Understanding the Basics of Air Shipment for International Trade of Exporters & Importers

In international trade, the transportation of goods by air plays a crucial role. 90% of cargo by volume is transported by sea and only 0.5% by air. But surprisingly, this small fraction translates to a significant 35% of the world’s trade value, amounting to $6 trillion, as reported by the International Air Transport Association (IATA). This importance of air shipment in global trade can be attributed to its reputation for rapid delivery and short transit times, making it the preferred choice for urgent and time-sensitive cargo. However, when we talk about air shipment, we come across the two confusing terms, “air freight” and “air cargo,” which are often used interchangeably but carry distinct meanings. According to the Business Dictionary:

  • Air Freight

This term refers to the cost of transporting goods via an aircraft. It represents the payment made for the transportation service.

  • Air Cargo

On the other hand, “air cargo” pertains to the actual goods or merchandise being transported by aircraft. It represents the physical items in transit via air transport.

This article will walk you through what air freight is and the benefits and drawbacks of air shipment.

What is Air Freight?

Air freight is a broad term that defines the transportation of goods via aircraft. This method of cargo transport can occur on both scheduled and charter flights, depending on factors such as the quantity and urgency of the shipment, especially for express or courier deliveries. Typically, air freight falls into two categories: consolidated air freight and standard air freight.

  • Consolidated Air Freight

This refers to the grouping of multiple smaller shipments into a single cargo load for more efficient transportation. These consolidated shipments are often transported below the main deck of passenger aircraft, commonly referred to as “belly flights.”

  • Standard Air Freight

Standard air freight consists of individual shipments that may be larger in size. These goods are often loaded onto Unit Load Device (ULD) containers or pallets. Liner flights are used for transporting ULD containers, filling the entire cargo space of the aircraft. Cargo aircraft dedicated solely to freight are used for this purpose, while passenger flights also carry a portion of air cargo as additional freight.

Method of Calculating Cost and Duration of Air Shipment

The primary and most striking advantage of air freight is its remarkable speed. In comparison to sea or rail freight, air freight stands out as the fastest means of transporting goods from one location to another. Deliveries via air freight services are exceptionally swift, with courier goods arriving no later than the next day, express shipments within a maximum of three days, and standard goods within a maximum of seven days. This rapid transit time is a substantial competitive edge, particularly for time-sensitive and high-value goods. Customers who demand real-time shipment status updates and are averse to long transit times benefit significantly from air shipment.

When it comes to calculating air freight rates, the process is intricate and involves multiple factors. The foundation of price determination in air freight is the cost calculation of consolidated air freight, following the International Air Transport Association (IATA) calculation scheme. This scheme is outlined in The Air Cargo Tariff Manual (TACT). The calculated price, along with the method used for the calculation, must be documented in the Air Waybill.

In this, both cargo weight and volume are key to calculating the rates. Air shipment costs are typically assessed based on the higher value between gross (actual) weight and volumetric (dimensional) weight. This higher value is referred to as the “chargeable weight,” and it serves as the basis for determining the freight charges.

Here’s a breakdown of the key terms involved in calculating chargeable weight:

  • Gross Weight: This represents the total weight of the cargo, including its packaging and any pallets used.
  • Volumetric Weight: Volumetric weight is the cargo’s volume converted into its weight equivalent. The formula to calculate volumetric weight is as follows: (Length x Width x Height) in centimeters / 6000
  • Note: If the volume is measured in cubic meters, divide by 0.006.
  • Chargeable Weight: The chargeable weight is determined by selecting the higher value between volumetric weight and gross weight. It serves as the basis for calculating the freight charges. This weight represents an equilibrium point where the gross weight and volumetric weight are balanced.

Here’s an example of calculating chargeable weight:

  • Gross Weight: 500 kilograms (kg)
  • Cargo (Box) Dimensions: 100 cm x 70 cm x 110 cm
  • Cargo (Box) Pieces: 4
  • Total Cargo Volume: 770,000 cubic centimeters (cm³) x 4 = 3,080,000 cm³
  • Total Volumetric Weight: 3,080,000 cm³ / 6000 = 513 kg

In this case, the chargeable weight is determined to be the volumetric weight, which is 513 kg, as it is greater than the gross weight of 500 kg.

It’s important to keep these cargo dimensions in mind when requesting a freight quote. Accurate dimensions help in obtaining a precise quote and also provide insights into the type of aircraft (passenger plane or freighter) required for transporting your cargo.

Benefits of Air Shipment

  • Speed

Air shipment is the fastest mode of transportation for cargo. Express air services can deliver goods within 1-3 days, making it ideal for time-sensitive shipments.

  • Reliability

Airlines adhere to strict schedules, ensuring reliable cargo arrival and departure times. This predictability is crucial for businesses with tight delivery deadlines.

  • Security

Airports and airlines enforce stringent security measures, reducing the risk of theft and damage to cargo during transit.

  • Coverage

Airlines offer extensive global coverage, with flights connecting most destinations worldwide. Air cargo is often the only viable option for landlocked countries.

Drawbacks of Air shipment

  • Cost

Air freight is more expensive than sea or road transport. According to the World Bank, it can cost 12-16 times more than ocean freight. Pricing is based on cargo volume and weight, making it less cost-effective for heavy shipments.

  • Environmental Impact

Air cargo has a substantial carbon footprint compared to ocean transport. Shipping goods by air produces significantly more CO2 emissions per unit of cargo than shipping by sea. The emissions from take-offs, landings, and flights contribute to air pollution and global warming. Air shipment operations also contribute to noise pollution and congestion in and around airports.

The Final Takeaway

Air shipment is a swift and dependable option, particularly suited for time-sensitive cargo and businesses with strict delivery schedules. However, it comes at a premium cost and has a significantly larger environmental footprint compared to sea or road transport. When choosing a shipping method, the decision should meet with the specific needs and priorities of the shipment and the business.