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HomeShippingAir TransportationInsights on Air Freight and Cost Calculations in 2019

Insights on Air Freight and Cost Calculations in 2019

Everyone knows that air shipments are much more expensive than shipping via sea or truck, but sometimes, urgent cargo requires a shorter transit time, leaving no other alternatives than shipping by air.

In those cases, it is useful to know how airlines build their transportation costs, to make an appropriate decision on what service to prefer and how costs are built up.

Some of the most important cargo airlines in the world are:

  • Cathay Pacific Cargo
  • Korean Air Cargo
  • Emirates SkyCargo
  • Lufthansa Cargo
  • Singapore Airlines Cargo
  • China Airlines Cargo
  • EVA Air Cargo
  • Air France Cargo

For air shipments, the cost is calculated by multiplying the rate (provided per kg/lbs) for the “chargeable weight”, which is calculated based on the weight or volume of goods.

The volume/weight ratio is very simple to calculate: 167 kg is estimated for each cubic meter of space (formula: 1 CBM = 167 kg), but if the weight exceeds the chargeable weight, the actual weight will be applied for cost calculation.

Rates/Costs

Each Cargo airline – either those dedicated to the transport of goods exclusively or those who transport goods in addition to passengers – applies different rates based on the type of service chosen and the route offered (direct service versus connecting service).

How to Calculate Costs

Once the cost based on the chargeable weight/actual weight has been established, simple multiplication will be enough to determine the cost of the shipment (net – as mentioned above – of insurance, customs costs, trucking for final delivery, etc.)

A Quick Example of Cost Calculator for the Shipment of Goods

Note: All dimensions/weights are usually calculated using the Metric system.

Example 1

Cost per kg: 2.4kg
Cargo Dimensions: 1200 mm x 800 mm x 1070 mm
CBM: 1.027
Gross weight: 138kg
Chargeable weight: 1.027 X 167 = 171.5kg

In this case the chargeable weight is greater than the gross weight so we need to multiply the cost per KG with the chargeable weight.

Final total cost: 171.5 X 2.4 = $411

Example 2

Cost per kg: 2.4kg
Cargo Dimensions: 1200 mm x 800 mm x 1070 mm
CBM: 1.027
Gross weight: 230kg
Chargeable weight: 1.027 X 167 = 171.5kg

In this case the chargeable weight is less than the gross weight so we need to multiply the cost per KG with the gross weight.

Final total cost: 230KG X 2.4 = $552

Below is an example of how airlines provide rates.

Weight Breaks: the different categories of price ranges.
Destinations, Origins and Carriers, and Costs are made up.

Lower Deck Rates

Main Deck Rates

The Importance of Packaging – how goods can be loaded.

The non-optimization of packaging is a widespread practice, as well as one of the main sources of profit for airlines. Volumetric Cargo (High CBM – Low Weight) is what airlines are after because they can fill the aircraft with low cargo weight and save on fuel.

Goods can be loaded in different ways: in the lower or upper compartment (in passenger aircraft adapted for cargo) or in all-cargo aircraft. In the lower compartment of passenger aircraft there are compartments of various sizes to contain baggage, mail, etc.

Below is a cross-section of a typical cargo aircraft:

Michele Marinellihttp://www.mts-logistics.com
Michele was born and raised in Italy and spent most of his early years in Bologna, a nice and vibrant city in northern Italy. He graduated from the University of Bologna with a master’s degree in industrial Engineering with a specialization in Logistics and Production in 2007.  Michele worked for a French-based Corporation in Bologna for almost 6 years as Project Manager. In January 2014, Michele moved to the U.S. for a fresh start in New York, and worked for 3 years for one of the major Steam Ship Lines as an Export Commercial Liner, in North European trade. He started at MTS Logistics in January 2017 as Sales Executive. Michele is currently covering and developing several areas: Texas, New York/New Jersey, Georgia, South Carolina, and North Carolina. His first priority is to create strong relationships based on trust, competence, and honesty. Michele loves to travel and does so for at least twice monthly to meet his customers/prospects in person to hear face-to-face how he can help them by providing the best service possible. Fun Fact: Michele, despite being Italian, loves basketball (watching and playing) instead of soccer and the NBA is his secret passion.
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