Air freight has rapidly gained prominence in global trade, providing an agile and speedy solution for transporting goods worldwide. It is a critical link in the supply chain, facilitating global business and ensuring that goods reach their destination swiftly.
Freight offers several significant advantages, making it a preferred choice for many businesses. It is indisputably the fastest mode of international shipping. This makes air freight an excellent choice for time-sensitive shipments, where tight delivery deadlines and punctual arrival are crucial. Air cargo shipments can be transported to Australia in hours or days, not weeks or months, as is the case with sea freight shipping.
Airlines generally operate on fixed schedules so that you and your overseas supplier can rely on specific departure and arrival times. This level of predictability enables businesses to plan their operations and supply chains more effectively, reducing the risk of delays in the supply chain. The risk of theft or damage to the goods being transported by air freight versus sea freight is significantly less.
Types of Air Cargo
The air freight market is divided into different segments: 1) postal articles sent by air freight, 2) express carriers such as DHL, FEDEX and UPS, 3) general air cargo and 4) valuable cargo, each with its own target market and offer:
Postal articles sent by air freight: your supplier would post your parcel (say less than 20 kilograms) with their overseas post office and then the goods would travel by air to Australia. Once the parcel arrives in Australia, Australis Post will then deliver the parcel to your home or business or ask that you collect the parcel from your local post office. These types of parcels can be tracked at www.auspost.com.au. If your parcel has arrived and you have not received the parcel, you can call Australia Post on 131118 and lodge a case.
Express carriers such as DHL, FEDEX and UPS: your supplier would contact one of these three express carriers in their country and ask that the package/s be collected and delivered to your home or business. These three express carriers offer a door-to-door service; the quoted price will include everything from point A to point B and everything in between except the import duty, import GST and the Import Processing Charge (IPC). Once your supplier has given you the tracking number, you can track the DHL package or call 13 14 06, or you can track the FEDEX or call 13 26 10, or you can track the UPS package or call 13 18 87. These three express carriers tend to move packages that are, say, less than 20 kilograms internationally, but they also move much larger shipments that are required urgently. We know of circumstances where a motor vehicle was shipped with one of these express carriers and where pallet loads of mobile phones and other high-value telecommunication items were shipped with another express carrier. Express carriers tend to move goods from point A to point B, relying upon their own aircraft.
General air cargo: General air cargo encompasses cargo that is not a postal article and not an express carrier shipment. General air cargo is cargo that travels from overseas to Australia on planes operated by, say, Singapore Airlines, Cathay Pacific and Air New Zealand. The cargo will arrive at an Australian air cargo terminal, and you will need a customs broker to process the customs clearance so that the cargo can leave the cargo terminal. Please be aware that the cargo terminals generally charge storage 24 hours after the cargo has been checked in at the cargo terminal [including weekends].
Valuable Cargo: Valuable cargo generally travels with general air cargo airlines in a safe onboard the aircraft. The cargo may be diamonds, precious metals, bullion, jewellery and cash. The cargo will arrive at an Australian air cargo terminal, and you will need a customs broker to process the customs clearance so that the cargo can leave the cargo terminal. Please be aware that the cargo terminals generally charge storage immediately after the cargo has been checked in at the cargo terminal [including weekends].
Understanding the terminology used in air freight is essential for smooth operations and communication:
Air Waybill (AWB): An AWB is a critical document in air freight. It acts as a contract between the shipper and the airline, outlining the terms and conditions of carriage. It also serves as a receipt of the goods being shipped. Whenever you wish to track general air cargo on the airline’s website, you will need the AWB number.
Consolidation: Consolidation is a practice where multiple smaller shipments are combined into one larger shipment destined for the same destination. This process enhances efficiency, reduces costs and can offer more competitive freight rates for both the shipper and the receiver.
IATA: The International Air Transport Association (IATA) is a trade association representing the world’s airlines. It develops industry policy and standards to ensure safe, efficient and sustainable air transport.
Transit Time: Transit time is the time that elapses from the shipment’s origin airport to the destination airport. This timeframe does not include the processes of having the cargo checked in at the airline terminal or customs clearance.
Steps in the Air Freight Process
Transporting goods via air freight is a multi-step process that requires careful planning and coordination. Below are the key stages involved:
Booking: The initial step involves choosing an airline or freight forwarder to manage your shipment. During this stage, you will provide details about the cargo, including its weight, volume, nature and destination. Based on these details, the carrier or forwarder will give you a quote and confirm the booking upon agreement.
Packing & Labelling: The next step is to prepare the cargo for shipment once the booking is confirmed. This involves packing the goods securely to withstand handling during transit, changes in pressure and temperature and ensuring that the goods are presented in accordance with airline and regulatory requirements. Additionally, correctly labelling the goods is crucial to ensure that the cargo reaches the correct destination without any mix-ups.
Documentation: A successful shipment of goods requires accurate documentation. This includes the Air Waybill, which acts as the contract between the shipper and the carrier, commercial invoices, packing lists and any other supporting documents required by Customs at either the origin or destination countries. Accurate documentation is vital for a smooth customs clearance process and in order to mitigate or avoid airline terminal storage costs.
Drop-off & Collection: This stage involves having the cargo presented to the airline at the airfreight depot before departure and then having the cargo collected after arrival. At the departure airport, the cargo must be dropped off at the cargo terminal before the cut-off time. Upon arrival at the destination airport, the cargo must be collected promptly to avoid storage costs.
Customs Clearance: The final step in the air freight process is customs clearance. This involves presenting the necessary documents to the customs authorities, paying any customs duties and taxes and having the goods cleared for collection. After the customs clearance has been completed, the goods can be delivered to the receiver.
Cost Determinants in Air Freight
Several factors determine the cost of air freight:
Weight & Volume: The chargeable weight is used to calculate the cost of air freight. This is based on the shipment’s actual and volumetric weights, and the higher of the two is used. This means that if your shipment is light in weight but bulky, you will be charged based on the space of the shipment.
Destination: The cost of air freight can vary depending on the distance and accessibility of the destination. Longer routes and destinations less frequently serviced by airlines can result in higher costs.
Type of Goods: The nature of the goods being shipped will also affect the costs. Valuable cargo and dangerous goods will always cost more than general cargo.
Seasonality & Demand: The cost of air freight will fluctuate based on the season and demand. Prices often increase during peak seasons when demand is high and can also be affected by fuel prices and flight capacity availability.
Choosing the Right Freight Forwarder
A freight forwarder plays a crucial role in the air freight process. They will manage the logistics, prepare the documentation and liaise with various entities. When choosing a freight forwarder, consider their experience, expertise and network.
There are common challenges in air freight, such as damaged goods, customs examinations and delays. Successful air freight shipping involves preparation, proper documentation and collaboration with experienced entities. By understanding the air cargo process and working with a reliable freight forwarder, businesses can leverage air freight requirements to drive their global operations.
This is where Platinum® Freight Management comes in. Allow us to handle your freight forwarding requirements. Contact us today for a free, no-obligation quote.