Wednesday, September 22, 2010

Air Freight Options

One area where companies can usually save money is air  freight.  The sourcing goal is usually to put everything on the water, but that doesn't always happen.  Demand changes or quality issues come up.  But there are many types of air freight, and picking the right service can improve the bottom line.  This post is focused on international air freight - unless you need same day service or are shipping from one coast to the other, truck freight usually gets the same results for domestic freight (over 150#) at less cost.

First, some vocabulary:
Carrier: the airline operating the plane.  It may be a passenger carrier like Delta, an all-cargo airline like Cargolux, or a small-parcel service like FedEx or DHL
PAX: industry term for passenger, in this context refers to passenger flights
TATL: Trans-Atlantic (pronounced tattle)
TPAC: Trans-Pacific (pronounced t-pac)
Freight Forwarder: a broker that works works with shippers and carriers, using volume to achieve lower prices.  Freight forwarders offer door to door service that includes every step of international shipping, including export and import clearance.  The small parcel carriers have freight forwarder divisions.
Courier: in international shipping, courier means a small parcel carrier like UPS or FedEx.  In local shipping, a courier is a local delivery service.
Consol: consolidated service offered by freight forwarders.  The forwarder has guaranteed space on popular cargo flights that it fills with freight from multiple shippers.  Depending on popularity, there may be weekly, twice-weekly, or daily consols.

Imagine you're a project manager for a multinational company.  You're doing a project in China, and you need a 500# motor from the US.  You need the motor to be onsite in four weeks.

Ideally, you'd have shipped it by ocean freight.  Unfortunately your vendor missed delivery.  So you have to ship it by air.  What do you do?  First, communicate with your forwarder.  Tell them exactly when you need delivery.  Freight forwarders and carriers offer multiple service levels, and if you have a couple weeks to play with you probably don't need the most expensive one.

The fastest and most expensive service is express service.  Express is usually the next available flight, with confirmed service on every leg.  Depending on where it's going, express service usually takes 2-4 days to get to the destination airport (be sure to add time for customs clearance).  Do you need express service for this motor?  Probably not. 

The other service option for air freight is deferred.  (Everyone has their own name for it, this is mine.)  Deferred service is slower than express, usually 5-7 business days.  Deferred service will either be a slower service from the carrier or a consol offered by the freight forwarder.  There are benefits and risks to either one - a consol may be slower, but you're less likely to get bumped (especially if you're a good customer, but that's a story for another day). 

What's the takeaway?  Make sure your forwarder or the employee booking the freight has good information about when it needs to get there.  That information could save you 25-50%.

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