International Air Freight Consolidation – In Short

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.

international air cargo consolidation

 

 

 

 

 

 

The two main categories are

  1. Own consolidation
  2. Third party consolidation

The three major modes in these two categories are

  1. Pre-paid
  2. Collect
  3. Mixed

Own Consolidation

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

Optimise

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.

Service

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

  1. Number of pieces
  2. Accurate dimensions of the pieces
  3. Accurate gross weight of each piece
  4. Packaging control : wood used? IPPC logo? Damage?
  5. Packaging control: Dangerous goods included?
  6. Packaging control: visible damage? Slits? wobbly content?
  7. Packaging control : Information: address of shipper and consignee
  8. Packaging control : labels attached? readable? waterproofed?
  9. documents : all documents checked? Latin American countries usually do not tolerate any  hand written amendments!!
  10. Insurances?
  11. Checked pricing? cost control?
  12. Checked booking?
  13. Have you chose the optimum routing?
  14. 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!!
  15. 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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Air Freight Consolidation

SUPATH
International Air Freight Consultant

Introduction

What is consolidation or what is consolidated freight? Shipments or consignments from several shippers booked under a single master air way bill goes by the name of consolidation of freight consolidation. The freight forwarders call this as consol. Shipments from each shipper travel under individual house air way bills (also called house bills). Air cargo consolidation bookings are usually for flights leaving on the weekend.  If the amount of freight expected is very large, bookings are done for the middle of the week. Such consolidations are called midweek-consol (consol is the short form for consolidation and is often used in the freight forwarding industry). Freight consolidation saves cost and helps airlines to plan freight movements.It helps businesses to grow by giving them an opportunity to move goods in a cheaper and effective way.

Loose Consolidation and ULD Consolidation

ULD means Unit Loading Device. It is the term used for air freight containers. The freight forwarder can put all the consignments of a particle consolidation into one container (ULD)  and get a so-called ULD Booking. A loose consolidation means the freight forwarder tenders to the airline all the consignments belonging one particular consolidation without a container. The airline can then decide to organise a container or fly the pieces without a container.

Apart from passenger airlines there is also a class called cargo airlines. These are companies that fly mainly cargo aircraft or only cargo aircraft. Cargolux is an example of a fully cargo airline. Cargo airlines also carry consolidated freight. They may also operate chartered flights.

What Should The Shipper do?

Simply put, define the situation based on basic principles in trade, combine them with the requirements of the freight forwarding industry.

The Steps

Consider the following questions:

  • Is your shipment urgent?
  • Is there a  very tight time frame for delivery?
  • Is your shipment meant for a stalled production line?

If your answer to any of the above questions is a YES, do NOT go for consolidation. You need to fly your consignment on a single direct air way bill and the freight forwarder has to be informed that the freight must go on a direct air way bill. For emergency freight please read my article here.

Define your freight

  • Total number of pieces: if  10 cartons are put together on one pallet, the number of pieces will be 1. Secure the cartons, number them, with numbers facing the outside. Leave room for air freight labels, which the forwarder will affix to the cargo. Mention “10 cartons on one pallet” on the Shipper’s Letter of Instructions
  • Packaging: wooden packaging? If yes, please read my article about packaging.
  • External Dimensions: always as:  Length x Width x height in cm or inches  (please mention)
  • Total Weight : Total weight of the finished cargo! (not the nett weight)
  • Incoterms: who is paying for the freight? If the consignee is paying, then he has to tell you about his choice of the freight forwarder.
  • Customs Formalities:  If an export declaration is needed, finish it. Usually this is not an expensive step at all (at least in Germany it is not) and harping on the terms of sale being ex works (EXW, named place) will only cause delay.
  • Incoterms: use them correctly. Simply stating  FCA will create a situation for the freight forwarder to ask you what the complete terms are. You need to complete the term by saying FCA,named place. If you want to deliver the goods directly to the customs door without paying the duties (or the customs clearance), state the terms as DAP,named place (the term DDU does not exist anymore). Air cargo and sea cargo have their respective terms but a few tend to be used for both.
  • In the SLI (Shipper’s Letter of Instructions) please mention ALL the details (Shipper, Consignee, dimensions, weight, pick up time frame, contact numbers of the consignee etc)

The Despatch

  • Advise the freight forwarder, one day in advance, if possible, to pick up the air cargo.
  • E-Mail ALL the documents to the freight forwarder. Avoid faxing! Think of the environment
  • The freight forwarder will message you the flight booking. This will include
  • The HAWB (House Air Way Bill. also called House Bill or HB)
  • The MAWB (Master Air Way Bill)
  • The Flight Numbers followed by the date

A consolidation will consist of several air cargo shipments (consignments) booked under a single master way bill. The individual shipments will have their own house way bills. Each forwarder has his own way of numbering. There is no international standard. However the master air way bill numbers are all in the same form. The way bill number begins with a three digit number followed one with eight digits. The first three numbers denote the airline and the last number of the way bill is called a check digit.

