International Air Freight Consolidation – A Short Explanation
This article is for those who are not conversant with the process of international air freight consolidation, or for those who are newcomers into the field and as such it will be kept as simple as possible.
Why Use Freight Consolidation?
The simplest answer to the question is saving money. On a broader view it is more than just that. Competition is stiff and ways and means need to be found to save money, reduce expenses and organise freight.
The salient points of international air freight consolidation
- Single airport of departure
- Single airport of destination
- One master air waybill
- Several house air way bills
- Both pre-paid and collect AWBs can be combined in one go
- Easy for airlines to handle and organise
- Keeps expenditure low
- Co-ordination of freight is easy
- Increases the freight forwarders’ capacity to negotiate prices
- Rate flexibility for clients
When To Use Consolidation
If you have a number of consignments going to the same destination, try to consolidate your freight. As much as possible quotations to the customers are to be based on consolidation. There may be exceptions to this: consignments being forwarded under L/C (Letter of Credit) form one of these. The banks might put up a condition demanding direct air freight. Such a condition has to be adhered to.
Dangerous goods (as per the IATA regulations) may not be transported under consolidation. Refer the actual DGR manual for any amendments.
It is especially advisable to use consolidation if you have a number of consignments falling under the “minimum” category, going to the same destination. This helps you to offer competent rates to your clients, reduce your own expenditure and co-ordination time
Organisation is the alpha and omega of any freight forwarding mode. Especially when it comes to air freight, or better still, to international air freight, organisation gets the highest priority. Time management is very important in a fast-moving mode such as air freight and consolidation offers the best possibility to manage time to the optimum. International air freight consolidation is the key concept that covers organisation and time management under one roof.
International Air Freight Consolidation Using ULDs
Several small-sized consignments of minimum weight can be a used as a reason for using ULD (Unit Load Device consolidation). A separate article will discuss this topic. General information for the ULDs are available on this site. Please refer to them for configuration, load limits etc for various ULDs.
The Various Modes In Consolidation
Three major modes of consolidation are available in to main categories. This applies to ULD consolidation, as well.
The two main categories are
- Own consolidation
- Third party consolidation
The three major modes in these two categories are
You consolidate your freight under your own master AWB. You have your own stock of AWB numbers and you process the whole consolidation. You may use third-party freight, as well.
If no third-party AWBs are included, all the house AWBs originate from your company and are processed at one point. If you are including third-party freight (freight from other forwarders) then you are physically transporting the third-party freight and the House AWBs are processed by that party and handed over to you for inclusion in your master AWB. The airline will invoice you, as the contract is between you and the airline. You will have to raise your own invoice on the third-party giving you freight.
Third Party Consolidation
You may use another freight forwarder to transport your own cargo thus saving money. As explained above, the partner forwarder who carries your freight on his own consolidation will raise his invoice on you. You will not receive any invoice from the airline as you are not a contracting partner.
Pre-Paid, Collect And Mixed
The three major modes are easy to understand. You may include all pre-paid consignment under one master AWB and execute a consolidation, or you put together all the collect consignments (consignments paid for by the consignee) under one MAWB and fly it out. The last category is a combination of pre-paid and collect consignments.
There is one difficulty when it comes to collect consignments. Your MAWB is addressed to one air cargo agent (deconsolidator). If any part of the charges is being paid for by the consignee, the air cargo agent must have the authorisation tim import on behalf of that consignee. If this is not the case, the agent will have to hand over the papers and the rights to the consignment to the broker appointed by the consignee against a charge.
In the field of international air freight consolidation, freight agents have agreements (at times even exclusive agreements). These topics will not be discussed here. as it will make the narrative complicated. Another article will be dedicated to this theme.
Costing, Invoicing etc
- Keep in mind the following points
- Your total expected amount of freight for your MAWB
- Your buying rate from the airline and the base minimum weight requirement put forward by the airline
- Your total expenditure (approximate)
- Your selling rate should be able to cover the expenditure and also provide you a profit
- The higher the freight weight, the lower the rate (keep an eye on the volume)
- If you are getting voluminous freight, you need high-dense cargo to capture and contain the volume
- You need to have a realistic assessment of the freight you are going to get
While calculating your prices, keep in mind that the figures should tally at the end. It is quite possible that on some consignments a loss might occur, however, there will be a total profit that will cover the whole consolidation
Do you have a large number of small consignments? If you do, then consider using a ULD consolidation. If the amount of freight is large enough but not too large use an LD3 container.
Some consignments may have a larger volume. Combine them using shipments that are high-dense (1:3 ). This will be a topic for another article
Optimise your pricing. Simply increasing prices in order to raise profits will not work. Try to spread the costs. Combine pick up on a straight route.
Prices may dominate the market but that does not mean services don’t count. Using a cheap airline might cost you your business. A consignment in the minimum range taking 10 days to reach the destination is acceptible to nobody.
Keep your customer updated. Communicate with your agent abroad. Force feedbacks. Send reminders. Learn about customs formalities. Keep a file with information on various topics. Your client may not have time to wait for information. Have it on hand. If you do not have it on hand, explain that you will get it as soon as possible
Keep your promises! Be punctual with information. International air freight consolidation is not only about consolidating freight. It is also about consolidating relationships.
International Air Freight Consolidation – Organising Freight
- Number of pieces
- Accurate dimensions of the pieces
- Accurate gross weight of each piece
- Packaging control : wood used? IPPC logo? Damage?
- Packaging control: Dangerous goods included?
- Packaging control: visible damage? Slits? wobbly content?
- Packaging control : Information: address of shipper and consignee
- Packaging control : labels attached? readable? waterproofed?
- documents : all documents checked? Latin American countries usually do not tolerate any hand written amendments!!
- Checked pricing? cost control?
- Checked booking?
- Have you chose the optimum routing?
- Country restrictions taken care of? A carton “showing” particular countries on the outside (or inside) may not be imported into the destination of your choice!!
- Checked for import restrictions? Some countries require import licences for certain products!
There are more but I cannot list them all here
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