Design for Air Freight - How to minimize your air freight costs

Air freight pricing is based on the weight and/or volume of your freight.  Generally, the more cargo you have, the lower your effective rate per kilo.  It’s definitely not that simple though! 

Many factors go into your air freight costs and this article will describe the fundamental techniques to optimize your spending. 

Definitions & Aircraft Types

To optimize air freight costs, there are several key terms and definitions to know, in particular, related to the aircraft that can move your cargo.

• Freighter - This is a cargo-only aircraft. There are large freighters (B747F) or small freighters (A319F).
• Maindeck - A freighter aircraft can store cargo on it’s maindeck (where passengers would typically site). Maindeck is typically reserved for large, oversized cargo.
• Lowerdeck / belly - Both freighters and passenger planes can store cargo on the lowerdeck or in the belly of the aircraft. The lowerdeck has tighter size restrictions.
• Widebody - This is any large aircraft and the passenger variants can be identified because they usually have 3 rows of seats. Common widebodies are B777 or A330 aircraft.
• Narrowbody - This is any small aircraft, the passenger variants can be identified as they usually have 2 rows of seats and 1 central aisle. Common narrowbodies are B737 or A320.
• Known Shipper - In the US, the Transport Safety Administration (TSA) has a safety program to approve companies to send cargo on passenger aircraft. The program is similar to a cargo version of TSA pre-check.

Consolidation is key - More Weight, Better Price

Air freight is charged on a per kilo basis with higher weights associated with lower pricing. 

For example, it’s common for a 20kg shipment to have a rate of $8.00/kg while a 5,000kg shipment of the same goods has a rate of $0.75/kg.  

All things equal, if you’re able to consolidate your cargo into larger shipments, you will have a better effective air freight rate per kilo. 

There are limits to the savings though!  At around 15,000kg the cargo becomes too large for a single widebody passenger plane so you may have service delays.  In these cases, it’s better to work with an airline to secure pricing over multiple flights or on a recurring basis. 

Use Passenger Planes - Become a Known Shipper

As there are significantly more passenger planes in the world than cargo-only freighters, it is generally less expensive to ship cargo on a passenger plane.

The keys to shipping on passenger planes in the US are to be a Known Shipper and to ensure your cargo fits on the flight (discussed below). 

The Known Shipper program is run by the TSA and gives shippers the authorization to ship on passenger flights once the TSA has approved the company security profile.  

Becoming a known shipper is not a complicated or time-consuming process, but it does require knowledge of the program and an Air Freight Forwarder needs to petition the TSA to add your company to the government list.  If you regularly move air freight cargo, you should definitely work to become a Known Shipper to access the plentiful belly capacity in the air.

Manage the Cargo Dimensions - Use Belly Space

In air freight, optimizing the dimensions of your shipment is fundamentally important to manage costs.  Aircraft have limited space and unique contours so build your cargo to help an airline load the plane easily and optimally save costs.  

There are some magic numbers associated with the size of an aircraft’s internal cargo bay (or freight positions) to keep in mind that will allow you to use the belly space on aircraft rather than the more expensive maindeck.  

Once the cargo falls outside of these magic numbers, the air cargo rates can increase dramatically as the cargo would be out-of-gauge for the standard positions on an aircraft. 

Widebody / Freighter Magic Numbers

Narrowbody Magic Numbers

A lot of cargo does not fit onto narrow-body aircraft so these numbers are used less frequently and also won’t allow for large consolidations but when you can fit onto these aircraft the number of destinations you can reach increases dramatically. 

Optimize your shipment!

What is an optimal air freight shipment from a cost perspective? 

Considering all of the above information you would want to: 

• Be a known shipper
• Consolidate freight into a large shipment
• Optimize your freight to fit onto the aircraft

Here is an example of an excellent air freight shipment:

In this case, the shipper knows that each aircraft position on the belly of a widebody plane is 125x96x63in so they are planning to fit 6x pallets onto each position and fully take up 2 positions on the aircraft, near the maximum of the dimensions. 

They also are consolidating enough cargo to make the shipment attractive for the airline but not too much that it won’t fit onto a single aircraft. 

Conclusion

Careful planning can help any company deploy strategies to minimize air freight costs.  Knowing how an airline prices, loads, and moves cargo and optimizing your freight to allow the carrier to fit as much cargo as possible into their available capacity is the key. 

In many cases, it’s not possible to follow these strategies, so working with an experienced team of air freight professionals is the best strategy to ensure your supply chain is efficient.

To see how Pelicargo can help you with your air freight procurement strategy, book a FREE no obligation demo buy clicking on the button below.