The outgoing or export forwarding process further explained
The goods are delivered at the forwarder’s warehouse.
The forwarder, sometimes also called expeditor is the ‘architect’ of the air cargo supply chain. A forwarder or expeditor can be IATA certified ; in that case he is referred to as agent. An agent is an IATA certified expeditor or forwarder that …
The goods are delivered at the forwarder’s warehouse.
go to: Site Map >>>
The forwarder, sometimes also called expeditor is the ‘architect’ of the air cargo supply chain. A forwarder or expeditor can be IATA certified ; in that case he is referred to as agent. An agent is an IATA certified expeditor or forwarder that …
... has been thoroughly checked for financial status
... has enough air cargo potential
... has the right facilities for handling air cargo
... has trained personnel for handling air cargo and dangerous goods
... receives commission from the IATA associated airlines
... may use the airline’s Air Waybills
Depending on the agreement with the forwarder’s customer, the forwarder organises:
Depending on the agreement with the forwarder’s customer, the forwarder organises:
- Outgoing handling or export handling & customs clearance of the customer’s shipment,
- Air transport from a nearby airport to an airport near destination
- (optional) Further incoming handling or import handling & customs clearance near destination
- (optional) Delivery at final destination (consignee)
The forwarder will buy space at the airline's sales or customer service department, or in case of a foreign airline sometimes through the airline's General Sales Agent, a GSA. (A short note about the GSA: An airline can decide to appoint a GSA when it proves beneficial to have the lower and more flexible costs of a hired local sales team instead of setting up an own sales-team, which is often more expensive and has fixed costs. Some sources claim the performance of a good airline sales-team will in the end always be better than the performance of a GSA ; I guess this can probably be managed upfront in a good tender, contract and performance review process though. Probably a good tip in selecting a GSA is for the airline to check with their potential local customers, the forwarders, in advance, because they know the market best.
(Airline) Pricing
Air cargo is generally sold for a fixed price or a fixed rate per kilogram, often with a minimum charge to cover basic expenses of shipment handling. Customers (forwarders) with a continuous demand of space on one or more specific routes, or with a continuous turnover with the airline overall, will negotiate and contract their own space and pricing details with the airline. Sometimes also so-called 'spot rates' can be requested for ad-hoc shipments. And it is also possible the airline offers special rates to assure the aircraft's capacity will be filled. Take a look here on ezinearticles if you want to know a bit more about by whom and how air freight rates are calculated. Basic air cargo rules and rates are laid down in IATA's TACT (The Air Cargo Tariff) ; rates are negotiable based on your shipped volumes and on capacity vs demand on the requested routes.
An important factor in air cargo pricing (with the airlines, but also with the large integrators DHL, FedEx, UPS and TNT) is the dimensional weight conversion. As stated here on Wikipedia: by charging only by weight, lightweight, low density packages become unprofitable for freight carriers due to the amount of space they take up in the (often very expensive) truck/aircraft/ship capacity in proportion to their actual weight. The concept of Dimensional Weight has therefore been adopted by the transportation industry worldwide as a uniform means of establishing a minimum charge for the cubic space a package occupies. Therefore the volume is converted into a (higher) weight / price class. Take a look here on Export911 to see the weight or measure factors for different transport modes.
Another factor in air cargo pricing are the surcharges that can be added by the airline (and therefore also the forwarder). A fuel surcharge can be added to cover the additional costs of increasing fuel-prices ; these will generally follow a certain index. A security surcharge can be added to cover the additional costs of the increasing number of security checks and related administration that are legally required by the authorities.
There is a lot of discussion these days whether or not these costs should actually be a part of the overall air cargo rate, as these surcharges tend to be even higher than the actual air cargo rate sometimes.
Of course the airline will try to optimize their expensive cargo capacity on board of the aircraft, and try to sell this capacity at the highest revenues. This is called airline cargo revenue management ; look at some of the principles and challenges for this here in Sabre Airline Solutions' Whitepaper.
Booking
First step after the pricing is obtained, is to make an airline booking for the shipment and get the airline’s confirmation in order to assure space on board of an aircraft:
- Airline (Master) Air Waybill number assigned
- Origin and (final) destination
- Type of goods / commodity (especially important for dangerous goods, perishables and valuables)
- Flight date
- Flight number
- Weight, volume and dimensions of shipment
- Number of colli
- Issuing agent / contact details
- Eventual assignment to customer (agent's) allotment
The reservation will be validated against the airline's capacity, commodity and revenue management criteria, and will be officially confirmed as soon as the booking is accepted. Now the booking process is complete.
In case of a so-called blocked-space agreement in which the forwarding agent has a continuous reservation (allotment) for space at one or more flight / date combinations with an airline the booking process may sometimes go slightly different, but the basics are the same.
There are a few recommendations in order to assure a smooth process for the airline and the customer:
- Make the booking at the earliest possible stage, and ask for (and meet) the latest possible delivery time of your goods (esp. in case of dangerous goods, live animals, perishables, valuables, etc.) at the airline's handling agent
- Check for specific commodity restrictions with the airline or the country of destination.
- Do not make bookings for the same shipment at several agents or airlines ; if you have to cancel do this timely, also in case you are not going to use (part of) your allocation. Aircraft space is very expensive!
- Do not exceed allotments and/or shipment weights without consulting the airline first. If noticed your shipment will certainly be stopped, and if unexpectedly unnoticed this is a potential air safety threat!
- Make sure the information on your shipment documents are exactly in line with the actual shipment details, dimensions and weight.
- Make sure you have made all the necessary security arrangements. Cargo from 'unknown shippers' or with otherwise suspicious characteristics will certainly be stopped.
Preparing the shipment
In order to keep track of the different customer’s shipments from one exact address to another, the forwarder makes a House Air Waybill (HWB) for each such shipment. The House Airwaybill is the shipment contract between the end-customer and the forwarder, so basically the forwarder acts a a carrier towards the shipper. (This is also called a Non-Vessel Operating Common Carrier or NVOCC, which is a shipment consolidator or freight forwarder who does not own any vessel, but functions as a carrier by issuing its own bills of lading or air waybills and assuming responsibility for the shipments.)
Next step is to make the goods ready for carriage (RFC)
- Correctly packed, labelled and
- Customs cleared for Export (if applicable), and
- With the right documents and security checks for air transport as the next step, as well as for incoming or import handling and clearance (if applicable) at destination
Often the forwarder combines shipments of different shippers travelling the same airport-to-airport stretch into a consolidation, because …
