IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i23p10202-d457968.html
   My bibliography  Save this article

Investigating Paradigm Shift from Price to Value in the Air Cargo Market

Author

Listed:
  • Jong Hae Choi

    (Graduate School of Logistics, Inha University, Incheon 22212, Korea)

  • Yong Hwa Park

    (Graduate School of Logistics, Inha University, Incheon 22212, Korea)

Abstract

This study presents a paradigm shift in the air cargo market based on Korea and Incheon Airport’s empirical data. The air cargo market has traditionally handled expensive items and has been a supplier-oriented market. There has been little room for individual customers in this market. However, “value” gradually replaces “price” in this market. The value depending on consumer preferences significantly impact air cargo demand. Consequently, items transported by air cargo are changing, and airlines and other market participants are revising operation policy. Economic growth may be losing its dominant power as the main growth engine in the air cargo market. This study identifies the weakened link between air cargo increase and economic growth based on the Granger causality test. COVID-19 calls for a deeper understanding of the paradigm shift in the market for sustainable air transport because COVID-19 will further stimulate it. In this regard, the air cargo business, which maintains a stable trend even during COVID-19, is seen as a new opportunity for the aviation industry. Since sustainable air transport requires an accurate understanding of the paradigm shift in the air cargo market, this study enhances our knowledge of the paradigm shift and provides significant implications for sustainable air transport.

