Posted by The eCommerce industry has experienced tremendous growth over the past few years, with an increasing number of consumers opting to shop online for convenience and accessibility. As a result, eCommerce companies have come to rely heavily on air freight to meet customer demand and ensure timely delivery. However, air freight charges can significantly impact the bottom line of eCommerce businesses, affecting profitability and competitiveness.
In this blog, we will provide a comprehensive guide to comprehending freight forwarding meaning, and air freight charges, specifically tailored to the needs of eCommerce companies. We will discuss the factors contributing to air freight charges, the calculation process, anticipated costs, and ways to reduce air freight costs.
By the end of this blog, businesses will better understand how air freight charges are calculated, how to anticipate costs, and how to save money on global shipping, thereby improving their bottom line.
Understanding Air Freight Charges for E-commerce Companies
Air freight charges refer to the fees airlines or freight forwarders charge for transporting goods by air. In the eCommerce industry, air freight charges are a critical component of the shipping process, as they directly impact the cost of goods sold and the overall profitability of the business.
Several factors contribute to air freight charges, including weight, volume, and distance. The weight of the shipment is one of the most significant factors, as airlines charge based on weight brackets. The shipment volume also plays a role in air freight charges, as airlines may charge based on either the actual or volumetric weight of the shipment, whichever is higher. Distance is another crucial factor, as airlines may charge more for longer hauls or destinations with limited air connectivity.
Businesses can benefit from working with freight forwarders to navigate air freight charges’ complexities. Freight forwarders have specialized knowledge and expertise in shipping goods by air and can help eCommerce companies optimize their shipping processes to reduce costs. They can also provide access to discounted rates and help businesses navigate the various fees and regulations associated with air freight, including customs clearance fees and documentation requirements.
Calculation Process of Air Freight Charges for E-commerce Companies
The formula used to calculate air freight charges is typically based on a combination of weight and volume, as well as the origin and destination of the shipment. The formula may vary depending on the airline or freight forwarder used, but it generally involves the following components:
Chargeable weight: It is generally more than the actual weight or volumetric weight of the shipment. Volumetric weight is calculated by multiplying the shipment’s length, width, and height and dividing the result by a volumetric factor.
Rate per kilogram: This is the cost per kilogram of the chargeable weight determined by the airline or freight forwarder.
Fuel surcharge: This is an additional fee added to the air freight charges to cover the cost of fuel. It is calculated as a percentage of the air freight charges, which varies based on market conditions.
Handling charges: This is a fee charged by the airline or freight forwarder to cover the shipment’s cost.
Customs clearance charges: This is a fee charged by the customs broker to cover the cost of clearing the shipment through customs.
For example, suppose a business needs to ship a package weighing 20 kilograms from the United States to China. The chargeable weight is calculated as higher than the actual weight (20 kg) or volumetric weight (30 kg). The rate per kilogram is $5, the fuel surcharge is 20%, the handling charge is $50, and the customs clearance charge is $100.
Using these figures, the air freight charges would be calculated as follows:
Chargeable weight = 30 kg (based on volumetric weight)
Rate per kilogram = $5
Fuel surcharge = 20%
Handling charge = $50
Customs clearance charge = $100
Total air freight charges = (30 kg x $5) x 1.2 + $50 + $100 = $246
Accurate weight and volume measurements are critical to avoid additional charges and delays in transit. Airlines and freight forwarders typically have strict guidelines for measuring shipments, and inaccuracies can result in additional charges or even rejected shipments. Therefore, eCommerce companies should ensure accurate measurements for their shipments and work closely with their freight forwarders for absolute clarity.
Anticipated Costs of Air Freight Charges for E-commerce Companies
Air freight charges for eCommerce companies can include various fees, including fuel surcharges and customs clearance fees. These fees are typically calculated as a percentage of the air freight charges or as a fixed fee that can vary depending on the origin and destination of the shipment.
Fuel surcharges are fees added to air freight charges to cover the cost of fuel. Airlines and freight forwarders typically adjust fuel surcharges periodically based on market conditions. These charges are calculated as a percentage of the air freight charges and can range from 5% to 30%, depending on market conditions.
Customs brokers charge customs clearance fees to cover the cost of clearing the shipment through customs. These fees can vary depending on the country of origin and destination and the type of goods being shipped. Customs clearance fees typically include charges for document preparation, inspection, and any taxes or duties that may apply.
For those eCommerce companies shipping domestically, air freight charges are generally lower than international shipments. Domestic air freight charges are typically based on the weight of the shipment and the distance travelled. On the other hand, global air freight charges can be much more complex, with charges varying based on the country of origin and destination, as well as the mode of transportation used.
Typical costs eCommerce companies can expect to pay for air freight charges include:
- Rate per kilogram: This cost per kilogram of the chargeable weight can vary depending on the airline or freight forwarder.
- Fuel surcharge: This is an additional fee added to the air freight charges to cover the fuel cost and is calculated as a percentage of the air freight charges.
- Handling charges: This is a fee charged by the airline or freight forwarder to cover the shipment’s cost.
- Customs clearance charges: This is a fee charged by the customs broker to cover the cost of clearing the shipment through customs.
For global shipping, additional fees may apply, such as:
- Destination handling charges: The destination airport charges fees for handling and transferring the shipment to the final destination.
- Import taxes and duties: These are fees charged by the destination country’s government to import goods into the country.
E-commerce companies should work closely with their freight forwarder to understand and anticipate these costs and explore ways to reduce air freight charges by optimising their shipping processes.
Conclusion
Understanding the calculation process and anticipated costs of air freight charges is crucial for eCommerce companies to manage their shipping costs effectively. Working with a trusted freight forwarder like NimbusPost can provide expert knowledge and guidance to navigate the complexities of air freight charges and optimize shipping processes.