Airfreight Pricing

August 31, 2009 Copyright©2009Second Review Business Analysts

Second Review Business Analysts

Airfreight Matterspart of Freight Matters Canada Series

An introduction to Airfreight Pricing



Index

• Introduction• Benefits• Airfreight rates• Origin pricing • Airport /Airport pricing • Destination Pricing • Chargeable Weight Calculation

• ULD Pricing• ULD 2• ULD 3• ULD 96 inches• ULD 9• ULD 8• Airport Codes• Glossary• Contact Us



Introduction

The use of airfreight to move cargo on a regular basis is a 20th century phenomenon for 20th century products and onwards.

This has changed the world of the supply chain forever from the previous century. The benefits are numerous…



Benefits

• Faster transit times, resulting in lower risk of damage to cargo.

• “Just in time” supply chain processes reducing the size of the consignment and the amount of capital outlay. Importers buy only what is needed to fulfil their sales.

• Cleaner environment for susceptible cargo such as pharmaceuticals, electrical components, motherboards.

• More markets are reached as the traditional surface barriers are reduced.

• Significant reduction of loss for perishables, enabling fish, flowers vaccines, produce, live animals to reach more destinations intact.



Airfreight Rates

• Airlines and forwarders normally offerA loose rate per Kg or 6 dm3 (1 Cbm = 166 Kgs), from an airport to airport basis.

• A forwarder may provide a flat general non – hazardous rate per Kg. subject to a minimum, or provide weight breaks, Minimum, under 45 Kgs, over 45 Kgs , over 100 Kgs, over 300 Kgs, over 500 Kgs, over 1000 Kgs. Forwarders sometimes have their own consolidations which are specific flights and space pre-booked from a specific origin.

• An airline would provide rates based on TACT ( The Air Cargo Tariff) based on commodities and weight breaks (as above) and is the standard tariff for international movements. An airline would offer service on a first available flight basis but is often more expensive.



PricingOrigin Charges

(Currency of the origin country)

• Pick up & Haulage *1• Documentation Fee• Aviation Security –X-Ray *1• Export Clearance * 2• Export Handling i.e.. airline terminal charge *1• ACI charge *2

*1 Rate per Kg. Subject to a Minimum*2 Flat Rate per shipment



PricingAirport to Airport

(Currency of the origin country)

• Airfreight *1• Fuel Surcharge *1• W.R.I. (War Risks Insurance) *1

* 1 Rate per Kg. Subject to a Minimum* 2 Flat Rate per shipment

weight/volume relationship normally 1 Kg = 6 dm3



PricingDestination Charges

(Currency of the destination country)

• Navcan Fee *1 (applicable to Canada)• Airline Terminal Charges *1• Documentation Fee• Customs Clearance *2• Delivery * 1

* 1 Rate per Kg. Subject to a Minimum* 2 Flat Rate per shipment

#Slide 37



Chargeable Weight Calculation

The formula for calculating the dimensional weight for all commodities is 166 cubic inches per pound (6000 cubic centimeters per kilogram or 366 cubic inches per kilogram).

Multiply the length by the width by the height to obtain the cubic inches (cm).• To obtain the dimensional weight in kilograms, divide the cubic inch result by 366.• To obtain the dimensional weight in pounds, divide the cubic inch result by 166.• To obtain the dimensional weight in kilograms, divide the cubic centimeter result by 6000.

If the dimensional weight is greater than the actual weight, freight will be charged on the dimensional weight.



ULD Pricing (1)

A Unit Load Device rate (ULD) . These are airfreight containers, and are specially configured for the aircraft. There are many different types, with different weight and dimension restrictions but not all are offered by every airline and at every airport. This is dependent on supply, aircraft type.



ULD Pricing (2)

Retailers of high value products, Specialized Food Importers Pharmaceutical companies would be some of the companies likely to utilize ULD’s to isolate their products from the mix of general cargoes.



ULD Pricing (3)

ULD’s are priced differently according to their configurations, maximum loads as well as availability.

Normally there is a flat rate up per unit to a pivot weight, e.g. 600 Kgs, 1300 Kgs etc., and then a flat rate per Kg. thereafter. Surcharges as well as origin and destination charges are extra.

The following slides indicate just some of the ULD’s in use today.



