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16 Mar 2011

Shipping

The air freight shipping process further explained





The door-to-door air cargo process starts with the shipper. -  A shipper is the person or company that is physically and administratively responsible for shipping the goods ; nothing more and nothing less.

Although in a lot of cases the shipper is also the customer of the forwarder, this is not necessarily so.  The customer can just as well be the consignee, or a third party that has ordered the goods stored at the shipper’s location to be shipped from A to B.  For this same reason, the shipper also does not need to be the owner of the goods.  This all depends on the delivery terms (or: Incoterms) that are agreed between the parties involved, e.g. a buyer, owner of the goods, a seller, a maintenance company, a distributor, a transport company, a forwarder, etc.  (For more information on Incoterms look here on The Cargo Channel.)

For security reasons these days the shipper must be a known shipper for the forwarder and thus also for the next steps in the process.


About air freight costs and quotes

Before taking any further steps, in order to avoid surprises afterward, it is important for the shipper to be aware of the different cost elements of air freight.  An overview of the possible costs involved can be found here at SUPATH Freight.

Another important consideration for the shipper is whether or not to (let) consolidate goods into one shipment, or to send the goods as individual shipments.  In most cases consolidation of goods is cheaper but also slower, especially if the forwarder consolidates goods of several shippers to a certain destination.  In case of emergency freight, if speed is required, shipping the goods as individual shipments can be an advantage, because it is more easily traced and expedited during the process ; but it will probably be more expensive as well, because the costs cannot be spread over a bigger volume.  Read more about this here, here and also here at SUPATH Freight.   

The next step for the shipper / customer will generally be to request a freight quote at one or more forwarders, and then select the forwarder that will become responsible for the shipment(s).  Often there is a steady relationship and a financial / credit arrangement between a shipper / customer and one or more forwarders that take care of the worldwide transport of the shipped goods.  (Look here at KG SID for the elements of a freight quote.  The service a shipper / customer can expect from a forwarder may partly depend on how his own strategy is set up, see: Strategic Shippers vs. Transactional Shippers ; also see: The 7 Habits of Highly Effective Shippers.)



Shipping the air freight

The shipper is responsible for efficient assembly of the shipment in terms of volume, weight and packaging in order to …
... get the best price / volume utilization of the aircraft pallet or container
... avoid damage to goods, people and aircraft.


Photo source: Kuehne + Nagel


(Look here for FedEx' packing tips, tools and guides for packages and here for FedEx tips for packing LTL freight.  Air freight wood packaging has special requirements - check it out here at SUPATH Freight.  Also the filling materials are important to protect your shipment during flight and handling - read more about this here at SUPATH Freight.  Do you want to know how to ship large freight by air, check it out here at SUPATH Freight.)

When the goods are ready for transport (RFT = correctly packed, labelled and with the right documents for forwarding as well as road transport as the next steps), the shipper orders transport of the goods.  
  • Depending on the transport agreement with the forwarder, this road transport can be organised by either the forwarder or the shipper.

The goods are picked up at the shipper’s warehouse for delivery by road transport at the warehouse of the forwarder who organizes the further air cargo process.  
  • Depending on the internal organisation of the forwarder’s or shipper’s processes, the road transport can be executed either with in-house operated trucks, vans or personnel or by a third party-.  
  • The transport company (or the forwarder) will give the shipper a proof of acceptance (POA).


CEVA US trucking


Process overview:




How To Pack A Box! (Propper item packing techniques for air, ground and sea freight).


USPS Packing Tips - Packing the Box




Other important advise and considerations for the air cargo Shipper:

Your national of international shipping process should be part of your Logistics Plan (checklist).  You want to control your logistics flow and shipping terms (incoterms).  Because your shipments will probably be part of your own or your customer's supply chain (being costs or a profit tool), you want to assure timely arrival of the shipment and consider your logistic timeline.


Another important thing is to take care to (let your forwarder) arrange the right customs documentation foclearance ease at destination, and be aware you will probably have to pay duty and VAT at import, unless you have arranged for special licenses or excemptions.  The packing list is a good basis for your forwarder to arrange these matters with and for you.

Furthermore you may want to consider an air cargo insurance. Whether importing or exporting, using air freight (or road or ocean freight) for your international shipping, cargo insurance covers loss and/or damage of cargo while it is in transit between the points of origin and final destination.  Many try to save a little money up front by not insuring their cargo, but here's just five of the many reasons why that's a bad idea.

So all in all it's important to be knowledgeable regarding your needs and be able to express your logistics requirements before you approach a forwarder or logistic provider, so that you can ask the right questions and the seller can offer you the right services.  

Finally, take care to negotiate good (and complete) air freight rates with your forwarder and/or the airline, and check on the applicable surcharges (see the Forwarding Out page on these subjects also).  The cost of your transport process, and so your profitability, are directly impacted by the concept of landed cost.  In simple terms, landed cost is the cost of your product delivered to or from a foreign country.  There are significant additional costs that can drive up the landed price of your goods overseas.  Knowing these costs is crucial in order for exporters to ensure order profitability.

Once your logistics service provider started delivering services, it's important to regularly measure the agreed logistic performance (KPI's), as well as the customer service performance.

Look here for some frequently asked questions concerning air cargo and answers from a forwarder. 


Some considerations about exporting and importing

Read some advice from DHL about the most common question in exporting, the top four causes for import delays and how to avoid them, and learn importing 101 with DHL.



I invite all of you in the industry to contact me for corrections or additions, 
and who are new in the business to question me 
in order to improve the information on this site! 


go back to: Introduction         >>>
move on to the next process step: Forwarding out  >>> 


[last updated nov 29th, 2015]







10 comments:

  1. This comment has been removed by the author.

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  2. Kudos for explaining the shipping process done by courier companies. Readers now get an idea where and how their goods will be processed and delivered. Thank you.

    ReplyDelete
  3. Dear Author,

    Just today i have contacted 2 airlines namely Turkishairlines and airchina for sending 100kg parcel to mongolia, but i got £2.45 per kg from airchina plus additional fees (fuel fee, war/insurance-how many types of additional fees are added) while turkish airline quoted £6 per kg!!!!!! plus above additional fees. How to negotiate the quotes down?, And is it hard to become a freight forwarder by myself?

    ReplyDelete
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