Air freight quotation: how to understand
When is air freight appropriate?
Air freight is nearly always associated with urgent consignments. However, it is also ideal for sending very high value goods, small packages and perishable goods because it offers refrigerated and frozen air freight.
Types of air freight
There are two types of aircraft and services available: passenger and cargo. The basic difference lies in the maximum height of the packages to be transported. Cargo planes can carry packages up to 2.05 metres high (the doors are 2.10 metres high) whereas the maximum height in passenger planes is 1.6 metres.
We will now move on to see how air freight quotes work.
Basic concepts and surcharges in air freight
Air freight quotes are relatively simple compared to shipping quotes because they include all surcharges. Even surcharges for fuel and the IRC (we will look at this concept later) are often included in air freight, offering clients an all-in price.
The air freight concepts that we are going to look at in this section are:
Air freight is always quoted per kg and is invoiced according to chargeable weight.
There are various different charges depending on the destination or the service required, whether this may is general cargo, valuable cargo, dangerous goods, or priority cargo, for example. Take a look at our post about air freight to New York for an explanation of the most common charges, all of which apply to any destination.
Fuel o FSC (Fuel Surcharge)
The fuel surcharge is applied to offset fluctuations in fuel prices.
IRC (Insurance Risk Charge)
The IRC is a security surcharge collected at the airport.
Until very recently, airlines in Europe applied fuel surcharges and the IRC according to gross weight whereas in other parts of the world they have always been calculated according to chargeable weight. This difference has now almost completely disappeared and freight, IRC and fuel surcharges are all invoiced according to chargeable weight.
A 1% charge is applied to the air freight and all of the surcharges quoted in currencies other than euros.
How to quote for air freight
Air freight charges and surcharges are normally based on weight bands in kilos, for example:
Forwarders normally use this format when giving a quote because this is how the airline companies work.
The weight scale for freight works as follows: the applicable weight column is the one showing the weight just under the chargeable weight of the consignment. The ‘-45’ column applies to shipments of less than 45 kg. There is always a minimum charge for a consignment indicated in the ‘MIN’ column. Fuel and IRC are applied according to chargeable weight (there is no weight scale for these charges).
Here are some examples:
- For the shipment of a 100 kg, 1.5 m3 package, the calculations to put together the quote are as follows: 1.5 m3 x 167 kg/m3 = 250.5 kg, which is greater than the gross weight of 100 kg. Therefore, the chargeable weight is 250.5 kg. The applicable price band is Q100 because 250.5 kg is less than the next band Q300:Freight: 0.95 x 250.5 = 237.98 EUR
Fuel: 0.99 x 250.5 = 247.99 EUR
IRC: 0.06 x 250.5 = 15.03 EUR
- For the shipment of a 43 kg, 0.15 m3 package, the calculations to put together the quote are as follows: 0.15 m3 x 167 kg/m3 = 25.05 kg, which is less than the gross weight of 43 kg. Therefore, the chargeable weight is 43 kg. The applicable price band is -45:Freight: 1.50 x 43 = 64.50 EUR
Fuel: 0.99 x 43 = 42.57 EUR
IRC: 0.06 x 43 = 2.58 EUR
If the resulting freight charge is less than the quoted ‘MIN’, the ‘MIN’ amount is applied (Fuel and IRC are not added to the minimum charge).
Typical local costs at origin and destination
GTC (Ground Terminal Charges)
The GTC are charges for handling services while the aircraft is on the ground. The charges are calculated based on gross weight.
The E2/G4 is levied on the transit of goods through the airport’s facilities. It is similar to the T3 in shipping and it is charged based on gross weight.
NSP (National Security Plan)
This fee was established to comply with the Spanish National Air Freight Security Plan. A different fee is applied depending on whether the cargo is known or unknown (the fee is greater if the cargo is unknown) and it is always based on gross weight.
This charge is applied for cargo handling at the airport terminal and it is based on gross weight.
AWB (Air Waybill)
The air waybill is the charge for the air freight bill of lading. It is applied per document issued, i.e. per B/L.
The charge for customs clearance may be quoted in various different ways. The most common are per commercial invoice, per consignment or per AWB. How it is quoted depends on the complexity of the consignment, i.e. the type of goods, whether they are for export or import, the number of tariff headings to be declared and whether certain services are required (customs inspections, procedures for medical or pharmaceutical consignments, goods scanning etc.).
P.L.I. (Public Liability Insurance)
This charge arises from the freight forwarder’s public liability insurance which is compulsory. It is quoted per consignment or AWB.
Collection or delivery (land transport)
Collection or delivery is usually quoted by the kilo on a scale based on chargeable weight which is calculated according to the haulage conversion factor.
IMO surcharge for land transport
The price of collecting or delivering dangerous goods for air freight is usually 25% higher than the standard price, just like shipping quotes, due to the increased risk involved.
As a summary, we will leave you with this table so that you can review the most common items found in air freight quotes and how each one is applied.
|Banking charge||1% of the costs in currencies other than the euro|
|Airport handling||Gross weight|
|Customs clearance||Commercial invoice/consignment/AWB|
|PLI||Consignment / AWB|
|Collection or delivery||Chargeable weight|
|IMO collection or delivery||% added to the cost of collection or delivery|
I hope this explanation has been helpful. If you have any questions, you can ask them below in the comments area and I will be happy to help you.
By Blanca Romeu
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