Your Air Freight Questions Answered
Here at the Exporting Excellence™ blog we invest a great deal of time in answering questions about international air freight for our clients. What we find most interesting is the fact that these questions don’t just come from small or mid-sized customers, but even from Fortune 500 sized shippers who have large air freight volumes. One of the most important ways we at Crescent Air Freight add value to the business of our clients is by eliminating the complexities that come with international logistics. To that extent, we’ve put together a series of FAQ’s that we have encountered from shippers of all sizes and from across various industries. Here’s a selection of some of the more frequent questions and our answers:
Q: Why does air freight cost so much?
A: The answer lies in simple economics: there is a scarcity of space on an aircraft. Long range, wide body passenger aircraft typically carry 15 – 20 tons of cargo on a flight and that’s only if passenger baggage and fuel capacity allow for it. On top of that, since cargo on a passenger flight goes in the aircraft belly, the maximum allowable height of the freight is only 64 inches.
With freighter aircraft, the maximum payloads are about 100 – 110 tons per flight, and maximum heights can go up to 108 inches (sometimes more depending upon the contour of the aircraft and the cargo). Contrast this with a 20’ ocean shipping container which can accommodate a payload of more than 20 tons, and you begin to see why space is always at a premium on an aircraft.
Q: Are there any ways to reduce or offset the costs of air freight, without settling for an ocean freight transit time?
A: We get this question very often, and there are several ways to answer it.
To begin with, the economics we mentioned above can’t be totally ignored. Space on an aircraft always comes at a premium. Typically direct flights and non-stop flights justify a higher price because of the speed of transit and reduced potential for delays. Hence, one cost saving solution shippers can opt for is an indirect service, which typically involves a slightly longer transit for a slightly lower price. As an example, cargo flying from New York to Sydney, Australia on a direct flight with QANTAS moves at nearly double the cost per kilogram of the same shipment traveling on Qatar Airways via Doha, using 2 flights. This may seem odd to the consumer: 1 flight ought to be cheaper to operate and load versus 2 flights and a longer route. However, the carrier offering direct service justifies their price premium by getting cargo directly to destination in a shorter time frame. The indirect carrier justifies their discount by pulling in cargo from all their destinations into a single freight hub and profiting from the potentially greater volume (in theory, anyways).
What new shippers typically fail to understand is that the cost cannot be continuously decreased by increasing the transit time. So this creates a common follow up question such as “Can you give us a really slow service that takes 7-10 days maybe for a really low price?”. This is something that really doesn’t exist, and if a huge price discount is to be found it’s probably because the airline has no traffic going to a particular destination and hence markets the space more aggressively, rather than pricing the service based on transit times.
There are, however, some scenarios where we are able to get creative with the mode of transport by adopting a multi-modal solution. For example, cargo being routed to landlocked countries in Central Africa, Central Asia or Central Europe can be sailed to major nearby cargo hubs such as Abidjan, Bremerhaven, Dubai or Sharjah and then flown or trucked a short distance to countries of final destination such as Afghanistan, Mali, Switzerland, etc. This sharply reduces the total landed cost of product at destination and also improves transit time over a pure ocean service. We offer similar solutions for our customers in the garment and textile industry by sailing cargo from Bangladesh to Dubai and then flying the goods to the United States, thus taking advantage of low inbound air freight rates and ample capacity that is typically not available in the country of origin of the goods. Sometimes the opposite works too as cargo can be flown from a landlocked country such as Nepal, into a major nearby port city and then transferred to ocean containers for final transit to Europe or the United States.
The ultimate way to avoid air freight costs, of course, is to not ship via air at all, and for customers who do not ship enough material to fill an ocean container on their own, the option of LCL ocean freight exists. Of course this is a longer transit time service than even standard containerized ocean freight, but the cost is often justifiable.
All of these scenarios, however, do require planning and that’s really the most important thing for a logistics manager to realize. Planning with your service provider and sharing information on required transit times, budget constraints, deadlines at origin or destination, etc. will allow your freight forwarder to come up with the right solution for your business and even for your individual shipment. “Just get it there” doesn’t work and is akin to randomly pulling a suit off a department store rack and telling the tailor to “just make it fit”.
Q: Do we really need to pay for a premium or time defined/guaranteed service? Can’t you just use your influence with the airlines to make our cargo move faster?
A: Definitely, maybe…
This question comes up a lot and many times the part about using “your influence with the airlines…” can come across as more of a taunt than a request! The reality is that just like in many other businesses, with air freight (and logistics in general), you get what you pay for. If your cargo needs to be kept in a cooler between flights and upon arrival at destination, then a freight forwarder will usually get you a service that may be slightly more expensive than general cargo, but far less than the cost of leasing a refrigerated air freight container. The airline would want you to lease the refrigerated container and maybe even pay them round trip airfare for it, but your forwarder adds tremendous value here by providing you a “product appropriate”, cost effective service option based on their knowledge of your product, temperature requirements and by proposing reasonable alternatives. However, once again the key here is communication. If a shipper fails to disclose their true temperature or handling requirements for the sake of saving money and the goods suffer damage as a result, then there’s nothing a forwarder can do, especially after the shipment has been executed.
Temperature controlled goods present a truly special case as do high value goods and a few other select product categories. Other times shippers have general cargo to ship via air on a very tight deadline. In such circumstances time definite or guaranteed services are worthwhile. The cost may be triple that of regular air freight, but if a customer is facing a production shut down, or an inventory problem that must be solved in a short time frame then it’s obviously worthwhile.
Over the past 39 years we have accumulated a lot of questions about the air freight and logistics process in general. In fact we just focused on price issues in this post and next month we’ll focus on air freight service and operational questions that arise on a daily basis. In order to make the series work for you, we suggest you leave your questions in the comments below, or if you prefer, try sending us your questions by email at email@example.com or on Twitter at @CrescentAF.