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Step 16: Handling the export logistics
You are here:Step 16: Handling the export logistics > Air freight > Air freight calculations


 

Air freight calculations

 

Introduction

Airlines that are members of the International Air Transport Association (IATA) are bound by their membership to comply with tariffs issued by IATA. However since 11th September 2002, airfreight rates are now extremely negotiable. Airfreight rates cover transportation from the airport of loading to the airport of discharge.

These rates do not include the following:

  • Collection of air cargo from the consignor's/exporters premises
  • Delivery of cargo from the airport of destination to the consignee's premises
  • Storage of cargo before or after loading
  • Customs clearance in the country of destination
  • Any duties and taxes that may have to be paid
  • Insurance

Chargeable/volumetric weight

Airline freight rates are based on a "chargeable weight", because the volume or weight that can be loaded into an aircraft is limited. The chargeable weight of a shipment will be either the "actual gross mass" or the "volumetric weight", whichever is the highest. The chargeable weight is calculated as follows: 1 metric ton = 6 cubic metres. In order to establish if the cargo will be a weight or volumetric based shipment.

 

Step 1

Measure the parcel/cargo along the greatest length, width and height of that parcel. For example; 100 cm (L) X 100 cm (W) X 100 cm (H) = 1 000 000 cm3. Next, weigh the parcel; assume it weighs 150kg.

Step 2

Now divide the 1 000 000 cm3 by 6 000 = 166,66 kg. You have now converted the centimeters (cm) into kilograms (kg)

Step 3

Now compare the weight to the volume. If the weight is 150 kg then the airline would base the freight on the higher amount being: 166,66 kg

Air freight calculations

The airline calculates freight based on weight or volume, which ever yields the greatest amount. Airlines quote freight rates based on the following rate structures:

  • A basic minimum charge per shipment.
  • General cargo rates quoted for per kilogram. This rate applies without reference to the nature or description of the parcel, which is to be freighted.
  • Specific commodity rates apply to certain goods of specific descriptions, such as fresh produce. These rates are lower than the general cargo rate, and they provide breakpoints at which the level of the rate reduces further.
Example:
0 - 50 Kg @ R22.00/per kg
50 - 100 Kg @ R19.00 per kg
100 - 150 Kg @ R17.00 per kg

Unit Load Device charges

These rates are charged per container/ULD without reference to the commodity loaded therein. Calculation of freight rates:

Let us assume the following figures:
The freight rate is R18.00 per kg
The weight of the parcel is 300 kg
The dimensions are: 114,6 cm X 120,4cm X 132,5 cm (round the cm's up or down)

Therefore: 115 cm X 120 X 133 cm = 1 835 400 divide by 6 000 = 305.9 kg (having converted cm's to kg's now round up the kg's to the next half a kilogram = 306 kg.
As the freight rate quoted by the airline is R18.00 per kg, we calculate the price as follows:
306 kg X R18/kg = R5 508.00

The freight rate will not be calculated on the actual mass 300 kg X R18.00 = R5 400.00 as the airline will always use the greater amount either the kg, or volumetric weight.

Consolidation

Consolidation is an economical method of moving cargo by employing a consolidator. The consolidator receives cargo from a number of suppliers/shippers and then combines these cargoes into one consignment by packing the goods into a Unit Load Device. The consolidator then books the Unit Load Device with an airline. The supplier/shipper would have a contract of carriage with the consolidator of the cargo and in turn the airline would have a contract of carriage with the consolidator. The airline would issue an air waybill to the consolidator when accepting the Unit Load Device and in turn the consolidator would issue the supplier/shipper with a house air waybill.

The air waybill

The air waybill, unlike the ocean bill of lading is not a document of title to the goods described therein, however it does perform several similar functions these are:

  • It is a receipt for the goods
  • It is evidence of the contract of carriage between the exporter and the carrier
  • It incorporates full details of the consignor/shipper, the consignee/receiver and the consignment/goods
  • It is an invoice showing the full freight amount
  • It must be produced, be it in an electronic format, at the airport of discharge for clearing purposes

All copies of the air waybill, together with the commercial invoice, packing list, certificate of origin and any other document which may be necessary for clearing the goods through customs, these documents are carried in the flight captain's bag.

 
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Step 16: Handling the export logistics
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© Cornelius Bothma

More information on
Step 16
Learning to export...
The export process in 21 easy steps
Step 1: Considering exporting
Step 2:Current business viability
Step 3:Export readiness
Step 4:Broad mission statement and initial budget
Step 5:Confirming management's commitment to exports
Step 6: Undertaking an initial SWOT analysis of the firm
Step 7:Selecting and researching potential countries abroad
Step 8: Preparing and implementing your export plan
Step 9: Obtaining financing for your exports
Step 10: Managing your export risk
Step 11: Promoting the firm and its products abroad
Step 12: Negotiating and quoting in exports
Step 13: Revising your export costings and price
Step 14: Obtaining the export order
Step 15: Producing the goods
Step 16: Handling the export logistics
Step 17: Export documentation
Step 18: Providing follow-up support
Step 19: Getting paid
Step 20: Reviewing and improving the export process
Step 21: Export Management
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