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    How Air Freight Shipping Works in International Trade

    How Air Freight Shipping Works in International Trade

    A Brief History

    Historically, air cargo was first used between the United Provinces of Agra and Oudh in British ruled India to carry mail from the post office. In the late 20th century, air cargo moved a variety of goods such as medicines, daily essentials, heavy machinery parts, etc. Newer, affordable Cargo airlines started operations across Europe and the US. In fact, in some parts of Europe, prints of newly made films were transported as consignments via aircraft so that they can be made available to the farthest of cinema houses across the continent.

    Over the last century, thanks to the massive technological advancements in the domain of aero technology, the aircrafts today can carry massive amounts of load in a single flight. Advanced tracking technology has enabled real-time tracking of the shipment, which makes the entire process much more transparent and accessible. This boosted the confidence of a lot of entrepreneurs, who saw this as an opportunity to explore newer markets.

    Air cargo today carries pretty much everything, from clothes to toys, electronics, and more, and is a vital part of the overall global trade.

    Air Freight - Meaning

    Throughout history, humans have been trying to get from one place to another, as quickly and safely as they can, and carry their goods with them while they are at it. Each travel route that we have explored for our unending voyages, has presented us with its own set of challenges. Each time, we have innovated our way out of these challenges. Air cargo or air freight is the latest innovation in the long chain of human intelligence outthinking the challenges posed by nature.

    Air Freight refers to the goods that are moved by loading them up in an aircraft carrier and sent to their destination via the aerial routes. These aircrafts can be passenger planes, commercial planes, or chartered flights.

    Advantages and Disadvantages of Air Freight

    Advantages

    There is a wide range of benefits to enjoy, once you opt for transporting your consignment via air. Some of the prominent reasons for using Airfreight services are:

    Timely delivery: Since the shipment is delivered via air routes, it is not surprising that the package reaches its destination in the shortest possible time. Compared to the other modes of transport, air cargo is lightning quick, and hence is used for transporting a wide array of products that are time-sensitive or perishable.

    Reliability: Air cargo is one of the most reliable methods of transporting your goods since most flights follow a standard schedule, with very few, occasional delays.

    Affordable Insurance Premiums: Since the goods are transported much quicker via air routes, the possibility of any mishap or an accident along the route goes down drastically, compared to sea, rail, and road routes. Hence, the premium for insuring the consignment is also relatively much lower.

    Security: Airports, in general, are one of the most secure places today, with multiple layers of security overlooking every nook and corner. Hence, the consignment transported in the air cargo undergoes various security checks and is almost impossible to be misplaced or damaged.

    Demands Less warehousing requirements: Compared to sea cargo, air cargo carries a much lesser load in one go. Additionally, the security clearance for air cargo is much quicker than any other means of transport, which means the goods move much faster through customs. All these factors mean that Airfreight logistics can be managed easily and can rid you of your stockpiling worries.

    Disadvantages

    Despite having a multitude of benefits, Airfreight does come with its own set of shortcomings.

    Risk: Airplanes remain one of the riskiest means of transportation, due to the sheer speed with which they move. Hence, moving your goods via an airplane is a lot riskier than moving them via a ship or a train as the goods can still survive a road accident but are unlikely to survive a plane crash.

    High Operational Costs: Airplanes are costly machines. The companies providing air freight shipping services are bound to calculate the money they invest in buying and maintaining their fleet of aircraft. Hence, air cargo is much more expensive compared to the other modes of transport.

    Limited Capacity: Compared to ships, airplanes can only carry a limited quantity of goods. Therefore, if your consignment contains a bulky, heavyweight product, sending it via air cargo may not be the best option for you.

    Dependent on Weather: Airplanes cannot operate in adverse weather conditions like thunderstorms, cyclones, sand storms, fog, etc. This may often cause a delay in your shipment getting to its destination and disrupt your supply chain.

    Unfit for specific products: Although air cargo can supply a wide range of products, the following are some of the things that still cannot be moved via air routes due to certain Airfreight restrictions:

    • Dangerous goods on the UN list
    • Lithium Batteries, Power Banks and Power Supplies of any kind
    • Firearms
    • Flammable Substances
    • Explosives
    • Biochemical Products

    How does Air Freight work?

    Air Freight - meaning & how it works

    There are seven crucial steps one needs to follow while sending their shipment via air cargo:

    1. Registration/Pickup: Once you calculate the chargeable weight of your shipment, you can begin searching for a trusted shipment partner to get it transported to its destination. Upon providing all the necessary details, the shipment company will pick your cargo up and store it in their warehouse.

    2. Confirmation and Labelling: Once the shipping company receives the package, it undergoes several quality checks. They confirm the physical status of the consignment, and then label it with all the necessary details and prepares the air waybill.

    3. Customs Clearance at the Airport of Origin: The package undergoes stringent checking by the customs department at the airport of origin. This is to make sure if the consignment doesn’t consist of any contraband or other banned goods.

    4. Storage and Departure: Once cleared by the customs, the cargo is packed into a Unit Load Device or (ULD). The ULD is then moved into the aircraft for transportation.

    5. Unloading of Cargo: Once the aircraft reaches the destination airport, the cargo is unloaded out of the aircraft with the air waybill and other documents.

    6. Customs Clearance at the Destination: Upon carrying out a detailed inspection of the package, the customs department at the destination airport clears it for entry.

