31 Oct Project ? Air Transport Recommendations for XPO Logistics Inc Based on your air transport analysis from project 8, your tas
Project – Air Transport Recommendations for XPO Logistics Inc
Based on your air transport analysis from project 8, your task this project is to summarize your main air transport recommendations and then link those recommendations to XPO Logistics Inc's income statement and balance sheet. Quantify the projected costs and revenues of your air transport recommendations (use percentage estimates) and then apply those percentages to the specific expense revenue line items in the XPO Logistics Inc income statement and balance sheet. Here are the steps:
Step 1: Summarize your recommendations
Step 2: Identify the cost / revenue categories that will be changed by your recommendations on the income statement
Step 3: Identify the asset / liability categories that will be affected by your recommendations on the balance sheet
Step 4: State the estimated percentages (best guess) that these income statement and balance sheet categories will change by as a result of your recommendations
Step 5: Calculate the net effect on the income statement and the balance sheet as a result of your recommendations
You will need to use the latest publicly available income statement and balance sheet for this project. These are often found in the investor relations section of publicly quoted companies websites.
Due date: 11/1/2022
Powerpoint 5 pages content for above 5 steps
XPO Logistics Inc Project: Air Transport Analysis
Assignment Instruction for Project 8
Your executive board has asked you to prepare a presentation detailing the opportunities for air transport (local and global) XPO . As your starting point analyze current usage of air transport with the reasons for its usage in comparison to alternative modes of transport across the dimensions of cost and service. Having profiled current air transport usage, develop your presentation to cover future opportunities for air transport in XPO, again using the logic of costs and service. You may find it useful to identify current and future products that fit a profile of high value to mass / cubic volume in terms of their fit with air transport.
Your presentation should be about 5 slides in length
Current Usage of Air Transport
XPO provide air transport services for urgent / express shipment
About 617 million shipments were shipped by XPO in the United States from North America, from Europe and from Latin America
XPO air transport market is expected to expand by 2037
XPO target for customer who are looking for reliability, affordability, speed, and invention of new technologies has led to the increase in its usage
Future Opportunities For Air Transport In XPO Logistics Inc a. Reduced Costs
This is by ordering goods in bulk to save many trips therefore saving fuel and other processes involved.
Outsourcing transportation management is also essential.
Other modes of transport are so expensive in terms of processes involved in supply chain compared to air transport (Seymour et al., 2020).
By monitoring supply chain performance, XPO Logistics Inc. will be able to determine breakage in line of operation and correct them properly (Vinod, 2021).
Customers can save more money overall when they are encouraged to do larger orders. This can benefit both XPO logistics and the customers. For instance, transporting six to eight pallets at once can typically be less expensive than shipping two to four pallets every other day. It makes reasonable that needing to use more journeys will result in the carriers using more labor, petrol, and vehicles. As one can see, prices will remain this way unless one component can be changed to significantly lower the cost of air freight as a whole. Air transport can help XPO logistics to reduce cost because the costs for fuel and other logistics expenses needed in this process are low (Seymour et al., 2020). A company can transfer the load on itself when they outsource the logistics and transportation of freight. These businesses can also buy operational goods in bulk, like fuel and parts/accessories (Islam, 2019). At the end of the day, XPO Logistics will still save more money on air freight shipping even if it has its own carrier line. Commercial sea travel, including trips on freighters and cruise ships, is significantly more expensive than flying considering tax and duties. Companies are able to detect in real time whether they are spending more on air costs than anticipated and take corrective action as they check against supply chain targets and budgets (Vinod, 2021). Therefore, in future XPO logistics can adapt to air transportation for development of the firm.
b. Large distance coverage
Only air transport can cover long distances quickly.
Air transport is the best model to be used to transport urgent products at long distances (Hallegatte et al., 2020).
Commodities can also be transported globally via air freight from airports inside one nation or from one nation to another this can lead to international advancement of XPO Logistics Inc.
Addition of air transport as a model of transiting goods in future can help XPO logistics boost customer relations hence more income.
