1.

1 Using Air Freight

1.2 Introduction

At the end of this lecture, participants will be able to:

 Identify the roles played by each of the actors

involved in air freight operations;

 Choose appropriate packing options based on cargo

needs; and

 Identify the responsibilities of exporters in terms of

documentation, insurance and activities when it
comes to air freight.

1.3 Airfreight Infrastructure and Services

1.4 Answer the question

THE HIGHEST NUMBER OF MOVEMENTS OF CARGO IN

THE WORLD ARE MADE THROUGH AIR FREIGHT.

IS THIS STATEMENT TRUE OR FALSE?

 Correct Choice

X TRUE

FALSE

Feedback:

This is true.

Although air freight lags far behind sea freight in terms of

cargo volume transported, it is responsible for the largest
movements of cargo in the world. In fact, an average
aircraft is capable of transporting at least 20 tons of cargo
per flight, which can average up to 5,000 separate
packages. For a busy airport, this means at least half a
million packages transported each day.

1.5 Introduction to air freight

Before the 20th century, our world was a larger place. A

trip from Colombo to Sydney could take months! Today,
however, the same journey - as well as most any other
journeys - can be accomplished in less than a day by
plane.

It did not take long before the important role which

airplanes could play in transporting not just people, but
also large amounts of cargo, was recognized.
Unfortunately, however, air freight still remains
prohibitively expensive when compared to sea freight. As
such, it is mostly used to transport high-value goods for
which customers are willing to pay a premium for quick
delivery, or perishable goods which must get to market in
a short amount of time to still be acceptable to
consumers. As such, although air freight today transports
less than 1% of global cargo tonnage, it is responsible for
53% of the value of all goods shipped.

Having a safe, efficient, sustainable, and cost-effective air

freight industry supports both a country’s growing
economy and its exporters. Maintaining such an industry
requires long-term planning in terms of airport
infrastructure, supply chain visibility, support services and
the mapping of key air freight routes.

1.6 Advantages and disadvantages of air freight

Air freight is useful to deliver fragile or perishable goods

that are not bulky and have short lead times. The
advantages and disadvantages of using air freight are as
follows:

Advantages

Fast delivery, usually between 24 and 48 hours

The customer is not kept waiting

Reduced lead time for the supplier

Improved service levels

Disadvantages

Possible flight delays and/or cancellations

Customs and excise restrictions

High cost

1.7 Types of aircraft networks

The world’s air cargo delivery system is made up of two

types of aircraft networks:

Passenger network - In this network, passengers are

carried in an aircraft’s cabin, while cargo occupies space
not needed by baggage or mail in the belly of the aircraft.
This is why such cargo is nicknamed “belly cargo”. Flights
on the passenger network are routed and scheduled for
the convenience of passengers. While passenger airlines
are generally willing to sell otherwise unused space, they
often do not offer any accompanying ground operations
such as pickup, delivery and loading of the belly
containers. Instead, freight forwarders often fulfil these
functions.

Cargo network - In this network, aircraft only carry cargo.

These dedicated cargo or “all-cargo” aircraft come in all
sizes from small, propeller-driven aircraft to giant
modified Boeing 747s. These aircraft generally fly at night
and are scheduled for the convenience of shippers.
Although the cargo network is less extensive than the
passenger network, it has grown over the years and is
gaining in importance.

1.8 Actors involved in the air freight industry

There are many actors involved in the air freight industry.

Although exporters are likely to only have direct contact
with one or two of these, it is nonetheless helpful to
understand who they are, what they do, and how they
work together.

Actors involved in the air freight industry include:

1. The airline carrier

2. The freight forwarder

3. The consolidating warehouse

4. The export airport

5. The airline ground handling agent

6. The overseas freight forwarder

7. The overseas airport

8. The overseas Customs bonded warehouse

9. The destination agent

10 The overseas customs broker

1.9 The role of the freight forwarder

The main contact for exporters is the freight forwarder. It

is the freight forwarder who will make most of the
arrangements on the exporter’s behalf, working with
other domestic and international organizations involved
in air transport, such as the International Air Transport
Association (IATA), the trade association for the world’s
airlines , and which represents over 275 airlines,
accounting 83% of total air traffic.