ULD LD2

977 kg/m2 (200 lb/ft2)

Floor Loading Limit

3.4 m3 (120 ft3)Approx. Internal

Volume

1,225 kg (2,700 lb)Maximum Gross

Weight

92 kg (202 lb)Tare Weight

1,165 kg (2,568 lb)Maximum Net Weight

8DRate Classification

LD2 Half Size Lower Deck Container (DPN, DPE Series)

Note: The RC8D is carried on the B767-200 and B767-300



ULD LD3

977 kg/m2 (200 lb/ft2)

Floor Loading Limit


Volume


Weight



8Rate Classification

LD3 Half Size Lower Deck Container (AVE, AVN, AKE, AKN Series)

Note: The RC8 is carried on the A340, A330 and B777-300



ULD 96 in Lower Deck

96” Lower Deck Contour Pallet With Net (PMC Series)

1,465 kg/m2 (300 lb/ft2)

Floor Loading Limit

Volume 11.70 m3 (415 ft3)

Approx. Internal


Weight


4,978 kg (10,975 lb)Maximum Net

Weight


Note: The RC5 (PMC Series) is carried on the B767-200, B767-300, A340, A330, B777-200 and B777-300



ULD LD9 Full Size Lower Deck

1,465 kg/m2 (300 lb/ft2)

Floor Loading Limit


Volume


Weight




LD9 Full Size Lower Deck Container (AA2, AAP Series)

Note: The RC5 (AA2, AAP Series) is carried on the B767-200, B767-300, A340, A330, B777-200 and B777-300



LD8 Full Width Lower Deck Container (ALN, DQN, DQF Series)

977 kg/m2 (200 lb/ft2)

Floor Loading Limit

6.85 m3 (242 ft3)Approx. Internal Volume

2,449 kg (5,400 lb)Maximum Gross Weight



6ARate Classification

Note: The RC6A is carried on the B767-200 and B767-300

ULD LD8



Airport Codes Canada

• YXX Abbotsford• YBC Baie Comeau• YBA Banff• XBR Brockville• YYC Calgary• YHG Charlottetown• YYQ Churchill• YCA Courtenay• YDA Dawson City• YHD Dryden• YED Edmonton Int’l• YXD Edmonton Mun.• YFO Flin Flon• YAG Fort Frances• YFC Fredericton Mun. • YMM Fort McMurray• YQX Gander• YGP Gaspe

YND Gatineau HullYYR Goose BayYQU Grand PrairieYHZ Halifax Int’lYHM HamiltonYEV InuvikYKA KamloopsYYU KapuskasingYQW KenoraYGK KingstonYKF KitchenerYQL LethbridgeYXU LondonYXH Medicine HatYLP MonctonYUL Montreal DorvalYMX Montreal MirabelYMJ Moose JawYCD NanaimoYYB North Bay

YOW Ottawa IntlYRO Ottawa RockcliffeYWA PetawawaYPQ PeterboroughYPA Prince AlbertYQB Quebec IntlYQF Red DeerYZR SarniaYXE SaskatoonYYT St. John’sYQT Thunder BayYYZ Toronto PearsonYTZ Toronto IslandYVR Vancouver IntlYYJ Victoria IntlYWG Winnipeg IntlYQI YarmouthYZF Yellowknife

Search for Worldwide Airport Codes online: http://www.nationsonline.org/oneworld/airport_code.htm

http://www.nationsonline.org/oneworld/airport_code.htm



Glossary

All Cargo Aircraft An aircraft that is designed for cargo only and does not carrypassengers. Flights tend to be limited and many hazardous materials are limited to this type of carriage. Airway bill AWB Airfreight bill of lading for domestic and international transport that can be used for legal tender in documentary credit situations. AOG Aircraft on Ground – This is a service designation, for aircraft spares and parts that are required immediately in order to enable an aircraft to fly. Priority and after hours service are often involved. Apron The area of the airport where aircraft are parked for loading/unloadingHAWB (House airway bill) . An airway bill issued by a freight forwarder NAVCAN Canada’s civil air service provider, governing navigation, weather information,traffic control. A fee per Kg is charged for all freight in and out of Canada by Air. LD3 Lower deck container. Commonly used in passenger aircraft. Main Deck. The deck on which the major portion of payload is carried, normally known Upper Deck of an airplane. The full cargo freighter aircraft has it entire upper deck equipped for main deck type of containers/pallets while Combi aircraft uses it rear part ofthe upper deck for cargo loading. There is no upper deck or main deck type of container/pallet at passenger aircraft.MAWB (Master airway bill). An airway bill issued by an airline.



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Airfreight Pricing