The kind of freight that can cover large distances quickly is air freight. This makes this model the best option if the client needs to export a product urgently or if their freight requires particular protection or acclimation standards (Hallegatte et al., 2020). For organizations with a need and the resources to use it, air freight can offer an affordable alternative. Due to its adaptability, air freight can be used to transport a wide range of goods in big quantities, including packages, chilled food, and perishable goods. Without using options for ocean freight transportation, commodities can also be transported globally via air freight from airports inside one nation or from one nation to another. This can be an opportunity for XPO logistics to boosts its income since even far point goods arrive in time attracting customers.
Levying User Charges and Time
Air transport industry covers its infrastructure by charging user fees to airports and air navigation service providers.
Air transport is the only mode that pays both user fees and taxes compared to other modes of transport like road and rail (Forecasting, 2005).
The fastness of planes save a lot of time for urgent goods and perishable commodities (Walton & Goehlich, 2022).
Adapting air freight can enhance earnings to XPO logistics as a firm.
The air transport industry covers its infrastructure costs (airport operations and air traffic management) by charging user fees to airports and air navigation service providers. These fees are typically included and sometimes explicitly stated in the price of an airline ticket.
Air transport is the only mode of transportation that pays both user fees and taxes. Governments levy taxes on the road sector, such as fuel taxes, to balance state investments in road networks. Governments levy taxes such as VAT, eco taxes, and so on in the rail sector, which are included in the rail ticket price. However, the total revenues collected in this manner are insufficient to fully cover the infrastructure costs of the rail sector, which is why most states heavily subsidize this sector. In US, for example, government aid to the rail sector amounts to nearly $50 billion per year (Forecasting, 2005). Time is saved from the production line simply because it does not involve stopping production for loading/unloading. Also the fastness of planes save a lot of time for urgent goods and perishable commodities (Walton & Goehlich, 2022). Adapting air transport as a firm, XPO logistics can attract more customers hence boosting their earnings.
Relevance of Air Transport To The Firm
The future opportunities that XPO logistics can enjoy after introducing air transportation of commodities are;
Reduced cost of firm operations
Large or long distance coverage
Time saving hence transporting all kinds of commodities
Air freight can accelerate earnings for the firm and also modernize and better their freight services (Forecasting, 2005).
In conclusion, the future opportunities that XPO logistics can enjoy when they adapt or introduce air transportation of commodities are such as; reduced cost which can be achieved by monitoring supply chain performance, transiting commodities in bulk at once and also outsourcing transportation management. Large or long distance coverage which will help the firm transport goods in different countries and nations earning more income. Being the only mode offering both user charges and taxes, air transportation can attract more customers hence an increase in annual earnings for the firm. Also considering the time factor, when the firm has a mode that saves time for perishable goods, more people will be attracted to use it for exports and also domestic transitions of goods (Forecasting, 2005).
Forecasting, O. E. (2005). The economic and social benefits of air transport. Geneva, Switzerland, air transport action group. www.icao.int/meetings/wrdss2011/documents/jointworkshop2005/atag_socialbenefitsairtransport.pdf
Hallegatte, S., Rentschler, J., & Rozenberg, J. (2020). Adaptation principles: A guide for designing strategies for climate change adaptation and resilience. World Bank. https://openknowledge.worldbank.org/handle/10986/34780
International Air Transport Association (IATA). (2018). The air transport sector makes a major contribution to the US economy. The importance of air transport to the United States, 2-4. https://www.iata.org/en/iata-repository/publications/economic-reports/the-united-states–value-of-aviation/
Lohmann, G., & Pereira, B. A. (2019). Air transport innovations: a perspective article. Tourism Review. https://doi.org/10.1108/TR-07-2019-0294
Seymour, K., Held, M., Georges, G., & Boulouchos, K. (2020). Fuel estimation in air transportation: Modeling global fuel consumption for commercial aviation. Transportation Research Part D: Transport and Environment, 88, 102528. https://doi.org/10.1016/j.trd.2020.102528
Vinod, B. (2021). Airline revenue planning and the COVID-19 pandemic. Journal of Tourism Futures. https://doi.org/10.1108/JTF-02-2021-0055
Walton, R. O., & Goehlich, R. A. (2022). Space Cargo: Ultra-fast delivery on earth–potential of using suborbital space vehicles for the transportation of cargo. International Journal of Aviation, Aeronautics, and Aerospace, 9(1), 2.
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