Company Background
Being a subsidiary of Cathay Pacific Airways, Cathay Pacific Services Limited (CPSL) operates the latest air cargo facility in Hong Kong - Cathay Pacific Cargo Terminal which serves the Hong Kong International Airport. In order to maintain Hong Kong competitiveness of being the Asia’s premier logistics hub, they committed to provide customer services with best quality and highest flexibility. They put safety and security first, provide tailored logistics solutions, being socially and environmentally responsible, and strive for excellence in any aspects.The following is a list of their customers:
Company History & Development:
Cathay Pacific Cargo Terminal (CPCT)
Terminal’s 1:100 building model placed on 5/F:
Being the benchmark of the industry, up to 2.6 million tonnes of cargo are handled by the Terminal. To manage such throughput, CPCT operates advanced technology systems to ensure efficiency and reliability at the same time. The inbound cargo is mainly handled at the east area of the Terminal while the outbound goods, as well as the airline cold units, are handled and stored at the west area. The backbone system of CPCT - Materials Handling System (MHS) is fully automated for managing the whole warehouse so as to ensure efficient cargo movement and activities across different storeies of the terminal. More than 4000 CCTV cameras are installed for operators in the control room on 5/F to continuously monitor the work station remotely, collect and receive real-time updates, thus tracking and tracing is more easier than ever.
CPCT adoptes “Just-in-Time” operational concept, so a dedicated zone on the G/F of the Terminal is designed to support fast transhipment handling. The area is connected to the Container Handling System (CHS) and the Bulk Handling System (BHS) which help to store inbound cargo and facilitate the fast movement of unit load devices (ULDs) to the outbound area. Hence, the motion waste and dwell time of cargo are minimized.
Q & A
1. What is the maximum time that a cargo can stay within your terminal and warehouse in order to wait for the transshipment or delivery to be considered as JIT? How would you handle the unstable situation, such as delays at the air transport?
The maximum time that a cargo can stay within the Terminal is 8 hours. Yet, cargo will usually be transshipped or delivered within 3 to 5 hours so as to shape to be a “Come-and-Go” processing cargo terminal. To achieve such standard, CPCT would inform customers to ready for receiving their goods before the goods actually arrived. The registering procedures are also simplified so that customers could receive their goods as soon as possible, and even if they are frequent-visitors, a permanent iPass could be applied and ensure a swift and sooth entry into CPCT.
To handle with delays, CPCT will communicate with the airline company and follow their instructions. At the same time, there is a planning system which can allow operators in CPCT to know when will be the next fastest flight with the same destination that the delayed-cargo can be arranged to.
2. What aspect in your material handling system gives you a competitive advantage over your competitors (e.g. HACTL)? Do you think it is sustainable?
The material handling system (MHS) of CPSL can bring it with a competitive advantage, and a throughput capacity of 2.6 million tones a year. The latest design of the Materials Handling System, Warehouse Operating System (WOS) and new operating concepts will enable quicker cargo processing. The fast transactions and just-in-time operation will mean wider network coverage with more aircraft pairing for connections. The security and special cargo-handling facilities are enhanced, it will ensure strict compliance with tighter security measures and industrial standards for safe air transportation. Just-in-time operation for import collection and export delivery, can reduce truck waiting time and cargo retrieval time, which will result in less staging and storage requirement within the terminal. Keeping the daily operation smooth, we think that it is sustainable.
3. How can Cathy Pacific management deal with complaint raised by cockpit crew regarding aviation risk due to the increased workload and fatigue? What measures had been done in terms of various regards, such as staffing, manpower mobilization, operations, etc.
Due to the Cathay Pacific management has admitted an "increased workload" and "decrease in rostering stability" among its pilots for the first time, after about 100 senior cockpit crew members warned in an angry letter that fatigue was putting aviation safety at risk (SCMP,2015). We think that the management team should conduct a regular check, not only check on the components, but also the quality of performance of the cockpit crew. Since workload increased may lead to different problem, such as complaints, air accidents.
Talking about the staffing, Cathy Pacific management can set up something like scorecard base on the workload of different duties and fatigue, to set up an appropriate schedule for the crew members. This came after a rostering practices agreement between the airline and its pilots was recently axed. On the scorecard, it helps to analysis the duty level, and try to match with the cockpit crew recently roaster.
In addition, during planning the next period of roaster, Cathay Pacific management can think about the manpower mobilization, day off is planned to the crews, but they need to stand by at anytime in need.
4. How do you compete with other logistics company like DHL, SF and FedEx?
The new Cathay Pacific Cargo Terminal has a design capacity of 2.6 million tons per annum. The tender to invest in, design, construct and operate the terminal under a 20- year agreement was awarded to Cathay Pacific Services Ltd in March 2008. A HK$1.4 billion ―mechanical handling system‖ will make the facility one of the largest and most advanced in the world. 44 The project has been frequently cited as an example of Hong Kong ‘s commitment to entrenching the city ‘s position as a world leading air cargo hub.
5. How do you expand your business if the third runway project successfully launched?
Since the third runway project is for civil aviation, there will not be any influence on the CPCT business. However, there is still expansion plan for the company that a large area is reserved for the second building. The new terminal will be connected to the existing building so as to increase the capacity and company revenue.
6. As we know that your company built a new air cargo terminal in 2008, what is your future plan for the extension of growth?
