Freight forwarders must consider a multitude of factors when making modal decisions regarding cargo. Product value, fuel costs, transit time, special handling requirements, and availability of space, are just several of these. Logistical analysis, commodity organization, and transportation determination are other key components of this multi-tiered process—all made with the ultimate goal of supply chain optimization.
Among other duties, air freight forwarding involves contracting and booking space on aircraft of various capacities, and often deals with the highest-valued cargo. It’s tricky, no doubt, but it’s efficient and expeditious—prized characteristics within the shipping industry.
The following is a useful analysis of some of the major factors freight forwarders must consider when deciding air freight transport options and ensuring supply chain optimization, including the common criteria warranting air treatment for cargo.Freight Forwarders and Air Cargo
Forwarders shipping cargo via plane are airlines’ bread and butter. According to the nonprofit International Federation of Freight Forwarders Associations (FIATA), this comprises more than 80 percent of international air cargo activity. The remaining portion is divided between postal companies, couriers and integrators.
Postal companies will handle envelopes and parcels up to 30 kg (about 66 lbs.), and couriers will deal with those up to 75 kg (about 165 lbs.). Both will generally outsource shipping to airlines.
Integrators, such as FedEx and UPS, will also handle parcels up to 75 kg, but often have their own aircrafts.
Freight Forwarders deal with the rest. That means parcels and consolidations ranging from 75 kg and up—to whatever can fit into an aircraft.
Air transport is the fastest and most reliable way to get goods where they’ve got to go. Whether this modal choice is worthwhile is (mostly) dependent on two main criteria:
- The value of the cargo being shipped
- How time-sensitive the delivery is
Some industries whose shipments commonly fit the bill for air freight include:
This is because the items these industries deal with are often high-ticket commodities (spaceship parts, for example), or are urgently needed (pharmaceuticals). Other time-sensitive shipments contain such varied cargo as live animals, money, gold bars, diamonds, luxury fashion items, perishable food, flowers, and dry-ice shipments, for example.
Human organs and human remains also fall into this category.
Imagine you’re on a liver transplant waiting list. You get a call from the doctor and it’s good news: “They found you a new liver. But, it’s sitting in the back of a truck, on ice, traveling across the country.” Yikes.
As aforementioned, air freight is generally most expeditious way to get goods to their destination, especially when traveling moderate-to-long distances. In fact, air freight moves even faster than is readily claimed (seven days, usually). New data suggests the actual average time taken for air freight to reach its destination is more accurately approximately five and a half days—a full 23 percent faster!
Commercial passengers are accustomed to flight delays, yet air freight is consistently more reliable than surface shipping methods. This is because there are usually multiple flights heading from one place to another on a given day. Ocean freight, however, follows a weekly schedule, and therefore, is prone to longer delays when issues arise.
Improved Inventory Carrying Costs
Inventory carrying cost concerns those related to perishability, shrinkage (theft), and insurance. This cost, naturally, is inflated for high value and/or time-sensitive cargo. Therefore, even though fuel costs make air transit more expensive than surface transit, the trade-off in inventory carrying costs for faster shipping can still make it worthwhile to favor air freight over ocean or land.
Capture Market Share (Better Access to Emerging Markets)
Market share is defined as the portion of a market controlled by a particular company or product. Since certain markets require air shipments more than others, forwarders who are proficient in the air have an advantage in said markets over forwarders who may only deal in surface freight.
There are four main options available for forwarders when shipping airfreight: next flight out, consolidated, deferred, and charter. Each is uniquely appropriate for various scenarios facing forwarders. Here's a helpful breakdown:
Next Flight Out
Next flight out, or expedited, is exactly what it sounds like: Your cargo is booked on the next available flight. It’s among the most expensive freight options, but it’s also the fastest, and therefore, so desirable that adequate capacity can’t be taken for granted. Next flight out shipments require a forwarder with enough juice to locate and book space on aircraft up until the very last minute.
When talking about air freight, consolidated means your cargo is shipped alongside the cargo of other shippers. This requires meticulous scheduling, but results in larger shipments and therefore, more cost-efficient rates. This method favors larger forwarders since its success is dependent upon large cargo shipments. If there aren’t enough commodities ready to ship out, the consolidation may be delayed.
Opting for deferred shipment is usually the cheapest bet, but could mean lengthy transit periods. These types of shipments typically encompass less valuable, non-perishable freight, which enables forwarders to simply defer shipment to the next flight with available space.
Between high fuel costs and lack of availability, only large and/or highly valuable shipments can make full air charter an optimizing supply chain element. This entails essentially renting out an entire aircraft for exclusive rights to its capacity. Partial charter is also an option.
Shipping cargo in the air is speedy and reliable, and facilitates the smooth transportation of time-sensitive and valuable products across long distances. Besides the aforementioned advantages for commerce, an often overlooked benefit of air freight is the access to remote and developing locations—providing a means of delivering humanitarian aid, for example, to those in need.
With an experienced team of freight forwarding professionals at the helm, the possibilities are truly endless.
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