Suggested Citation

  • Jong Hae Choi & Yong Hwa Park, 2020. "Investigating Paradigm Shift from Price to Value in the Air Cargo Market," Sustainability, MDPI, vol. 12(23), pages 1-15, December.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:23:p:10202-:d:457968
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/23/10202/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/12/23/10202/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. O. Norojono & W. Young, 2003. "A Stated preference freight mode choice model," Transportation Planning and Technology, Taylor & Francis Journals, vol. 26(2), pages 1-1, April.
    2. Chang, Yu-Hern & Chang, Yu-Wei, 2009. "Air cargo expansion and economic growth: Finding the empirical link," Journal of Air Transport Management, Elsevier, vol. 15(5), pages 264-265.
    3. Demir, Emrah & Huang, Yuan & Scholts, Sebastiaan & Van Woensel, Tom, 2015. "A selected review on the negative externalities of the freight transportation: Modeling and pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 95-114.
    4. Maparu, Tuhin Subhra & Mazumder, Tarak Nath, 2017. "Transport infrastructure, economic development and urbanization in India (1990–2011): Is there any causal relationship?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 100(C), pages 319-336.
    5. Frédéric Dobruszkes & Moritz Lennert & Gilles Van Hamme, 2011. "An analysis of the determinants of air traffic volume for European metropolitan areas," ULB Institutional Repository 2013/95858, ULB -- Universite Libre de Bruxelles.
    6. Hu, Yi & Xiao, Jin & Deng, Ying & Xiao, Yi & Wang, Shouyang, 2015. "Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 95-100.
    7. Park, Yonghwa & Choi, Jung Kyu & Zhang, Anming, 2009. "Evaluating competitiveness of air cargo express services," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(2), pages 321-334, March.
    8. Zhang, Anming, 2003. "Analysis of an international air-cargo hub: the case of Hong Kong," Journal of Air Transport Management, Elsevier, vol. 9(2), pages 123-138.
    9. Puckett, Sean M. & Hensher, David A. & Brooks, Mary R. & Trifts, Valerie, 2011. "Preferences for alternative short sea shipping opportunities," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(2), pages 182-189, March.
    10. Ana C. Paixão Casaca & Peter B. Marlow, 2005. "The competitiveness of short sea shipping in multimodal logistics supply chains: service attributes," Maritime Policy & Management, Taylor & Francis Journals, vol. 32(4), pages 363-382, October.
    11. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    12. Kasarda, John D. & Green, Jonathan D., 2005. "Air cargo as an economic development engine: A note on opportunities and constraints," Journal of Air Transport Management, Elsevier, vol. 11(6), pages 459-462.
    13. de Jong, Gerard & Ben-Akiva, Moshe, 2007. "A micro-simulation model of shipment size and transport chain choice," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 950-965, November.
    14. Hong, Seock-Jin & Randall, Wesley & Han, Keunsoo & Malhan, Amit Sundeep, 2018. "Estimation viability of dedicated freighter aircraft of combination carriers: A data envelopment and principal component analysis," International Journal of Production Economics, Elsevier, vol. 202(C), pages 12-20.
    15. Shinghal, Nalin & Fowkes, Tony, 2002. "Freight mode choice and adaptive stated preferences," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 38(5), pages 367-378, September.
    16. Shujie Yao & Xiuyun Yang, 2012. "Air transport and regional economic growth in China," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 19(3), pages 318-329.
    17. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    18. David Levinson & David Gillen & Adib Kanafani, 1998. "The social costs of intercity transportation: a review and comparison of air and highway," Working Papers 199801, University of Minnesota: Nexus Research Group.
    19. Mary R. Brooks & Valerie Trifts, 2008. "Short sea shipping in North America: understanding the requirements of Atlantic Canadian shippers," Maritime Policy & Management, Taylor & Francis Journals, vol. 35(2), pages 145-158, April.
    20. Dobruszkes, Frédéric & Lennert, Moritz & Van Hamme, Gilles, 2011. "An analysis of the determinants of air traffic volume for European metropolitan areas," Journal of Transport Geography, Elsevier, vol. 19(4), pages 755-762.
    21. Forkenbrock, David J., 2001. "Comparison of external costs of rail and truck freight transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(4), pages 321-337, May.
    22. Forkenbrock, David J., 1999. "External costs of intercity truck freight transportation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 33(7-8), pages 505-526.
    23. Boonekamp, Thijs & Burghouwt, Guillaume, 2017. "Measuring connectivity in the air freight industry," Journal of Air Transport Management, Elsevier, vol. 61(C), pages 81-94.
    24. Elton Fernandes & Ricardo Rodrigues Pacheco, 2010. "The causal relationship between GDP and domestic air passenger traffic in Brazil," Transportation Planning and Technology, Taylor & Francis Journals, vol. 33(7), pages 569-581, July.
    25. Santos, Georgina & Behrendt, Hannah & Maconi, Laura & Shirvani, Tara & Teytelboym, Alexander, 2010. "Part I: Externalities and economic policies in road transport," Research in Transportation Economics, Elsevier, vol. 28(1), pages 2-45.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bing Zhao & Hao Wu, 2022. "A System Dynamics Model of Multi-Airport Logistics System under the Impact of COVID-19: A Case of Jing-Jin-Ji Multi-Airport System in China," Sustainability, MDPI, vol. 14(19), pages 1-19, October.