In fact, when it comes to transporting cargo by air, freight

forwarders are usually IATA Cargo Agents, which are
freight forwarders registered with IATA to act on behalf
of an appointing airline. As regular, key customers of
airlines all around the world, IATA Cargo Agents are paid
a commission by IATA-affiliated airlines to perform
functions such as:

1. assisting shippers (e.g. exporters) with shipping

information;

2. providing facilities capable of receiving cargo

from shippers;

3. preparing airline documentation;

4. ensuring compliance with imports/exports

procedures;

5. arranging insurance for shippers; and

6. arranging for the transport, booking and tracking

of shipments.

Note: A freight forwarder may also be a consolidator - a

freight forwarding agency specializing in air consolidation
(also called “groupage”). Exporters should call upon a
consolidator if they are planning to ship their air cargo
through bulk or LCL means. The services which they offer
include the delivery of bulk cargo to airlines, the loading
of cargo into air unit load devices (ULDs), and the tracking
of shipments.

1.10 Answer the question

ARE THE FOLLOWING REQUIREMENTS BUYER, SHIPPING

OR IMPORT COUNTRY REQUIREMENTS?

DESCRIPTION STAKEHOLDER

This is a freight Consolidator

forwarding agency that
specializes in air cargo
groupage for bulk or LCL
air freight.

The main actors in Freight forwarders

handling air freight
internationally.

The companies Airline carriers

responsible for
maintaining the
passenger and cargo air
networks. They contract
freight forwarders to
ship air cargo
internationally.

1.11 Packaging Options for Air freight Movement

 1.12 Answer the question

IS THE AIR FREIGHT PALLET AND CONTAINER SYSTEM A

PRACTICAL WAY TO SHIP CARGO BY AIR?

SELECT ONE OF THE ANSWERS BELOW

Correct Choice

X YES

NO

Feedback:

Yes.

There are many reasons for which air freight

pallets/containers are a practical method of shipping
cargo by air. Not only do they minimize the damage to
cargo, they are also cost-effective, protect perishable
goods, and can reach any market quickly.

1.13 Unit load devices in air freight

When it comes to air freight, cargo is generally held in

what is referred to as “unit load devices.” A unit load
device, or ULD, is a single pallet or container used to load
luggage, freight, or mail on wide-body aircraft and
specific narrow-body aircraft. Using ULDs allows large
quantities of cargo to be bundled into individual “units”,
which can then be accounted for in a systematic manner,
thus saving ground crews time and effort, and helping to
prevent delayed flights. Each ULD can be identified and
tracked by its ULD number. Moreover, each ULD also has
its own packing list (called “manifest”) which allows its
contents to be tracked as well.

For standard passenger flights, the height of a ULD is

limited to a maximum of 163 cm. However, there are
cargo flights which allow ULD heights of up to 318 cm.

ULDs usually come in two forms:

Containers: Also known as “cans” and “pods”, these are

closed containers made of aluminium or a combination of
aluminium (for the frame) and polycarbonate Lexan (for
the walls), which may also have built-in refrigeration
units. They protect cargo against damage and prevent
unauthorized access to the cargo.

Pallets: These are rugged sheets of aluminium with rims

designed to lock onto cargo net lugs. The cargo is placed
on these sheets and secured by a net, which is attached
to the pallet’s rim. They are generally cheaper to use than
containers, are easily stackable and can be used for
oversized cargo difficult to fit into containers.

Aircraft loads can consist of containers, pallets, or a mix

of ULD types, depending on requirements.

Types and dimensions of ULDs

Although the exact weight and dimensions of ULDs vary

depending on their manufacturer, there are a number of
standardized container and pallet types that are widely
used throughout the world.

Click here for a comprehensive look at the types,

dimensions, and other specifications of the ULDs
currently in use for air freight.

1.14 Container standardization

As mentioned in previous lectures, break bulk consists of

non-containerized cargo, usually transported in bags,
boxes, crates, drums, barrels, or ULD pallets.

Sri Lankan Cargo Services operates one medium-sized

freighter aircraft for break bulk - the MD82F - that has a
payload of approximately 18 tonnes and has the capacity
to carry out-sized cargo, livestock, perishables and
dangerous goods. Currently, its has scheduled routes to
India, Pakistan and Bangladesh, thus connecting Sri Lanka
to important air hubs linking the country to markets in
the Far East, Middle East and Europe.

