The Various Factors Affecting Air Freight Rate- Control and Measures
If your business requires frequent shipping abroad by air, you must know the factors that influence the air freight charges. Mostly its generic, but for specific items the charge might vary. Whatever, you may request a free quote from any trustworthy company dealing with air carriage of items.
What is air freight quote and the factors that decide? There are various factors that decide the pricing of air transport. While some factors are fixed, some are variable.
- Volumetric weight: Volumetric weight is the factor that a parcel occupies. Maximum carriers charge by volumetric weight. The thumb rule here is to multiply the volume of the parcel by 167. But this again depends which is more, the volume or actual weight of the parcel. The one which is more, will be actually chargeable.
- Actual weight: The actual weight is the factor that the parcel weighs in reality. In fact, the charges depend on the volumetric and actual weight, whichever is greater, that will be the deciding factor. The rate of carriage depends on the distance between destination and point of origin. There is a chargeable weight calculator that will work out on the fact whether your parcel will be charge depending on your actual or volumetric weight.
- Fuel surcharges: This is an extra fee that the trucking companies charge to the client for covering the fluctuating cost of the fuel. The calculation is a percentage of the base rate added to the shipper’s freight bill usually to cover the operating costs.
- Security charges: The security charges are mainly the transportation security administrative charge claimed in order to protect the airline transportation industry from threats. The air freight cost varies a lot on the weight of the cargo, its origin and destination.
- Terminal handling charges: This is the one chargeable fee applicable for handling cargo. The airline terminal fee generally appears both as the origin and the destination charges. They will appear on the flex port quote or the invoice mainly.
- Airport transfers: When your parcel reaches the destination airport, the airport handlers use laborers to move to the target terminal. This labor is paid by the airport authority, and that is recovered from the pockets of the client.
- Custom brokerage: When the parcel reaches the target airport, it falls into the clutches of the custom department who actually decides that material that should go inside the country. The professional who handles the custom department mainly rules, laws, clearance, merchandise, import & export documents is paid a charge depending on the material and weight of the parcel.
- Pickup and delivery: The labors at the terminal who handles the parcel are paid on a daily basis by the authorities. They accomplish the pick of materials and deliver to the door of the client. This attracts a charge which is paid by the client.
- Cargo insurance: The cargo insurance is paid by agent handling the material, and it depends mainly in the, material, volume and destination of handling the cargo. This charge will be an addition to the client’s bill.
- Accessorial charges: If the client is parcel is delayed due to unforeseen circumstances like flight delay or anything, the charge of handling and keeping the material increases. This is the factor the contributes to the accessorial charges and adds to the cost of the parcel, to be borne by the client.
There are various external factors influencing air freight charges, which depends on a periodic cycle.
- Economic condition: The demand and supply graph for a certain period will decide the pricing. When the economy is booming, the demand for air freight actually exceeds capacity leading to a higher price. When the demand is lower during downturns, the price subsequently falls so that the space could be used up for bigger volumes.
- Regional influence: Geographical factors like political unrest, labor strikes, and epidemics influence the cost of the air freight. Even when there is a labor unrest, in that case the prices are likely to go up. When such unstable condition prevails, the rate goes up and the volume of parcel is decreased by the client.
- Operating expenses: The operating cost hugely depends on the fuel and other surcharges. When the fuel is low, the operating cost remains considerable. When the fuel charge goes high, the same bears in the cost of carriage. Moreover, there are some other factors influencing cost of operation like the parking fees, landing fees, security measures, and environmental regulations.
- Time and temperature: The cost of air freight is largely dependable on the time of delivery and the temperature required to maintain. Say like for perishable items like medical supplies, flowers, vegetable, food items which can start decomposing if remained inside the aircraft, will definitely charge higher. Sensitive items are charged depending the condition of aircraft.
- Premium and value-added services: air services are generally identified as the service offering premium services at a higher price. Keeping into mind, the shipment tracking device required for handling items like food with short shelf life, hazardous material or human remains will definitely attract a priority to be delivered to clients address at the shortest possible time.
- Weight & volume: Weight and volume is of course the determining factor of the air parcel. Whichever is more depending on weight or volume, the rates are charged accordingly.
How to reduce air freight? There are various ways you can control the charges of air freight, mainly reduce to bill.
- Spacing out your shipping: If you are shipping smaller parcels to a closer distance, the best way controlling the cost is by making a single parcel with all the smaller ones, and ship it once. This will cost only once, and the weight will be the main determining factors.
- Using a consolidation shipping service: Using consolidation shipping service ensures you do not pay for the empty spaces but pay only whatever you use.
- Negotiating a long-term agreement: Lock in the business and make a long-term pact with the logistics company, thereby reducing the part bills. Space up the shipping cost that doesn’t match your business requirements.
- Prioritizing to keep air freight cost lower: Air freight is only for items having high priority. The rest can be shipped via road ad water transport.
- Decide on packaging: Packaging solution is meant for safety of goods, but that can be hugely saved by transporting sturdy items and refraining from using heavy packaging materials.
- Let the carrier have late pick up: Let you air freight take on by transporting late evening. By this way you are actually helping the aircraft manage space. They might charge lesser in order to fill up the space.