business, insurance

Airfreight

A guide to moving goods by air
The airfreight industry comprises a number of different commercial operations including airlines, freight forwarders, express carriers and customs brokers. This guide is designed to provide you with some background information on the industry operates, outlining the relevant requirements and regulations that you need to comply with.

Airfreight rates
Unsurprisingly airfreight is a more expensive mode of international transport compared to sea freight or road haulage. However, the benefit is that transit times can be dramatically reduced and in certain circumstances where the consignment size is small, it can actually be much more cost-effective.
The actual cost of air freight is calculated on the weight or volume of the consignment, whichever is greater, and with different airlines offering different freight rates, your freight forwarder will be best placed to advise you on the most appropriate route, service and airline options to suit your needs.

Carriers
Air freight is carried by both scheduled passenger aircrafts as well as by dedicated cargo airlines and has undergone a lot of deregulation in recent years to the extent that freight rates are no longer marketed in a single industry tariff. Instead freight forwarders will negotiate rates on an individual basis.
It’s worth remembering that unless otherwise requested, air freight rates will only normally apply for the transport between the airport of origin and the airport of destination. Haulage to and from the airport of origin and destination will be charged in addition to the actual air freight cost.

Additional costs
As well as the freight costs you have to consider other relevant costs, which for exports include the airline terminal handling fees, fuel surcharges and security charges relating to the physical screening of consignments. For imports, you need to factor in duty and VAT charges.
As with all other modes of transport mode, it’s imperative that you receive a detailed quotation from your freight forwarder so that you fully understand what is included in the price.

The airlines role
Most international air cargo is carried within the holds of passenger aircraft, with the amount uplifted subject to the passenger and baggage load, as well as the type of aircraft and the distance involved.
Airlines will accept freight an airport to airport basis in accordance with the Warsaw and Montreal Conventions. These conventions define the legal, contractual and liability obligations (for loss and damage) of the airlines and those of the shipper.
Once the cargo is ready for carriage it is delivered to the airline’s cargo terminal. The cargo terminal operator has a responsibility to the airline to ensure that the cargo is transported to the aircraft at a given time, ready for loading.
Most airline’s cargo terminal operations are sub-contracted to third-party providers contracted to the airline, with the airlines themselves pre-planning passenger, baggage and air freight loadings well in advance of departure. Occasionally as a result of unforeseen circumstances, air freight can sometimes be offloaded and held for a later flight.
Although most airlines allocate flight details in advance for air freight movements, under their Conditions of Carriage they can’t be held responsible for delays.

Airfreight logistics
Purchasing air freight and managing the logistics can be a complex process, which is why unless you have experience it is often more cost effective to use a freight forwarder.
When transporting small to medium sized consignments, the most cost effective is to use a consolidation service. This is where a freight forwarder will purchase and pre-book capacity in bulk, which they will then sell on to exporters.
Whatever your consignment consists of it is imperative to know in advance the type of service you require and to select a provider that suits your needs. When choosing a freight forwarder you need to ask yourself the following questions:
•    Do they have experience in transporting your type of consignment?
•    Do they have experience in transporting to your destination countries?
•    Do they have membership of a freight services trade association? Members of such associations are often covered by limited liability insurance and apply standard trading conditions and procedures, whereas non-members might not

Express parcel international courier services
Express parcel and couriers will normally provide a complete door to door service for an all inclusive price, excluding any applicable duties and taxes. Although some providers offer a similar service for larger consignments, most providers focus on smaller consignments of 30kg or less.
In recent years, in recognition of the demand for such services, international airlines have developed similar express services available through freight forwarders.

Perishable consignments
More information on the transport perishable consignments such as food is avalable from the Food Standards Agency website:

Air freight packaging
As with all modes of transport, air freight is subject to rigorous handling processes en route. Indeed it is estimated that during a typical international transit a consignment can be loaded and reloaded up to 60 times, meaning that quality packaging is essential. As such, when packaging your consignment it is important to consider the following:
•    Ensure that the outer packaging is sufficient to withstand other consignments being stacked on top of it
•    Stabilise the consignment within the packaging using materials such as bubble wrap of polystyrene chips
•    Consolidate smaller consignments into a single larger package to reduce the stress on individual smaller consignments, as well as avoiding smaller packages getting lost in transit.
•    Check the restrictions that your destination country may have on the use of certain packaging materials, particularly with respect to wooden packaging materials

Air freight security
All air freight consignments need to conform with government regulated security requirements, which in the UK are regulated by the Aviation and Maritime Security Act 1990. This means that air freight consignments must either originate from a Department for Transport (DfT) accredited consignor or be screened prior to loading.
To become an accredited consignor your business will need to be accredited by a DfT approved inspector. Although it isn’t mandatory, once accredited your consignments will be regarded as known cargo which is not normally subject to other security checks prior to loading.

Airfreight industry regulations
Although most products can be imported and exported to and from the UK without a licence, certain items are restricted. For more information on products which require a licence and the regulations you need to comply with, visit the Department for Business, Innovation & Skills (BIS) website:

Hazardous goods
If you are moving hazardous goods, you need to ensure that they are packaged, labelled and certificated in compliance with the International Air Transport Association (IATA) Dangerous Goods Regulations. Such goods when being moved to or from an airport need to also comply with the regulations for the transport of dangerous goods by road. For more information visit the IATA website:

Documentation
For customs clearance you need to provide a commercial invoice which details the description, quantity and value of the goods. This should be attached to the air waybill and forwarded to the airport of arrival.

Air waybills
The air waybill acts as a document of carriage, providing evidence of a contract for carriage between the exporter and the airline, as well as proof of receipt of the goods by the airline. Unlike an ocean Bill of Lading, an air waybill isn’t a document of title to the goods.

Other paperwork
Other standard paperwork includes:
•    Standard Shipping Note (SSN)
•    Certificate of Origin – required for certain imports
•    Export Cargo Shipping Instruction (ECSI) – for when using a freight forwarder or carrier
•    Single Administrative Document (SAD) or form C88

Air freight insurance
As airlines and freight forwarders operate under limited liability conditions, meaning that you’re unlikely to receive full compensation if your goods are lost or damaged, it is imperative that you have adequate insurance to cover the full value of the consignment, as well as any applicable freight costs.
Normally however insurance won’t extend to protecting consequential loss, for example when a consignment is delayed en route incurring a financial loss. Check with your insurers prior to shipping your goods to see whether you need this type of cover.
For further information on cargo insurance visit the SITPRO website:
Further sources of information:
HMRC National Advice Service Enquiry Line
0845 010 9000
National Export System Helpline
029 2038 6254
The British International Freight Association
Department for Transport
0300 330 3000
SITPRO website
020 7215 8150 Airfreight
Airfreight Transport