A special charter system can be employed for any other

break bulk cargo whose transportation cannot be fitted
into the MD82F’s scheduled routes or into a standard
passenger aircraft flying from one of the country’s
airports. However, as local infrastructure develops,
additional and larger aircraft are expected to begin more
frequent cargo routes to and from Sri Lanka, thus
gradually easing the scheduling and space burdens on
break bulk air freight.

1.15 Managing air freight cargo

It is the responsibility of exporters to ensure that their

cargo arrives in a satisfactory condition for their buyer.
This means that ensuring adequate transport
arrangements is paramount. The most important thing is
to ensure that they accurately understand all of critical
information with regard to their air freight cargo,
including:

 Cargo origin and destinations

 Transit times and routing;

 Special requirements (e.g., temp control, etc.);

 Cargo contents (e.g. the product); and

 Cargo volume.

Once an exporter is confident that they grasp all of this

information, they should inform their freight forwarder of
it. The freight forwarder then guides the exporter through
the process of choosing a logistics service and provides
information on the precise packing requirements. For
instance, freight forwarders can provide advice on
whether Express (1-2 days, for urgent cargo), Standard (3-
5 days), or Flexible choice/Economy (5-7 days) transport
is best to maximize cost effectiveness, special services,
capacity, or speed needs.

Tips on air freighting successfully:

1. Understand your product and source suitable

packaging for it - it will save you both money and
space during transport. Using ULD containers for
air freight is often a good idea, as they have a
number of advantages in terms of their
convenience, cost, cargo security, and the ability
to control perishable cargo more effectively.
Normally, small packages are most suitable for
ULD packing.

2. Taking a full ULD container requires packing

wisely - use dunnage (packing materials such as
wood shavings or bubble wrap to keep products
in place) or lashing (such as ropes to secure
products) if needed.

3. Be careful with the weight distribution, mixing of

cargo (compatibility), weight restrictions, and
temperature requirements of products.

4. Use a packaging company that can retain the

integrity of your product and, if required, offer
data-logging to allow your product to be tracked
up to its destination point.

5. Understand the quarantine issues and laws, both

in your home country and in your product’s
country of destination.

6. Have all of your paperwork in order before the

“uplift” of the product by the airline takes place.

7. Use a freight forwarder that is knowledgeable

and experienced in the type of product that you
wish to export.

8. If required by your schedule, use a Freight

 Forwarder that is available for early morning and
late night cargo deliveries and flights.

9. Understand the air routes that your cargo will

take to ensure that time-sensitive goods are
moved in the most efficient manner possible.

10. For perishable goods, remember that there are

no temperature control systems on planes. As
such, you and your freight forwarder will have to
source cooling materials, such as dry ice. Keep in
mind that your cooling materials will need to last
for the entire journey: this means until your
goods have been accepted and signed for by the
receiver in the country of destination.

11. Make sure the receiver of the goods is well

aware of the flight details and ensure that there
will be someone available at the end destination
to take the goods when they arrive. Air freight
generally cannot linger in an airport, but must be
moved off-premises fairly quickly.

1.16 International security compliance

Many large international airports, handle hundreds of

thousands of metric tonnes of cargo annually. Such a
large amount of tonnage means that adequate security
measures have to be in place to ensure the safety, not
just of the cargo being transported, but also of the
personnel handling it.

The International Civil Aviation Organization (ICAO) has

adopted stringent air cargo security standards as part of
its ongoing efforts to enhance the overall security of air
transport operations worldwide. These measures
emphasize extensive screening of cargo, mail and other
goods prior to placing them on board aircraft, as well as
better protection of cargo from unauthorized
interference from the point at which security controls are
applied, and until the aircraft’s departure. These include
air cargo security, screening technologies to detect
prohibited articles, stringent application of international
standards, maintaining security information sharing and,
where necessary, providing capacity-building assistance
to countries in need.

Restricted goods for air freight

Some goods, such as flammable liquids, corrosives

substances, and gas cylinders, pose a risk to the safety of
aircraft and are not allowed on board, either as hand
baggage, checked luggage, or even cargo. These goods
are known as “restricted goods”. Exporters must ensure
that they do not pack any of these restricted goods into
their cargo. To do so, we recommend that exporters
speak with their freight forwarder or the airline carrying
their cargo to obtain a detailed list of restricted goods.