The new cargo terminal was established in 2008, which would increase the airport’s cargo capacity by more than 50 percent, to more than 7 million tones a year from 4 million tones. It ran the operation since September,2013, the future plan is keep on using the old cargo terminals and the new one, try to maximize its capacity. In the upcoming year, CPSL will sign the contract with 4 more airline companies to transfer the cargo to Hong Kong as import, or export to the other places.
7. Since the CP’s terminal operates 24 hours per day, what information system deploys in handling cargo management?
To ensure the 24 hours’ operation of cargo collection and delivery, the main system used by the company is Bulk Handling System (BHS) and Container Handling System (CHS) which record and inform the updated location of cargo and mail. The system can also transport the materials from position to position automatically. Besides, the system has connected to Hong Kong Custom and different airlines which enable CPSL to react with different immediate issue efficiently. For instance, when there is delay of the aircraft and so of the cargo, the company system is linked up with the airline system (SS) to receive immediate instructions by airline. Meanwhile, there is the fully-automated Materials Handling System (MHS) with over 400 CCTVs monitoring the smooth 24 hours’ operation of the cargo movement and activities.
8. Does CP have any sustainable development in order to reduce cost and achieve the environmental protection in the supply chain? If yes, what are they?
Yes, CP has embedded best practices of sustainable development in order to reduce cost and achieve the environmental protection. Best quality cladding is used at CPCT’s exterior so as to minimize damage and the need for replacement which will result in additional construction cost and worsen air quality surrounded. The chilled-ceiling air-conditioning system in CPCT helps reduce up to 40 % of energy consumption while heat emitted from the system is also recycled for the hot water supply. Energy is re-generated by the movement of the Materials Handling System (MHS) and electric vehicles are used to support green airport operations.
Not only do CPSL promote sustainable development within their own cargo terminal, but also to their suppliers. CPSL complies the supply chain sustainability code of conduct to their suppliers and only prefer working with those who share the same standards as well as promote sustainable development. They have a strong preference for any suppliers whose goods or services can make significant difference to reduce their environmental impact. For example, wastewater and solid waste generated from operations, industrial processes and sanitation facilities should be monitored, controlled and treated as required prior to discharge or disposal.
9. Can you explain what ‘Just-in-Time’ operational concept is? What are the benefits for the stakeholders?
The company adopts just-in-time concept from industrial engineering and apply it to cargo handling, to shorten processing time.
Emphasis is put on information flow and automation. Our customers tell the company the goods they want in advance and we will sort them out for customs clearance. Collection vehicles are preregistered and tagged with RFID labels so when they arrive the goods will be ready for them.
A highly automated materials handling system (MHS) procured from Siemens is designed to handle 2.6 million tones of cargo per year in the first phase of the project.
Since Hong Kong is a regional transshipment hub, the cargo terminal has been designed to cater to cargo that involves long transshipment time as well as cargo that is quickly transferred for export. A quick transfer area is located on the ground floor of the terminal, along with areas for perishable cargo and last-minute pre-packed exports.
While cargo that allows more time to be spent on the import or transshipment process may be processed on the upper floors, the quick transfer area on the ground floor allows cargo that will remain at the terminal for a short time only to be sorted and transferred from import to export quickly. The quick transfer area features a total of 63 airside interfaces for import and export operations. Automated pre-queueing of export cargo further enhances efficiency. The approach has enabled CPSL to dramatically reduce connection time for transshipments.
10. What are the future development plans/ new technology for your cargo operations?
The major development plan of CPSL is to build the new terminal in order to maximize the capacity and attract more customers. Moreover, CPSL also put efforts in improving the efficiency and effectiveness of the operation by technology. For this reason, small handy computer with barcode scanner for every staffs have been implemented. This highly raise the accuracy and productiveness of the workers’ operation.
Reflection:
Before actually entering into the Terminal, our group had already browsed its official website and was suprised with its comprehensive operating systems. Yet, physically visiting the site could always discover more than references searching on web. When we walked through the Terminal, we understood how the whole operation process would be run right after the cargo arrived. Before the cargo arrived, operatiors already knew all the information about the cargo, such as how many unit, where to store, whether it would be transitted to another plane directly or delivered to outbound area for pick-up. All these information transferred and even cargo physical movements were conducted automatically by its MHS, CHS and BHS. The CHS and BHS did not required any human effort to transport the cargo from point to point, hence, this reduced lots of wastes, especially wastes of transportation, motion, and waiting. The whole visit gave us an actual view on how to maximize the efficiency and effectiveness of the whole operation process.
Reference:
Cathay Pacific Services Ltd. (2015). Supply Chain Sustainability Code of Conduct. Retrieved on 19 Feb, 2016, from http://www.cpsl.com.hk/Portals/0/CPSL%20Supply%20Chain%20Sustainability%20Code%20of%20Conduct.pdf
Cathay Pacific Services Ltd. (2016). Comapny overview. Retrieved on 19 Feb, 2016, from http://www.cpsl.com.hk/About-CPSL/Company-Overview
McKinnon, A. (2011). The Air Cargo Industry and Transhipment in Hong Kong. Retrieved on 19 Feb, 2016, from http://www.cityu.edu.hk/slw/HKCMT/Doc/Working_Paper_5_-_Hong_Kong_Air_Cargo_-_Final_(v4).pdf
Tam, A. (n.d.). The Art of Cargo Handling on the Fly. Hong Kong Engineer. Retrieved on 19 Feb, 2016, from http://www.hkengineer.org.hk/program/home/articlelist.php?cat=cover&volid=170