AIR-FORWARDING
Air freight rates are essential for businesses and individuals who need to transport goods quickly across large distances. Understanding how these rates are calculated and what factors influence them can help shippers make informed decisions and optimize their shipping strategies. This discussion will focus exclusively on the components of air freight rates, including the formula used to derive these costs and the conditions under which these rates apply.
Disclosure of Industry Basic Formula for Air Forwarding Rates
The formula for calculating air freight rates is primarily based on the Weight or volume of the cargo, whichever is greater. This approach ensures that the pricing reflects the physical Weight and the cargo's space in the aircraft. The standard formula used in the industry involves converting the cargo volume from cubic inches to volumetric Weight and then comparing it to the actual gross Weight to determine the chargeable Weight. The formula is as follows:
1. Volume Calculation: The cargo's volume in cubic inches is divided by a dimensional weight divisor, commonly set at 166 for air freight (in inches). This divisor reflects the density of the cargo that air carriers are willing to transport at a particular rate.
Volumetric Weight (lbs)} = multiply the three dimensions to get cubic inches, then divide by 166, resulting in Volume Weight.
2. Chargeable Weight: The chargeable Weight for the shipment is the greater of the actual gross Weight or the volumetric Weight. This ensures that the cost reflects the space and weight resources consumed by the cargo on the aircraft.
Factors Influencing Air Freight Rates
Several factors can affect air freight rates beyond just the Weight and volume of shipments:
Fuel Costs: One of the most significant variable expenses in air transport, fluctuations in fuel prices can lead to corresponding changes in air freight rates through fuel surcharges.
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