German Air Freight Trade Scenario In Short
German air freight trade is a booming sector. Of the 15.2 million tonnes of air freight that was carried through the EU, in 2016, 4.5 million tonnes were processed through German airports. (Source: EUROSTAT ) German export is dominated by engineering goods. The first three positions are as follows (figures for April 2018). (Source: Global Edge)
- Motor vehicles and parts
- Industrial Machinery
- Electrical Machinery
Germany is home to some of the largest airports handling tonnes of freight volume everyday. The freight segments of some of these airports have seen continued positive momentum in the first quarter of 2017 (Source : The Stat Trade Times : https://www.stattimes.com/germany-ranks-high-in-trade-game-air-cargo)
Germany, an export driven market, with the main products being industrial goods and services. Germany is known for its machines, which enjoy a very high-profile on the world market. Since roughly 46.1% of the German GDP is made up of exports (goods and services) (source: World Bank ), it will be very helpful for you to know the procedures involved in exporting from Germany, if you are sourcing your goods from there. Air freight export is a highly developed mode of foreign trade and is evolving at a fast pace, adjusting to the modern developments.
Satisfaction is the most important success factor in any business. Air freight export is no exception to this rule. As a supplier of goods, you need to be able to deliver your wares on time and to do that, you need to receive your own supplies punctually. If you are not armed with the right information, it will be difficult for you to keep to your schedule.
Your broker takes care of the importing procedures on the home front. However, he is responsible for the procedures that happen after the arrival of the goods. Exporting from Germany is a straightforward process but you will save yourself a lot of trouble, if you know how that works here. You need to arm yourself with the following information. Once you roughly know the German air freight trade process, you have won half the battle.
This article concentrates on the export side of the German air freight trade. The import part is dealt with in a separate article.
VAT or no VAT?
German air freight export or rather export in general is exempted from VAT, be it air freight export or sea freight or export by land. As long as the destination is not to a member of the European Economic Country, there is no VAT applicable and many companies note it on their commercial invoices.
Civil Aviation Authority Regulation: Known or Unknown Shipper
Is the shipper a Known Shipper? If not, an x-ray screening will be necessary. That will add to the cost. There is no fixed tariff as each forwarder has his own listing. Air freight export procedures are never complete without the mandatory safety measures. There is no work around to be free from the stringent regulations in place.
Not all goods can be successfully screened by x-ray. High density goods will result in what is called “black alarm” or a “dark alarm”. The material is too dense for the x-rays to penetrate. This will result in a mandatory test called ETD (Explosive Trace Detection). This is a mandatory procedure. Read more about ETD on Aviation Security International
The German air freight export is regulated by the Civil Aviation Authority known as Luftfahrtbundesamt (LBA in short). The rules and regulations set forth by this authority are binding not only on the airlines but also on shippers, freight forwarders, warehousing facilities and transport companies.
The question you need to ask is:
Is my supplier (shipper on air waybill) a known or unknown consignor? If the shipper is a known consignor (registered with the Civil Aviation Authority) then no screening is required, If he is an “unknown consignor” (not registered as one with the Civil Aviation Authority), then a screening is mandatory. The consignment is, in the latter case, called “not secured consignment” and must undergo a screening.
If the consignment is of high density (too dense for x-ray to go through), the x-ray machine will generate, as mentioned above, an alarm called “black alarm” . In such a case the consignment has to opened and the contents will undergo explosive trace detection. Such a measure will, obviously cause delays and charges.
Air Freight Export Security Measures
German air freight trade on the export side is subject to mandatory security regulations. Generally called screening, the measures can be x-ray or ETD. The latter is done when the consignment is too dense for the x-rays to go through.
X-ray machines have limitations of weight and dimension. When a consignment is too heavy (usually more than 2200 kg or 2500 kg), ETD will need to be done. The packaging is opened for the screening and then closed.
Export Procedures before pick up
If the commercial invoice value is 1000 EUR or more an Export Declaration called ABD is a must. It is a document (PDF file) with a bar code on the top right. The document is, as a rule, NOT sent out of the country
If the invoice value is below 1000 EUR, the commercial invoice is the paper used for export and must be presented to the customs, preferably in the original, at the airport.
Remember: As a rule, Export Declaration procedure cannot be done once the freight has been picked up from the shipper’s facility! An advance electronic application is sent to the shipper’s local customs office to get the declaration. The goods, to which this document is bound, must be physically present in the shipper’s warehouse or facility. The local customs office is determined by the geographical location of the goods and not by where the exporter is located. Be it air freight export or sea freight export, an export declaration is necessary, when the value on the commercial invoice is 1000 EUR or above.
Pick up can be organised only after the Export Declaration has been done. If the commercial invoice value is below 1000 EUR, an export declaration is not necessary.
Freight forwarders have a time frame for pick up. It is usually 8 a.m to 5 p.m and the freight arrives in the warehouse usually late in the evening.
Special Regulation Iran
Although the German air freight trade is a growing sector there are a few restrictive measures due to various reasons. Exporting from Germany to Iran is governed by a special law. Even if the value is below the above mentioned amount, an Export Declaration is mandatory.
Customs Registration or EORI Number: Pre-export formality
Only companies that have a Customs Registration Number called EORI (Economic Operators’ Registration and Identification Number) number can export. It is the task of the exporter to get this registration done and there are no charges involved. If the company has not done this, the management should follow the instructions given on the website of the German customs and send a fax to the office of the registration. The transmission journal can be used as a proof of having applied. This proof is to be sent to the local customs office file submitting the application for export declaration.
Shippers are usually registered and, hence, most of the business houses will have the EORI number. Imports into Germany cannot be processed without the above number. If you are exporting to Germany, remember to make your consignee’s EORI number known to your freight forwarder or ask the shipper to inform you. If your freight forwarder’s partner in Germany is doing the customs clearance, he cannot do the processing without this number.
One most important factor you need to know, before getting the goods picked up, is about packaging. Your shipper will usually know this. If the packaging is made of wood, it is mandatory that it is made of treated wood. Make sure the shipper uses wood that carries the IPPC logo. If no wood is used this point does not arise. In air freight export mode, no openings, slits etc. are permitted in the packaging. All slits and any form of openings must be be closed (secured).
Try to keep the dimensions to a maximum of 120 x 80 x 160 cm (L x W x H in cm) for long haul flights. Short haul flights may be smaller aircraft and it is better to keep the weight to less than 150 Kg per piece and the height to a maximum of 70 cm. This is the case for small consignments.
When it comes to large machines, remember not many airlines fly a 747 freighter. MD11 is now the most popular aircraft in use and has a hight limitation of 244 cm. This includes the air freight pallet (also called ULD) under the freight! It is difficult to say anything about the width and length, but it is advisable to keep the width to less than 250 cm.
Flying: Direct or Consolidation
Direct service will have an air way bill addressed directly to you as consignee. You need to have a broker on hand, who can do a customs clearance for you.
When consolidated, your freight is forwarded under a sub way bill, called House Bill (HB) or House Air Way Bill (HAWB). Such a document will be covered by a Master Air Way Bill. The house bill will be addressed to you (the consignee) and the MAWB to the de-consolidator, who is an air freight agent at destination.
The de-consolidator has to pass on the documents (air way bill and commercial invoice and packing list if any) to your broker for customs clearance. He will enlighten you on the procedures to follow. If you are in the US, either a Single Entry Bond or a Continuous Bond is needed before any clearance can start. Your broker will help you with these formalities.