Regulators managing the security process for Sri Lankan

air freight:

1. International Civil Aviation Organization (ICAO) -

Founded in 1947 under the umbrella of United
Nation Organization (UNO), ICAO promotes
development of safe and secure international air
transport, addresses the need of consumers, and
promotes healthy competition.

2. International Air Transport Association (IATA) -

IATA is a voluntary non-political industry
association for airlines to facilitate international
air transport. It aims to promote safe, regular
and economical air transport, and provide a
platform for carriers to collaborate.

1.17 Answer the question

MATCH THE FOLLOWING ADVANTAGES WITH THE

APPROPRIATE PACKING METHOD.

ARE THESE ADVANTAGES APPLICABLE TO ULD

CONTAINERS, ULD PALLETS, OR BOTH?
 Packing Method Advantages

Both Easier to load/unload on

aircraft than break bulk
cargo

ULD pallets Capable of handling

oversized cargo

ULD containers Protects cargo from

damage & prevents
unauthorized access

Feedback:

Thanks to their standardization, both ULD pallets and

containers are easier to load/unload on aircraft than
traditional break bulk cargo. The main advantage of
pallets over containers (other than their price), is that
they are able to handle oversized cargo that otherwise
would be difficult to fit into containers. Containers,
however, prevent a wide variety of damage to cargo and
prevent unauthorized access, thus improving cargo
security.

1.18 Contracting and Documentation

1.19 Answer the question

WHEN SELLING GOODS BY AIR FREIGHT, THE FREIGHT

FORWARDER IS THE SOLE AUTHORITY ON HOW THE
GOODS ARE SHIPPED.

IS THIS STATEMENT TRUE OR FALSE?

Correct Choice

TRUE

X FALSE

Feedback:

This is False.

In fact, it is very important that exporters remain fully

involved in the decision-making in terms of air freight
logistics. As the precise modalities of air freight transport
have major cost and performance implications, they can
cause difficulties and even major contractual issues with
buyers.

1.20 Using incoterms in air freight transactions

When negotiating the contract with a buyer, exporters

need to decide: Who will pay/arrange for the shipping?
Who will bear the risks of loss or damage to the goods
during transport? How will the shipping tasks, costs and
responsibilities be shared?

Introduction to Incoterms

To clarify these questions, traders often chose to

incorporate International Commercial Terms (Incoterms)
into their contracts. Incoterms are pre-defined
commercial terms published by the International
Chamber of Commerce (ICC). The Incoterm rules define
the obligations of each party of a sales contract, as well as
the transfer of liability at various stages of the
transaction. Governments, legal authorities and
practitioners worldwide accept the Incoterm rules to
interpret the most common terms used in international
trade. As such, incorporating Incoterms in a contract
helps both parties avoid the risk of different
interpretation in different countries.

The latest (2010) edition of the Incoterm rules consists of

11 rules, abbreviated by three upper case letters.

Incoterms 2010 rules quick reference chart

As you can see from the table above, different Incoterms

place the responsibilities for different aspects of the
exporting process on different parties - either the buyer
(importer) or the seller (exporter). As such, the selection
of the Incoterm which you wish to use for your contract
will have a major impact on your responsibilities. For a
more detailed list of Incoterms and a number of “Golden
Rules” to keep in mind when using them, click here.

More detailed information can be accessed under:

https://www.searates.com/reference/incoterms/

or on the ICC website: https://iccwbo.org/resources-for-

business/incoterms-rules/incoterms-rules-2010/

1.21 Documentation requirements for air freight

As with most aspects of international trade, the use of air

freight to transport goods involves the completion of
specific documents. Exporters do not fill out most of
these documents themselves: freight forwarders take
care of most of them, while the airline issues some
others.

Nonetheless, it is a good idea for exporters to understand

the documents that are involved in the export process, in
case they are ever called upon to review and/or confirm
the accuracy of any of them.

