
liability, in the event of accident, for international carriage of
persons, luggage or goods performed by aircraft for reward.
 It was the first comprehensive legal framework governing aviation at the
international level, playing an essential role in supporting the
development of the sector and establishing a set of principles, most of
which are still effective and constitute the basis of modern aviation law.

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Notes on Claim
 If the Carrier admits the loss of the goods or if the
Goods do not arrive after 7 days from the date they
should have arrived, the Consignee shall be entitled to
claim under the carriage contract.
 In case of damaged goods, after detecting such
damage, the Consignee shall claim the Carrier without
delay and/or within 14 days from the date of goods
receipt. In case of delayed delivery, a claim shall be
filed within 21 days from the date the goods are at the
disposal of the Consignee.

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Notes on Claim
 A claim for damages shall be at the option of the
Claimant (usually the Consignee) or brought in the
country of the contracting party, or where the carrier is
domiciled / mainly engaged in business or where
contract carriage is signed or at place of destination.
 Time limit for cargo loss claim is 2 years, from the date
of arrival at destination or from the date on which the
aircraft should have arrived or the date on which the
carriage was fulfilled.

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6. International Organizations
 International Civil Aviation Organization (ICAO)
 International Air Transport Association (IATA)
 Forwarding International Air Transport
Association (FIATA)
 Association of Asia Pacific Airlines (AAPA)

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7. AIR CARGO AND AIR FREIGHT

 Air cargo
 Air freight

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7.1. Air cargo

 air mail
 express
 air freight

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7.2. Air freight (air cargo rates

& charges)
 Definition
 Foundation of calculation
 Classification
 TACT tariff rules of air freight calculation
(gross weight & volume weight)

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Definition
 Freight: amount payable for the shipment
carriage and other relevant services.
 Applicable freight rate: announced in the
freight tariff effective on the date of Air Way
Bill issuance.

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Foundation of air freight

calculation
 Cargo may be charged according to: weight,
space occupied on board, or value.
 The freight charge must not be less than
the minimum rate.
 Air freight rate is regulated in “The Air Cargo
Tariff” (TACT) of the International Air
Transport Association (IATA).

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Classification
 General Cargo Rates (GCR)
 Specific Cargo Rates (SCR)
 Minimum rate (M)
 Commodity Classification Rates (CCR)
 Freight All Kinds (FAK)
 Unit load devices (ULD) Freight
 United Cargo Rate
 Priority Rate
 Group rate

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TACT tariff rules of air freight

calculation
 Air freight calculation (gross weight & volume
weight)
 Air Freight of a shipment = chargeable weight
x applicable rate

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TACT tariff rules of air freight

calculation - Chargeable weight

 The amount of cargo which can be loaded on an

aircraft is limited by weight and volume.
 Heavy and small loads (also called high density
cargo): weighs more than 1 kg per 6000cm3 (heavy in
relation to its volume), such as gold, metal parts
machinery, etc.
 Light and bulky loads (also called low density cargo):
weighs less than 1 kg per 6000 cm3 (light in relation to
its volume), such as woolen, pullovers, hats, etc.
 The chargeable weight can be the actual gross
weight of the shipment or the volume weight of the
shipment, whichever is higher.

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TACT tariff rules of air freight

calculation - Gross weight

 For high density cargo: The actual gross weight used

as the chargeable weight
 Actual gross weight = weight of shipment + its
packing.
 Expressed in kg, with fractions of a kilogram rounded
up to the next higher half kilogram 1/2 kg


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TACT tariff rules of air freight

calculation – Volume weight

 For low density cargo: The volume weight used as the

chargeable weight
 Fractions of dimensions must also be round up or
down to the next higher/lower half centimeter or inch
If volume measured in cm, weight measured by kg:
 Volume weight = L x W x H / 6000
 If volume measured in inches, weight measured by kg:
 Volume weight = L x W x H / 366
 If volume measured in inches, weight measured by lb:
 Volume weight = L x W x H / 166

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TACT tariff rules of air freight

calculation – Volume weight

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8. Incoterms rules for air

transportation

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EXW
DDP FCA

1. Point of risk
DPU transfer? FAS
2. Point of cost
transfer?
DAP 3. Seller’s & buyer’s FOB
obgliations?
4. Transportation
method?
CIF CPT

CFR CIP

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THANK YOU FOR LISTENING

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