REGULATORY PERSPECTIVES OF THE AIR EXPRESS INDUSTRY
Kian Chuan Chang Federal Express Corporation Mark Brian Debowski Jie Lu International Enterprises and Central Queensland University ABSTRACT In its early days, the international air express industry was synonymous with on-board couriers, carrying bags of documents on commercial flights. The industry has changed dramatically. That initial focus on documents has widened into the transport of packages and freight, carried by fleets of fully owned or dedicated aircraft, trucks, trains and delivery vans. The bulk of the business is dominated by 24-hour guaranteed and next-day deliveries. “Every day, hundreds of thousands of employees serve the distribution needs of an increasing number of businesses worldwide from one region to another” (European Express Association, 2002). The express companies are also making use of state-of-the-art information technology systems to provide minute-by-minute control and track and trace information. All the resources in the industry are dedicated to providing customers maximum reliability and flexibility of service. In this article, detailed information on major regulatory barriers in the air express industry are presented. Furthermore, recommendations on how to minimize the impact of these barriers in order to build a better future (with reference to operational efficiency, cost effectiveness and wider coverage of services to the final customers) are also discussed. MAJOR REGULATORY CHALLENGES Due to its presence in more than 200 countries around the world, the air express industry is tightly influenced by local regulatory environ-ments. Government policies, practices and regulations always effect the ability of air express companies to operate efficiently and can reduce the potential economic benefits These barriers will be discussed in light of the associated with air express services. The following are the major regulatory challenges: 1) Customs clearance 2) Air traffic rights 3) Labor law 4) Company ownership 5) Local postal regulation 6) Ground transportation researchers’ definition of regulatory problems Spring 2005 31
as well as an analysis of the tangible and intangible impacts to the industry. Possible resolutions to mitigate the anticipated damages are then raised. Customs Clearance Customs clearance is by far the biggest regulatory barrier impacting the efficient flow of cargo between countries. This barrier is now more obvious and severe after the terrorist attacks of Sept 11, 2001. There are many cus-toms laws and/or resolutions that can easily affect the flow of cargo in and out of countries. The following is a list of the most common customs regulations in many countries: · De minimis value - This is a measure of worth determined by customs. If the shipment value is lower or equal to this value, there will be no duty and tax levied on the importer. Although many countries have increased their de minimis values to an acceptable level that enables smooth move-ment of cargo importation, there are still a number of countries that either do not set any de minimis value (and tax virtually all imports) or the value is too low. This practice results in almost all shipments into that country being subject to tedious and costly clearance procedures as well as high import duties and taxes. Some relevant examples of countries with this barrier are the Philip-pines, Vietnam and India. · Licensing control – For controlled shipments such as telecommunication equipment, foods and drugs, magazines and video tapes, it is very common that the importers will have to obtain permits or licenses in order to clear these shipments. In some countries, such as Thailand, China, Vietnam, and the Philippines, the application for licenses and permits can take several weeks, often causing packages to be held at the airport customs warehouse for many days. · Shipment information submissions – Due to Apart from customs regulations, there are also 32 Journal...
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