Air shipping has been a prevailing shipping method for high value goods, perish goods and time critical products.
Air freight can be expensive and most shipper already know that. But business owners incline to keeping a lean inventory for cost reduction depends on air freight instead of ocean freight
In this article, we are going to touch upon all the basics about air shipping and to disclose the essentials on how to properly manage and reduce air shipping cost.
Unlike sea shipping where goods are loaded into a standardized steal container, cargoes in air shipping are loaded into one ULD, known as Unit Load Device
Capacity of ULD varies from carrier to carrier, from aircraft to aircraft, simply because the ULD itself needs to fit in cargo hole of respective aircraft.
Pallets are also being used as ULD, subject to operation requirement from respective carrier.
Meanwhile, in sea shipping, shipper has the responsibility (and possibility) in loading the container by themselves while in air shipping, all cargoes are handed to airline through carrier appointed handling agent, meaning shipper hands loose cargo to handling agent who shall then facilitate the loading into a ULD.
That said, finding an experienced cargo handling agent is of crucial importance in air shipping
What’s air freight rate and how it is calculated?
As cargoes are loaded in ULD with capacity (space and weight) limit, all carriers use a shipment’s weight and volume when calculating cost. From here, they will determine rates by choosing among the higher of two options, selecting what is known as chargeable weight.
Chargeable weight could either be the actual weight (also known as gross weight) or the volumetric weight (also known as dimensional weight), whichever is higher. The calculation of volumetric weight falls into following calculation;
Volumetric Weight = Length (in cm) x Width (in cm)x Height (in cm)/Dimensional Factor
* Dimensional factor varies from handling agent to handling agent while the most commonly used one is 6000 (or 5800 in some occasions)
For example, one piece of carton weights 10KG, measured 80CM in length, 60CM in width and 30CM in height;
Gross weight = 10KG
Volumetric weight = 80*60*30/6000 = 24KG
Chargeable weight for this carton is 24KG (volumetric weight) instead of 10KG (gross weight)
So, after the basics, are you ready to know how to reduce air shipping cost?
There you go
1. Plan ahead
“More cargo, less often” has been considered to be the golden rule in reducing air shipping cost, however, few had ever tried to elaborate further.
Indeed, more cargo is likely to get competitive offers from carrier but only in low season, unless you are shipping large volume on a regular basis, or it is still difficult to get good rates, think about the limited capacity on an aircraft.
In fact, the savings in “less often” come from NOT paying redundant surcharges and handling fees to carriers and your handling agents i.e. documentation fee, customs brokerage cost, sorting and handling fee etc. that come along with each and every shipment, regardless chargeable weight.
Ring a bell?
2. Carrier selection
Unlike container shipping liner who makes berth calls along the way, airliner is dedicated in moving from one location to another. That’s why even though there are so many carriers in the business, each and every one of them still having advantage over others on selected routing.
For instance, if a carrier is operating a transfer route from A to C via B, with 1st leg from A to B on a narrow-body aircraft while 2nd leg from B onward on a wide-body aircraft, shipper is likely to get competitive rates.
Call your freight forwarder to learn about operation process, flying route and tran-ship hub of respective airliner shall give you the insight in cost management.
3. Prioritize your shipping schedule
Just like booking ticket on a passenger flight, direct flight normally costs more than a transfer one.
Likewise in air shipping, if you could accept a “delayed or planned” schedule other than a speedy next-flight out, there will be much higher chance in getting competitive rates, a trade-off with time for low cost.
Try to prioritize shipping schedule for your shipment to enjoy low transportation cost whenever condition and situation allowed.
4. Good packaging is king
In addition to protecting cargoes during transit, packaging also serves the purpose of reducing air shipping cost, here is why.
After receiving your cargoes, in loose condition, sorting or operation staff of respective carrier handling agent will start measuring each piece. If all of them are in regular size carton, or all cartons are of identical shape, operation team could run a quick calculation and confirm the chargeable weight that match your owned calculation.
However, if the goods are in the form of irregular shape, or well, packed in cartons of different size for the same shipment, the operation team would find it difficult to calculate chargeable weight and will have to bill you according to their best operational estimation.
Moreover, properly packed regular shape package reduce the risk of lost shipment or partial shipment, always keep this in mind in shipment preparation.
5. Don’t wait for pick-up
There is cost behind every activity in logistics
It is indeed to shipper’s convenience to have shipment pick up by handling agent, however, please take note that it comes along with extra cost due to two-way transportation cost incurred to the handling agent.
Whenever possible, try to send over cargoes to handling agent’s consolidation facility, by doing so shipper could enjoy discount rate of a truck load while at the same time NOT paying extra hidden pick-up fee on the basis of cargo weight.
6. Enter into long-term agreement
There is a collective understanding that cutting down transportation cost will help improving sales bottom line (well, may be a bit).
To make this happen, most of the time shippers are taking a “go for spot” approach. It works sometime of course, however, shipping on spot rate is like betting the luck in one volatile market.
In fact, there is better way to lower shipping cost through negotiating long term contract other than shopping around for every single shipment. Developing a relationship is more valuable than the short-term gains of looking at and comparing offers from different providers.
Talk to your regular provider about setting up an agreement which benefits you both in the long term.
7. Outsource your transport operation
A small business probably doesn’t have much time and resource to learn about all the details of shipping operation, or to plan well for every single shipment.
That said, working with a reliable logistics company who has all the expertise in the field to sort things out will definitely benefit business operation.
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Superlink logistics provides international shipping solutions for time-definite delivery needs.
If you have any questions about air freight costs, or any other shipping queries, we'll be very happy to help you.