    7. Delivery: Once the customs clears it, the cargo is moved into the containers, which then is transported to its destination, via road or railways.

    Airway Bill in Air Freight

    An Airway bill is a document that acts as a legal contract between the shipper and the company that provides shipping services i.e. the carrier. An airway bill has multiple copies, one of which is also sent along with the goods while shipping them via air cargo. It is also sometimes referred to as ‘AWB’ or an ‘air consignment note.’

    AWB contains the following information:

    • Shipper’s name and address
    • Consignee’s name and address
    • Origin Airport Code
    • Destination Airport Code
    • Detailed Description of the Cargo
    • Special Instructions (If any)

    Once both the parties or their agents sign the document, it becomes enforceable by law and can be used to legally settle any differences that may arise in the course of transportation.

    Air Freight - Cost or Pricing

    Air Freight charges are comparatively 4 to 5 times more than the cost of moving the same shipment via road, and 12 to 16 times than the cost of moving it via sea routes. Air Freight rates are generally between 1.5 USD to 4.5 USD per kg, and they depend on a range of factors:

    Fuel prices: Fuel costs are one of the most prominent reasons why air freight is the most expensive mode of transporting your goods. Fluctuations in global fuel prices dictate the latest freight rate trends.

    Shipment type: The regular shipment costs relatively less. But if your goods require specific climatic conditions, the companies charge more for providing those services.

    Space and Chargeable weight: In case you're shipping your goods via the Less than Container Load (LCL) method, the amount you pay for getting your package delivered via air freight is directly proportional to the space it takes up inside a container and its chargeable weight.

    Distance and route: Greater the distance between the airport of origin and the destination, the more the shipping costs. However, some of the busiest routes for air cargo are cheaper than those where trading is scarce, simply because it's much more profitable for a company to move goods between the routes that can guarantee business both to and fro.

    How to calculate Air Freight?

    To calculate air freight, we have to understand the terms like Gross Weight, Volumetric/Dimensional Weight, and DIM factor.

    Gross weight calculation for air freight

    The gross weight of a shipment is the total weight of the goods with the package and the pallet. Supposing your product weighs 50 kg, and the packaging, as well as the pallet, weigh 20 kg in total, the gross weight of your freight would be 50 kg + 20 kg = 70 kg.

    Volumetric weight calculation for air freight

    If the cost of cargo is calculated based on its gross weight, the carrier will incur losses -- package may be bulky, but very light in weight.

    Hence, air shipping companies around the world also measure the dimensional weight or the volumetric weight of the package by multiplying the CBM value of the package with the applicable DIM factor.

    For example, your cargo is 2m wide, 1.5m long, and 1 m high. So the formula to calculate volumetric weight for air freight would be 2 X 1.5 X 1 = 3 CBM. The DIM factor for air freights is 167 i.e. 1 CBM equals 167 kg.

    Hence the volumetric weight of the cargo would be 3 CBM X 167 = 501 kg.

    Chargeable weight calculation for air freight

    To calculate the chargeable weight, the values of gross weight and volumetric weight are compared, and the higher of the two is taken into account.

    For example, the gross weight of your package is 70 kg. However, the volumetric weight is 501 kg. Hence, the carrier will charge you based on the volumetric weight of your consignment.

    The above example is one of the classic cases where sending goods via air cargo may not be the best option, seeing as there is a drastic difference between the actual weight and the volumetric weight of the package. Air Cargo can be divided into two main categories- General containers and Special Containers.

    General Containers: These are used for requirements that are not special. Products that do not require a specific storage environment can be shipped using general air freight containers. These cost relatively less, compared to special containers. Items like clothes, jewelry, electronics, pharmaceutical products, etc.

    Special Containers: Some products require specific climatic conditions, or else they’re likely to perish or get damaged. To effectively transport these, carriers around the world provide special containers with advanced features like temperature and moisture control, that ensure greater sustainability of the product quality throughout the transport.

    Some of the goods that are shipped via special containers are:

    • Livestock
    • Perishables
    • Fragile Items
    • Human Remains/ Organs

    FAQs on Air Freight

    1) What is the maximum crate size for Air Freight?

    The maximum crate size for standard air freight is 2.44 x 3.15m (96 x 125 in). However, special packages can be used to transport a bigger size cargo.

    2) How do you get Air Cargo?

    Once you decide to ship your package via air cargo, just contact a reliable air cargo shipping service that you’d like to partner with, and their executive will take care of the rest.

    3)What is not allowed in Air Cargo?

    Here are some of the things that aren’t allowed in air cargo:

    • Dangerous goods on the UN list
    • Lithium Batteries, Power Banks and Power Supplies of any kind
    • Firearms
    • Flammable Substances
    • Explosives

    4) Is Air freight more expensive than Sea freight?

    Yes, shipping your goods via air is much more expensive than shipping them via sea.

    5) What is the difference between Air Freight and Ocean Freight?

    Air freight is quicker, while the ocean freight is much slower. However, air freight is much costlier and can carry far less an amount of load as compared to the ocean freight.

    6) What is the difference between Air cargo and Air freight?

    The difference between the two terms will only differ with the type of company you deal with. The negotiation will initially refer to the payment made while the vessel/cargo is transported on a plane by a third party or if a freight company moves the respective cargo to a personal plane.

    Raghav Khajuria
    Raghav Khajuria
    Leads Marketing activities for Drip Capital.
    11 min read