When your cargo needed to arrive yesterday or across the ocean, there’s no faster or more reliable method to transport it than air freight. This makes sending sky-bound shipments an essential option for every logistics professional.
Unfortunately, air freight is also substantially more expensive than ground-shipping alternatives.
Sometimes air freight is the fastest option, and for others, it may be your only choice. Either way, you’ll want to identify opportunities for how to reduce air freight cost and recoup savings. We’ll cover some areas of optimization in this article that should be easy to identify by looking at your logistics data.
How are Air Freight Costs Calculated?
Whether you’re trying to calculate international air freight shipping or domestic costs, there are some factors to consider, as with other types of shipping. But Before deciding on air freight cost reduction strategies, it’s crucial to understand how those costs are calculated since they’re not very transparent.
With air freight shipping, there are two measurements that carriers take into account when determining the shipping price for a given item:1
- Volumetric weight – Volume is calculated by multiplying the length, width, and height of the item you’re shipping. However, volumetric weight for air freight is adjusted according to an “air cubic conversion factor” of 167. So, to determine the volumetric you may be charged for, you’ll need to multiply the item’s volume by 167.
- Gross weight – The total weight of the item—including packaging and pallets—being shipped.
Once gross and volumetric weight have both been calculated, the carrier will charge you according to the greater value.
Using the Metric System
One aspect of air freight shipping cost calculations that some may find confusing is that your items are always assessed with the metric system. This means you’ll need to convert the weight from pounds to kilograms and the volume from cubic inches to cubic meters.
For quick conversions, you’ll want to multiply each measurement by:
- Volumetric weight – Divide the volumetric weight in cubic inches by 61,024 to convert it to cubic meters.
- Thanks to the flexibility in math’s order of operations with multiplication and division, you can multiply the volumetric weight by the air cubic conversion factor (i.e., 167) before or after the measurement conversion.
- Gross weight – Multiply the weight in pounds by 0.4536 to convert it to kilograms.
Without performing the metric conversion, your cost estimates will be highly inaccurate and can lead to substantial budgeting challenges or surprise charges.
Optimize Your Shipping Schedules for Air Freight Cost Reductions
Now that you’re familiar with calculating air freight prices’ exact values, you can begin looking for opportunities to reduce those costs.
And the easiest way to identify savings is by evaluating your shipping schedules.
Analyzing the data stored within your transportation management system (TMS) and other software solutions will provide insight into what dates and times are the most expensive regarding air freight. The reverse is also true—you’ll discover the optimal times to ship by air and the carriers to partner with.
Some shipments just can’t wait.
These will need to be sent via air freight regardless of costs, but there’s likely a percentage of the cargo you send by plane that doesn’t need to depart immediately. By simply waiting for the optimal load size or lower-cost scheduling options, you can open up numerous avenues for realizing savings.
Ship More and Less Often
As with trucking, there are minimum costs that carriers will charge for air freight. If the cost of shipping your items falls below these minimums, you should wait whenever possible until you meet that threshold.
If you regularly transport your cargo via air freight, consider whether your operations and customer satisfaction will be impacted by making each shipment a little larger and more spaced out.
Ship By Truck When Timelines Allow
If urgent delivery isn’t required, assess which shipments can be sent by truck and reliably arrive by the expected delivery date. Again, the primary motivation for using air freight is speed—you’ll find substantial savings by considering viable ground transport if being fast isn’t necessary for a given shipment.
Schedule Transit for Off-Peak Dates and Times
When most businesses compete for shipment scheduling and airplane cargo space during peak hours, the demand quickly drives up freight transportation costs. If you can identify the days and times with the lowest demand—and adjusting to them doesn’t disrupt your delivery timelines—you’ll be able to find less expensive transportation options.
Schedule Pickup After Business Hours
Carrier networks don’t follow the same operating hours as most businesses. Instead, they operate around the clock. So, when the warehouses they’re picking up shipments from are closed, they’re left waiting until the morning or Monday.
Suppose your operating schedule can accommodate pickups in the evening or on weekends. In that case, your carrier partner will likely be thrilled to keep their own business moving and provide a reduced freight rate.
Additional Air Freight Cost Reduction Strategies
Although reviewing your shipment schedules will provide the quickest ways to identify air freight savings, some other options to consider are:
- Adopt the same LTL strategies for consolidation — “Less than truckload” (LTL) shipping involves consolidating your items with other businesses transporting goods to nearby destinations. Finding a partner or consolidation program will allow you to take advantage of more regular air freight schedules and lower costs.
- Negotiate new carrier contracts – If you regularly ship via air freight, there’s a good chance that you can negotiate with carriers for better rates in your next contract. However, this strategy is most successful when leveraging industry benchmarks as comparables to your operations. If you don’t have access to that data, you may want to find a consulting and negotiation partner to help.
Partner with Shipware to Assess Your Shipping Data and Negotiate Carrier Contracts
When you’re looking to reduce air freight costs, the best strategy is partnering with Shipware.
Our team of former carrier and third-party logistics (3PL) professionals augment your own team with over 200 years of carrier pricing experience and 30 years of parcel and LTL contract negotiations. We bring insight and expertise to every data audit and negotiation table that guarantees shipping cost reductions between 10-30% without disrupting your operations.
- Air Cargo Week. How to read and understand your international airfreight bill. https://www.aircargoweek.com/read-understand-international-airfreight-bill/