    2. Choi, Jong Hae, 2023. "The value of time and the impact on the air freight product portfolio - A study of the South Korean market 2017–2021," Journal of Air Transport Management, Elsevier, vol. 109(C).
    3. Sun, Xiaoqian & Wandelt, Sebastian & Zheng, Changhong & Zhang, Anming, 2021. "COVID-19 pandemic and air transportation: Successfully navigating the paper hurricane," Journal of Air Transport Management, Elsevier, vol. 94(C).
    4. Fageda, Xavier & Fioravanti, Reinaldo & Ricover, Andy & Café, Eduardo & Ansaldo, Mariano, 2023. "Econometric analysis of the determinants of air cargo services supply in Latin America and the Caribbean," Transport Policy, Elsevier, vol. 135(C), pages 33-44.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wang, Yanzai & Hao, Chengzhi & Liu, Dawei, 2019. "The spatial and temporal dimensions of the interdependence between the airline industry and the Chinese economy," Journal of Transport Geography, Elsevier, vol. 74(C), pages 201-210.
    2. Wang, Sen & Gao, Yi, 2021. "A literature review and citation analyses of air travel demand studies published between 2010 and 2020," Journal of Air Transport Management, Elsevier, vol. 97(C).
    3. Hu, Yi & Xiao, Jin & Deng, Ying & Xiao, Yi & Wang, Shouyang, 2015. "Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 95-100.
    4. Choi, Jong Hae, 2023. "The value of time and the impact on the air freight product portfolio - A study of the South Korean market 2017–2021," Journal of Air Transport Management, Elsevier, vol. 109(C).
    5. Konstantinus, Abisai & Zuidgeest, Mark & Hess, Stephane & de Jong, Gerard, 2020. "Assessing inter-urban freight mode choice preference for short-sea shipping in the Southern African Development Community region," Journal of Transport Geography, Elsevier, vol. 88(C).
    6. Ali, Rafaqet & Bakhsh, Khuda & Yasin, Muhammad Asim, 2023. "Causal nexus between air transportation and economic growth in BRICS countries," Journal of Air Transport Management, Elsevier, vol. 107(C).
    7. Akinyemi, Yingigba Chioma, 2023. "Air cargo demand in Africa: Application of cointegration and error correction modelling techniques," Journal of Air Transport Management, Elsevier, vol. 109(C).
    8. Rahman, Farzana & Rahman, Md. Mahmudur, 2023. "Analyzing service quality of domestic airlines in an emerging country- Bangladesh by structural equation models," Journal of Air Transport Management, Elsevier, vol. 107(C).
    9. Ştefan Cristian Gherghina & Mihaela Onofrei & Georgeta Vintilă & Daniel Ştefan Armeanu, 2018. "Empirical Evidence from EU-28 Countries on Resilient Transport Infrastructure Systems and Sustainable Economic Growth," Sustainability, MDPI, vol. 10(8), pages 1-34, August.
    10. Tolcha, Tassew Dufera & Bråthen, Svein & Holmgren, Johan, 2020. "Air transport demand and economic development in sub-Saharan Africa: Direction of causality," Journal of Transport Geography, Elsevier, vol. 86(C).
    11. Lo, Winnie Wai Ling & Wan, Yulai & Zhang, Anming, 2015. "Empirical estimation of price and income elasticities of air cargo demand: The case of Hong Kong," Transportation Research Part A: Policy and Practice, Elsevier, vol. 78(C), pages 309-324.
    12. Hanson, Daniel & Toru Delibasi, Tuba & Gatti, Matteo & Cohen, Shamai, 2022. "How do changes in economic activity affect air passenger traffic? The use of state-dependent income elasticities to improve aviation forecasts," Journal of Air Transport Management, Elsevier, vol. 98(C).
    13. He, Hang & Wu, Hanjun & Tsui, Kan Wai Hong & Wang, Biao & Fu, Xiaowen, 2024. "Spatiotemporal evolution of air cargo networks and its impact on economic development - An analysis of China's domestic market before and during the COVID-19 pandemic," Journal of Transport Geography, Elsevier, vol. 117(C).
    14. Ching-Chiao Yang & Hui-Huang Tai & Wen-Hsing Chiu, 2014. "Factors influencing container carriers' use of coastal shipping," Maritime Policy & Management, Taylor & Francis Journals, vol. 41(2), pages 192-208, March.
    15. Yetkiner, Hakan & Beyzatlar, Mehmet Aldonat, 2020. "The Granger-causality between wealth and transportation: A panel data approach," Transport Policy, Elsevier, vol. 97(C), pages 19-25.
    16. Hakim, Md Mahbubul & Merkert, Rico, 2016. "The causal relationship between air transport and economic growth: Empirical evidence from South Asia," Journal of Transport Geography, Elsevier, vol. 56(C), pages 120-127.
    17. Demir, Emrah & Huang, Yuan & Scholts, Sebastiaan & Van Woensel, Tom, 2015. "A selected review on the negative externalities of the freight transportation: Modeling and pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 95-114.
    18. Tsui, Wai Hong Kan & Fu, Xiaowen & Yin, Chuanzhong & Zhang, Huaxin, 2021. "Hong Kong's aviation and tourism growth - An empirical investigation," Journal of Air Transport Management, Elsevier, vol. 93(C).
    19. Lenaerts, Bert & Allroggen, Florian & Malina, Robert, 2021. "The economic impact of aviation: A review on the role of market access," Journal of Air Transport Management, Elsevier, vol. 91(C).
    20. Tu Anh Trinh & Ducksu Seo & Unchong Kim & Thi Nhu Quynh Phan & Thi Hai Hang Nguyen, 2022. "Air Transport Centrality as a Driver of Sustainable Regional Growth: A Case of Vietnam," Sustainability, MDPI, vol. 14(15), pages 1-14, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:23:p:10202-:d:457968. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.