Because each country has different import regulations,

exporters must be careful to provide all proper
documentation. These documents must be precise and
accurate; even slight discrepancies or omissions may
prevent the goods from being exported, result in non-
payment or even seizure of the exporter's goods by a
foreign government’s customs. We recommend asking a
freight forwarder for assistance with all relevant
documentation. Note, however, that the exporter on
record is ultimately responsible for the accuracy of the
documents provided.

Shipping instructions: The shipping instructions are used

by exporters to provide their airline and/or freight
forwarder with the details of their goods, as well as to set
out instructions for the shipment. These instructions
should be provided soon after the initial booking, when
the airline has confirmed the date and the airplane on
which the cargo will be uplifted. Although shipping
instructions are often simply given by telephone and, as
such, are not a “document” per se, it is always a good
idea to confirm everything in writing. Note that providing
clear and precise shipping instructions is absolutely
critical. Any mistake in the shipping instructions could
lead to mistakes by the freight forwarder, which could
endanger the success of the entire shipment.

Documents handled by the freight forwarder: After the

exporter has provided the shipping instructions, the
freight forwarder will handle the shipment arrangements
on their behalf. This will include the cargo manifest,
commercial invoice, cargo arrival notice, as well as any
special declarations for particular products such as
dangerous goods and perishable items (note: dangerous
goods will also need a “Dangerous Goods Note” - DGN).

The role of Air Waybills (AWB)

Air freight shipments are covered by “Air Waybills”, which

are a receipt issued as evidence of the contract of
carriage of goods and are required for all types of cargo.
Depending on whether a ULD consists of a single
exporter’s shipment, or is rather a consolidation of the
shipment of several different exporters, exporters are
either issued with a Master Air Waybill (MAWB) by the
airline or IATA agents, or with a House Air Waybill
(HAWB) by the freight forwarder.

Other types of cargo may also require special documents

such as:

 Shipper’s Declaration of Dangerous Goods

 Commercial Invoice

 Cargo Arrival Notice/Documentation for special cargo

1.22 Determining air freight costs

The factors which affect air freight costs include

movement rates, surcharge fees, and fuel and security
charges. In fact, the air freight cost of most shipments
incorporate multiple different charges, only some of
which are controllable by exporters. The volatility of fuel
prices, together with the fact that shippers are faced with
varying levels supply and demand, makes it difficult to
know the exact costs of air freight services beforehand.

Costs for ULD containers

ULD containers are charged per unit, and not on the

actual weight or size of the cargo. Exporters who contract
for a full ULD should therefore maximize the entire space,
since they will be paying for the whole unit anyways.
Other costs besides the ULD costs include airline handling
costs, documentation fees, fuel surcharges, security fees,
freight forwarder fees and terminal fees.

Costs for ULD pallets (breakbulk)/non-ULD cargo

For ULD pallets and non-ULD cargo, costs are based on

so-called “chargeable” cargo weight. This is calculated
according to the actual weight or the volumetric weight
of the cargo (whichever is higher). Very big, but very light
cargo would cost airlines a lot of money if it was only
calculated based on its actual weight, given the amount
of space which it occupies.

The formula calculating cargo volumetric weight for

international air freight is:
Length x width x height (CM) 6,000

This gives a volumetric weight result in kilograms.

Thus, the idea of volumetric weight in air freight is that

there should be a maximum of roughly 6,000 cubic
centimetres to the kilo - 1 cubic metre would thus have a
volume charge of 167 kg. If the cargo is lighter than this,
namely, if the volumetric weight of the cargo is greater
than its actual weight, then the volumetric weight is used
to calculate the costs.

Example of shipment costing calculations:

