International Air Freight Shipping: Definition
Air cargo is used by global importers and exporters when they need to get goods somewhere rapidly and reliably. While 90% of everything is shipped by ocean, air connects the world faster, cutting China-US freight shipping time from 20-30 days by ocean to only 3 days by air cargo.
International air freight and express freight shipments are not the same thing. Express freight is typically handled by one company (like DHL, UPS or FedEx) that handles the entire shipment lifecycle, with shipping from door to door in under five days. These shipments are usually smaller (less than one cubic meter and 200 kilograms) than air freight. International air freight shipments can be significantly larger and may move across multiple carriers during shipment. As a matter of fact, the largest cargo airplane, the Anatov 225 – can hold an entire train.
International Air Freight Charges: What are the costs?
When it comes to air freight, weight and volume are key factors. Air carriers will charge by either volumetric weight (also known as dimensional weight) or actual weight, depending on which is more expensive.
The global rule of thumb is to calculate the volumetric weight is to multiple the item’s volume in cubic meters by 167. The volume is for a package that is W: 40cm, H: 40cm L:40 would have a .064 (the product of all sides divided by one million). Multiple by 167, and you get a volumetric weight of 10.67 kg.
if the volumetric weight exceeds the actual weight of the product, the volumetric weight becomes the chargeable weight.
Why Ship Cargo by Air?
- Speed – Think five days from a factory in China to a warehouse in the United States. Airplanes are about 30 times faster than ocean liners. Passenger jets cruise at 575 mph, while slow-steaming ocean liners move at 16-18 mph. In general numbers, air freight is usually 5X the price of trucking and 16X the price of ocean freight, according to the World Bank.
- Reliability – People are pickier than packages, which has encouraged the freight market to develop more dependable freight services, and combined with better air freight data movement, shipping by air provides better air freight tracking and the knowledge that your goods will get to the right place at the right time.
- Protection – While ocean piracy is on the decline, goods are more likely to be damaged in ocean freight shipping than air shipping.
Why Not to Ship Cargo by Air?
- Cost – Simply put, air freight comes with a hefty price tag. Comparing air and ocean freight, a medium size 2000 lbs box from Shenzhen, China to New York, USA, can cost $1,200 by ocean but a whopping $4,000 by air.
- CO2 emissions – Of course, air freight also leads to far more emissions. For example, according to this research, 2 tonnes shipped for 5,000 kilometers by ocean will lead to 150 kg of CO2 emissions, compared to 6,605 kg of CO2 emissions by air. Definitely not the greenest way to ship.
- Heavy Shipments – Ever since the 1960s, freight shipping has revolved around shipping containers, which are great for shipping large, heavy items. Air freight is priced based on both size and weight, which can scale price very quickly.
What goods are generally shipped by air?
Since air cargo is prohibitively expensive, it’s usually limited to smaller, high-value goods or time sensitive items, such as:
- Electronics. Steve Jobs famously purchased the entire available air freight capacity along key Asia-US routes to ship the first iMac prior to holiday season.
- Apparel. Seasonal trends in clothing can shift fast. As a result, companies generally need to get clothing from factories to stores as quickly as possible. Again, clothing’s small size and high value make it a great tradeoff.
- Pharmaceuticals. Given their small size and value, medical goods are frequently shipped by air.
- Documents and Samples. DHL Global Forwarding actually got started by taking ocean freight documents by air to expedite release along a new West Coast-Hawaii ocean line. Air remains the most cost-effective method of shipping documents.
- Seasonal shipments. Whatever the product is, if there’s high international demand for a product that requires bolstering down a supply chain, it will generally be shipped by air.
Beyond the air freight, which is calculated based on the cost above, the air freight price will also likely include:
- Fuel surcharges
- Security surcharges
- Container Freight Station / Terminal Handling charges
- Airport transfers
In addition, for door-to-door costs, the price will also include
- Customs brokerage
- Pickup and delivery
- Accessorial charges
Are International Air Freight Quotes & Prices Changing?
Air freight usage is growing slowly, with less than 1% growth in 2015 among the world’s top freight forwarders, according to Transport Intelligence. The International Air Transport Association (IATA) said that air freight growth only hit 2.2% in 2015, down from 5% in 2014. One reason for this is increased reliance on ocean freight, which is growing more and more reliable.
Ocean freight has been getting cheaper, driven by massive ocean freight overcapacity, with up to 75% declines on key routes. On the other hand, air passenger travel has grown strongly, pushing carriers to create more and more planes. As a result, there’s more belly cargo space – space under the place to store air freight. However, this means that less than half of air freight capacity is being used.
The result for air cargo shipments is that most companies that need to import do everything in their power to take advantage of cheap ocean rates, leaving only the most urgent shipments for air.
Top Five Air Freight Forwarders:
Air freight is a fairly fragmented market, with the top 10 air forwarders dominating only 39% 0f the market. The top air freight forwarders have remained ahead of the pack for years:
- DHL Global Forwarding. In 2015, DHL Global Forwarding air freight revenue reached $5.4 billion dollars. In 2015, it moved 2.1 million tonnes of air freight, over 60% more than the next forwarder in line.
- DB Schenker. Headquartered in Germany, the freight giant employees nearly 100,000 employees around the world. In 2015, it saw $3.8 billion in air freight revenue.
- Kuehne + Nagel. Between ocean and air freight shipping, this company holds close to 10% of the freight market. IN 2015, air freight revenue reached $3.3 billion.
- Panalpina. Founded in 1936, the Swiss forwarder saw $2.5 billion in air freight revenue in 2015. It also has one Boeing 747, leased from Atlas Air Cargo, which it called “Spirit of Panalpina”.
- Expeditors. A relative newcomer, founded in 1979 in Seattle, Washington, this US forwarder had $2.51 billion in air freight revenue in 2015.