Role of air freight forwarding company in the import and export (Part 3 of 5)

Do I need an air freight forwarding company for importing and exporting?

Can I not do it on my own so I can save more?

What exactly do these freight forwarders do?

These are some of the questions importers and exporter may be asking themselves. You may have even come across these questions, too. Sadly very few article discusses this topic extensively. Thus, we are here to give you the details regarding the role of air freight forwarders in the import and export process.

Read on.

Should I hire a freight forwarding company
Should I hire a freight forwarding company

Immediate role of an air freight forwarding company

An air freight forwarding company is hired by importers and exporters to expedite their air cargo supply chain. Because of this, they are called as shipment “expeditors”.

They act as organizer of the following supply chain processes:

  • Export and import handling
  • Customs clearing
  • Air transport and delivery

Major roles of an air freight forwarding company
Major roles of an air freight forwarding company

Read on to know how they speed-up your air cargo supply chain.

Elements considered by freight forwarding companies prior to shipment

As a appetizer to our lengthy discussion on freight forwarding, below is a list of some of the elements a freight forwarder has to consider to ensure your shipment arrives to its destination as you want it:

  • Gas Charges
  • Distance
  • Goods value
  • Handling costs
  • Package type
  • Service type
  • Tolls
  • Transport chain
  • Volume
  • Weight

Components of air freight cost
Components of air freight cost

Looks a handful? There is more to this that freight forwarders do for you. Read on.

Transacting with the carrier

If you think that getting your cargo on board an aircraft is as easy as booking for a passenger ticket, then you are most definitely wrong. Airline carriers have a different process when accepting cargo for air freight. Most of which are due to the additional security they need to perform to ensure you are not loading dangerous goods into their craft.

So unless you are friend with the owner of an airline company, it would be difficult to get your cargo land a space on the plane on your own. You may try your best to try, but it would be a stroke of luck if you do get your parcel on board the plane without a freight forwarder – that’s how important a freight forwarding company is to the import and export process.

Negotiating airline pricing

You must be interested with how some freight forwarders can quote less compared to their competitors. Well, this is not a fraud. Nor is it is a hoax.

An air freight forwarding company that has regular transactions with an airline company has more chances of getting a space on board with better deals. Thus one of the reasons why its always best to choose a freight forwarding company with years of experience in the industry.

One of the reasons – they have established relationships with carriers which gives them the special privilege of getting better rates.

Makes sense? Absolutely! Carriers would rather deal with a freight forwarder they have been working with for decades rather than a newbie.

Why? Because this freight forwarding company has established its credibility.

So how do they negotiate on the price of your cargo?

Air cargo is sold for a fixed price or a fixed rate per kilogram.  However, this varies on certain season, as shown in this graph:

Air freight marketing comparison table
Air freight marketing comparison table

The law of supply and demand dictates that the higher the demand for air freight space results to a higher rate.

Thus the rise in freight rates during or whenever the holiday season is arriving, which begins September and ends in December. These carriers know very well that demand for air freight would heighten and they take it as a good opportunity to earn money.

You can’t blame them. It’s not every month that freight rate is at its peak. They do suffer from low freight demand. So it’s just a give and take process. This is still business after all.

Understanding dimensional weight conversion

With very limited space available for air freight, it is important for airline to charge not solely on weight, rather they do it by calculating weight and space altogether. The image below shows how this is to be calculated.

Booking your cargo

After the freight forwarding company settles the price for your cargo, they will now prepare the airline booking for the shipment together with its confirmation. This will ensure your space is reserved on their aircraft. This confirmation will contain the following data:

  • Assigned Airline (Master) Air Waybill number
  • Origin and final destination
  • Type of goods
  • Flight date and number
  • Issuing agent  and its contact details
  • Volume, weight and dimensions of shipment
  • Eventual assignment to customer or agent’s allotment

This will be validated against the airline’s capacity, commodity and revenue management criteria, prior to confirmation to complete the booking process.

Preparing the shipment

The official document between the forwarder and the airline carriers is referred to as the Master Air Waybill (MAWB). This serves as:

  • Communication of the applicable contract terms, conditions and liability to all parties involved
  • Proof of delivery (POD) of the goods to the carrier
  • Provide handling instructions to all parties involved and basis for invoicing for both the airline and the freight forwarding company
  • Act as an insurance certificate (if applicable and indicated on the AirWaybill) and key for other related documents required at Customs

However, for the purpose of ensuring all the different customers of the freight forwarding company is properly tracked, freight forwarding companies makes a House Air Waybill (HWB) for each shipment. This becomes the shipment contract between the end-customer and the forwarder.

The illustration below shows the relationship between MAWB and HWB:

Master air waybill vs house air waybill
Relationship between master air waybill and house air waybill

After this HWB is fixed, the freight forwarding company now coordinates the goods to ensure it is ready for carriage (RFC) which includes:

  • Correctly packing and labelling the cargo
  • Customs clearing the goods for export (if required)
  • Preparing the goods for import handling and clearance (if required) at destination

Once the goods are ready for carriage, the freight forwarding company will now order the transport of the goods. Otherwise, it can be temporarily stored at the warehouse while awaiting shipment.

This image shows how the various processes involved prior to it getting on board the aircraft:

air freight forwarding company process from pick-up to airport
Air freight forwarding company process from pick-up to airport

Other processes a freight forwarding company has to consider

Other than these basic processes, other important processes a freight forwarding company has to consider includes:

  • Planning and controlling transport orders, airline slot-times, flows of goods, and necessary documents
  • Repairing or improvising to ensure the cargo arrives at its destination  
  • Maintaining a structured and standardized network of commercial and operational agreements
  • Handling claims on behalf of the customer (as applicable)

Need assistance with air freight forwarding?

So do you need a the services of an air freight forwarding company? By the looks of it, you can save by someone like us handle the shipments process for you.

We offer a full range of air freight forwarding services and are confident we can give you the help you need. Freight Forwarder Quote Online is able to give you the best prices as we have low overheads. If you are looking for air freight forwarding that is fast, lean and transparent, then contact us online and send a message. You can even message us on Facebook for help on international shipping.