Shipment 2: Gross weight = 850kgs Measurement of

cargo = 120cm X 160cm X 115cm = 2 boxes 75cm X
130cm X 125cm = 2 boxes Total volume = 4,416,000 +
2,437,500 =6,853,500 cubic centimetre Total volume
weight = 6,853,500 / 6,000 = 1,142.25kgs The gross
weight is 850kgs and volume weight is 1,142.25kgs.
Hence, air freight is charged on the basis of volume
weight, 1,142.25kgs. Chargeable weight is 1,142.25kgs.
Shipment 2: Gross weight = 850kgs Measurement of
cargo = 120cm X 160cm X 115cm = 2 boxes 75cm X
130cm X 125cm = 2 boxes Total volume = 4,416,000 +
2,437,500 =6,853,500 cubic centimetre Total volume
weight = 6,853,500 / 6,000 = 1,142.25kgs The gross
weight is 850kgs and volume weight is 1,142.25kgs.
Hence, air freight is charged on the basis of volume
weight, 1,142.25kgs. Chargeable weight is 1,142.25kgs.
Shipment 2: Gross weight = 850kgs Measurement of
cargo = 120cm X 160cm X 115cm = 2 boxes 75cm X
130cm X 125cm = 2 boxes Total volume = 4,416,000 +
2,437,500 =6,853,500 cubic centimetre Total volume
weight = 6,853,500 / 6,000 = 1,142.25kgs The gross
weight is 850kgs and volume weight is 1,142.25kgs.
Hence, air freight is charged on the basis of volume
weight, 1,142.25kgs. Chargeable weight is 1,142.25kgs.
1.23 Marine cargo insurance

Goods transported by air are exposed to a variety of risks

that are difficult or impossible for an exporter to control.
Such risks include damage through inappropriate
handling, theft, pilferage, pressure-related damage,
aircraft crashes, etc. Purchasing marine cargo insurance
can help exporters mitigate these risks by protecting you
from bearing the consequences of loss and damage of
your goods during transit. It also covers against risks
associated with connecting land conveyances and
transport by mail (so-called “warehouse to warehouse”
coverage).

Note that, while an exporter may choose to arrange for

their own marine cargo insurance, a freight forwarder will
usually be able to assist with this, and may even be able
to issue insurance themselves.

Types of marine cargo insurance:

The London Institute of Underwriters have defined

marine insurance cover under standard sets of clauses:
Clause A, B and C. These sets of clauses are widely
recognized and used by underwriters worldwide.

Clause A: Also known as “all risks”, Clause A covers all

physical loss or damage to the cargo from any external
cause. While it is the widest form of insurance coverage,
it also has the highest premium. There is a version of
Clause A specifically for air freight called “Clause Air”,
which specifies the aircraft involved.

Clause B: Clause B provides a more restricted form of

coverage, or partial cargo coverage, for a moderate
premium.

Clause C: Clause C is the most restrictive coverage, and

essentially only covers damage to the cargo in case of
ship malfunction, including collision, fire, explosion,
sinking, or stranding. It has the lowest premiums of the 3
types of marine cargo insurance.
1.24 Types of marine cargo insurance - continued

All 3 types of marine cargo insurance can be taken as:

 Single Transit - covers only one transit

 Open Policy - covers all transits (subject to conditions

in the policy) provided that each transit is declared
to the insurance company

 Annual Policy - covers each transit on a yearly basis

without requiring declarations for each individual
transits.

When should marine cargo insurance be taken?

Marine cargo insurance is usually voluntary, but becomes

mandatory if the contract chosen uses the Incoterms
2010. Indeed, Incoterms 2010 specify that insurance must
be provided on the basis of minimum cover (Clause C) in
accordance to the Institute Cargo Clauses, or a similar set
of clauses. Only the CIF and CIP Incoterms, however,
require sellers to provide the buyer with evidence that
more comprehensive insurance (Clauses A or B) has been
purchased.

Who is liable for marine cargo insurance?

The Incoterms used for the shipment dictate who is

responsible to provide cover for insurance on any cargo
transport. For example, Carriage and Insurance Paid to
(CIP) is an Incoterm which require the seller to pay for
freight and insurance, but transfers the risk of damage or
loss to the goods to the buyer as soon as the goods have
been delivered to the carrier.

What does marine cargo insurance not cover?

Marine cargo insurance has some exemptions to its

coverage. For example, if it is found that the goods were
not packaged properly, or if the loss or damage to the
cargo was due to the unworthiness of the craft, then
insurance will not apply.

What’s more, marine cargo insurance will not cover

delays in shipment, sales, or payments, nor will it cover
changes in the composition of the goods as a factor of
improper packaging, such as liquid evaporation.

1.25 Answer the question

A garments exporter has been asked to provide quotes

for the sale of various apparel goods to the SAARC region
(Maldives). Because this shipment is needed for the
holiday tourist trade, the importer requests that the
shipment should be done through air freight. In order to
minimize the cost and save on the time required to
consolidate the shipment, it is decided that the goods will
be exported on a ULD pallet. The suggested trading
Incoterms are the CIP terms.

