Air freight is the most recent form of transportation for the exporter. It has many advantages over other modes of transport and its use is increasing. Generally, Air freight is most practical for goods which have a high unit value- that is, a high ratio of price to weight. But there are no hard and fast rules.
The most obvious advantage of Air freight is of course the speed of delivery. For many items, such as fresh flowers and fruits, it is the only logical mode of transport if the customers are far away.
ADVERTISEMENTS:
Air transport may also be vital for carrying fashionable goods that have a short selling life, or for seasonal goods. But the other advantages of Air transport should not be forgotten.
The speed of delivery means that because the customer receives his goods more quickly, the exporter receives his payment faster. This can be very important for small exporters who may not be able to afford having their capital tied up for three months which is the time a ship takes to complete its voyage.
Image Source: shipit.com
An exporter may find that Air Freight can save him storage costs because he may have to maintain a small inventory of raw materials or finished goods, particularly in the export market.
Cost savings also stem from
ADVERTISEMENTS:
i. Greater security in transit
ii. Less jostling in transit
iii. Lower insurance costs
The greater security of Air transport means that insurance premiums on shipments by air are usually lower than for Sea transport, because the risk of pilferage and damage is much smaller.
ADVERTISEMENTS:
The smoother ride and gentler handling of Air freight means that the packing needed for shipment by Air is much lighter than for shipment by Sea.
Indeed, ‘domestic’ packing is often sufficient. Lighter packing can be a big advantage in countries where Custom Duties are based on the weight of the consignment.
For each product that an exporter considers shipping abroad, he should consider the possibility of using Air freight. Below is an example of how Air freight packing can save money.
Example:
A Swiss firm ships ceramic heating tubes made up in consignments of 24 tubes of different diameters with an average weight of 300g each. Total net weight on one such consignment is 7.2 kg.
When the company shipped by surface, it had to pack the consignment in five small wooden crates, which in turn went into a wooden crate. Together with the packing material (shredded wood) the packing weighed 64.5 kg.
Eventually the firm switched to Air freight and devised new packing. It consists of one corrugated cardboard box, expanded polystyrene and foam rubber for cushioning, and two wooden boards for stiffening.
Total weight of the new packing is only 6.9 kg – a saving of 54.4 kg.
Of course certain goods are unsuited to carriage by Air, including many bulky goods and raw materials, where the high cost outweighs other advantages. Hazardous cargoes are subject to strict regulations for Air freight. As a general rule, the longer the journey for an export shipment, the less favourable the Air Cargo rate becomes, compared with Ocean freight.
Procedures for Shipping Ocean Freight have been developed over centuries and are therefore complex. Air freight procedures are newer and simpler. All the same, the procedures may take up too much of an exporter’s time and he may wish to use the services of an Air Cargo Agent.
Air Freight Rates:
Air freight rates vary more than shipping rates, but the basis of calculation is usually a price per kilogram (or 427 cubic inches) with certain minimum charges.
Because bulky cargoes present problems to Airlines, rates are sometimes charged by volume rather than weight. That occurs if 1 kg of air freight exceeds a volume of 7 cubic decimeters. Other costs which may be incurred include:
i. Terminal charges for Customs clearance
ii. Sorting, pick-up and delivery
iii. Transit charges at the Airport
iv. Over-flying tax now charged by some states and which Air lines add to the freight costs.