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How do Air Cargo rates work ?
Air Freight - How do Air Freight rates work?
Air Freight works based on several considerations:
In General Air Cargo works on a per kilo basis or base rate plus ancillary charges. – (A kilo is approximately 2.2 Pounds)
The more air Freight you are shipping the better the rate.
Weight breaks are broken into: Minimums, 45 KG, 100KG, 300 KG, 500 KG, 1000 KG,2000KG and then Air Freight Containers
Airport Pairing – Simply the number of carriers that interline or fly from the airport the cargo is leaving from to the airport the cargo is going.
Volume/ Density = Charges is based on which ever works out to be higher
1. Actual weight is just that: how much the item weighs, otherwise known as gross weight.
2. Volumetric weight (also known as dimensional weight) is an estimated weight calculated by using the item’s length, width, and height.
For freight forwarding purposes, volumetric weight is the weight of the package at the minimum density accepted by the carrier.
Calculating this is relatively simple:
Volumetric Weight = Length x Width x Height/Dimensional Factor
Measurements can be made in inches or centimeters, if the appropriate dimensional factor is used.
This approach to determining base air freight rates protects carriers from losing money on moving cargo that has a low density-to-weight ratio.
Type of Commodity:
Standard commercial cargo -
Hazardous or Non-Hazardous – Not all cargo that is hazardous can be moved by air or in some cases hazardous can still move but on cargo only planes.
Perishables or non-Perishables – Perishables in general are moved by air at a higher rate due to the time sensitivity of the commodity and special handling needs that
might be required.
Aside from my base rate, what additional charges can I expect?
Many different parties handle your cargo throughout its journey from origin to destination.
At any point where cargo changes hands, carriers may require additional preparation, paperwork, time, and fees.
Fuel surcharge (FSC) fees - account for fluctuating regional and seasonal fuel costs, fee’s protects carriers from the volatility of
Carriers can use their own formulas for assessing, calculating, and charging related fees. Most commonly,
FSC is calculated using the base fuel or threshold price, the base fuel mileage, and price fluctuation.
Warehouse freight station (CFS/WHS) - fees are for cargo that is temporarily stored in facilities when leaving or entering a country. Once proper customs
documentation is provided, the cargo is released from the airport CFS warehouse. Airline warehouse free storage times in general are very short and having air cargo
at the warehouse over the free time allotted can be very costly. It is very important to have all documentation needed for customs brokerage/ Clearance to your broker
by “Wheels up” ( by the time the cargo leaves the final airport of departure leaving the Origin country )
Security surcharges cover (SSC) - any additional fees for security measures required at airports. The cost associated with security surcharges applies to the
screening and handling processes certain goods must undergo in accordance country of origin or destination as all cargo must abide to Airline Security Regulations.
Security-related fees are charged at both the origin and destination If you are a Known Shipper versus unknown shipper can also be a rate consideration on how your
cargo, the transit time and how your cargo will be handled and the cost
Airline terminal handling fees - apply to all air shipments, and cover costs associated with handling cargo at both the origin and destination. Terminal handling
charges may be included in the cumulative air freight fee or listed as a separate line item, depending on the airline.
Door-to-door costs include the above, and:
Customs clearance fees are the routine charges paid to customs brokers for the entry of goods into a country. If customs examines your cargo, there may be
Government Tariffs -- Charges based on the Harmonized tariff schedule or ( The classification of the cargo)
Aside from the charges incurred at customs, shippers should note that any extensive delays could result in additional fees at a later point in the cargo’s journey. You
should also prepare to have official shipping documents checked at any point in your cargo’s journey. Cost of Examines , Storage, Detention an tariffs will be passed to
the shipper or consignee depending on buying terms.
Associated trucking fees - occur when cargo is picked at origin or delivered up from an airport or warehouse and transported to the next point in the cargo’s
journey. These are standard fees paid to a trucking company to cover factors such as fuel and the driver’s wages.
Cargo insurance is typically arranged through a shipper’s freight forwarder, and it covers the cargo included in a given shipment. Because liability falls on the shipper,
and not on the carrier or forwarder, cargo insurance is a must-have.