WHAT TYPE OF AIR FREIGHT SERVICE SHOULD BE USED?

Correct Choice

X PASSENGER
 CARGO

Feedback:

The cargo is not very big, nor is it particularly heavy. As

such, a passenger service can be used without issue.

1.26 Answer the question

A garments exporter has been asked to provide quotes

for the sale of various apparel goods to the SAARC region
(Maldives). Because this shipment is needed for the
holiday tourist trade, the importer requests that the
shipment should be done through air freight. In order to
minimize the cost and save on the time required to
consolidate the shipment, it is decided that the goods will
be exported on a ULD pallet. The suggested trading
Incoterms are the CIP terms.

ASSUMING THAT THE AIRLINE CHARGES USD2.00 PER

KILOGRAM OF CHARGEABLE WEIGHT,
WHAT WILL THE AIR FREIGHT COST FOR THIS CARGO BE?

Correct Choice

X USD 1,900.00

USD 1,225.00

Feedback:

The correct answer is USD1,900.

As the cargo’s actual weight is greater than its volumetric

weight, the actual weight will be used for the chargeable
weight calculations.
1.27 Answer the question

A garments exporter has been asked to provide quotes

for the sale of various apparel goods to the SAARC region
(Maldives). Because this shipment is needed for the
holiday tourist trade, the importer requests that the
shipment should be done through air freight. In order to
minimize the cost and save on the time required to
consolidate the shipment, it is decided that the goods will
be exported on a ULD pallet. The suggested trading
Incoterms are the CIP terms.

WHICH DOCUMENTS WILL THE GARMENTS EXPORTER

NEED TO PREPARE? SELECT ALL ANSWERS THAT APPLY.

Correct Choice

X Shipping instructions

X Commercial invoice

X Customs declaration

X Packing list

Air Waybill

Cargo manifest

Feedback:

The exporter needs to prepare the shipping instructions,

the commercial invoice, the customs declaration (CusDec)
and a packing list. The Air Waybill and the cargo manifest
will be handled by the freight forwarder.

1.28 Answer the question

A garments exporter has been asked to provide quotes

for the sale of various apparel goods to the SAARC region
(Maldives). Because this shipment is needed for the
holiday tourist trade, the importer requests that the
shipment should be done through air freight. In order to
minimize the cost and save on the time required to
consolidate the shipment, it is decided that the goods will
be exported on a ULD pallet. The suggested trading
Incoterms are the CIP terms.

WHICH SERVICES ARE THE RESPONSIBILITY OF THE

GARMENTS EXPORTER? SELECT ONE ANSWER.

Correct Choice

Arranging transport and booking with the

airline

Pickup and deliver the goods to the airline

X Arrange marine cargo insurance

Feedback:

Since the CIP Incoterms are used, the garments marine

cargo insurance is the responsibility of the exporter.
However, in actuality, the freight forwarder will often
arrange this insurance on behalf of the exporter. In
addition, booking the flight with the airline and picking up
and delivering the goods to the airline is also the
responsibility of the freight forwarder.

1.29 Key Points

Remember:

 There are a number of different actors involved with

air freight activities. For exporters, the most
important of these is the freight forwarder, who is
the main point of contact responsible for booking
transport shipments, arranging marine cargo
insurance, ferrying goods to and from warehouses,
and successfully escorting goods through customs.

 Shipments must be properly packed to ensure

damage-free transportation with ordinary care in
handling. Standard packing uses unit load devices
(ULDs), which are pallets or containers used to load
luggage, freight, and mail. For non-standard packing,
non-ULD break bulk air freight can also be used.
Special transport by air that requires complex freight
 services such as for medicines and luxury goods is
also available for air freighted shipments at premium
prices.

 Exporters must carefully consider what contracting

options they have available, as well as which services
to engage (and with whom), as well as provide
complete documentation based on their air freight
considerations. Engaging a reputable freight
forwarder allows exporters to take advantage of their
expertise to make cost-effective contracting
decisions and provide advice on documentation
requirements.

1.31 Thank you for completing the lecture