Send an email with all the booking details to your consignee

Send excellent electronic copies of all your documents to your client

Co-ordination

Freight forwarders move hundreds of pieces and consignment daily. Consolidation is only one of the various forms of methods they use. A freight forwarder will have several consolidations to look after and that means managing a huge amount of paperwork, bookings, checking and documentation for various purposes. Hence, keeping an eye on your consignment is a step, which you cannot and should not avoid.

Learn to check the freight using the internet. A separate article will show you how to do this.

 

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you can check the articles here on air freight that also mention consolidation

References

Air cargo – Wikipedia, the free encyclopedia

Air Cargo is any property carried or to be carried in an aircraft. Air cargo comprises air freight, air express and airmail. Contents. [hide]. 1 Aircraft types; 2 History.

Cargo airline – Wikipedia, the free encyclopedia

Cargo airlines (or airfreight carriers, and derivatives of these names) are airlines dedicated to the transport of cargo by air. Some cargo airlines are divisions or …

International Air Freight Forwarding – FedEx Trade Networks

FedEx Trade Networks offers international air freight forwarding services connecting major global markets – inbound and outbound, intercontinental, and …

Emergency Freight


SUPATH
International Air Freight Consultant

Introduction

Air freight offers the best service for a fast-moving world and is often the first choice when it comes to an emergency. Emergency Freight can be anything from machine parts,  blood bags or even organs for transplantation, to vital supplies for a fast moving industry project moving . Generally speaking, there is almost no limitation to transporting freight, for example  large vehicles and even helicopters.

The most critical element in  emergency transport is unbroken co-ordination

 

A concrete Example

Situation

My customer’s branch in the US sold a very high-profile and expensive machine (priced over a million dollar limit). The deed of sale was signed, the date of handing over the machine was fixed and the papers were all signed and kept ready for the final day. Three days before the deadline, my customer in Germany called me and told that a piece of freight (about 17 kg) MUST arrive in the US factory, within 48 hours. Reason being an existing part in the US machine had broken down and had to be replaced urgently with one from Germany. Until the replacement part arrived, the machine was unable to be delivered, resulting in a breach of contract.

Preparation and Execution

  • Customer finished the packaging very fast.
  • Export Papers were made ready
  • Pick up from shipper’s location: dedicated vehicle
  • Consignment was booked on Lufthansa TD FLASH service
  • I arranged for a “wheels-up-clearance” in the US along with dedicated transport
  • Bond for clearance already arranged
  • Air Way Bill printed before arrival of  the driver
  • Airline informed of freight arriving
  • Final Export Clearance executed
  • Air freight agent in the US notified. All the documents sent by email to help prepare the customs entry
  • Freight delivered to airline
  • Shipper is kept informed of progress
  • 36 hours later the customer in the US signs off the receipt of the consignment

Defining the Requirements

  • Prioritise: Time frame, speed, costs, probable losses, probably gains
  • Services to be put in place
  • Local transport needs
  • Freight Co-ordination
  • After sales service

The air freight agent will take care of the bookings and the transport.  Consignee must arrange the import clearance. In the US: single entry bond or continuous bond! A continuous bond will take time. So you may have to use a single entry bond if you do not have a continuous bond in place.

Never use freight consolidation! Use a direct flight! Ask for a copy of the air way bill, get hold of light details. If the consignment is EXTREME HIGH PRIORITY demand Lufthansa Flash or if the priority is higher than that demand an on board courier. Expensive, but effective.A person will actually fly with the consignment and get the freight through customs and to you. Possible only for small freight, which can be carried as cabin luggage!. No dangerous goods can be transported this way.

Extremely Large Emergency Freight

Charter! Special equipment! A picture will explain what is possible. Here is the Beluga, also called Super Guppy. An Aircraft that can carry extremely large consignments.


Nose Load: Boing 747

 

Antonov 124

The Beluga. Courtesy Wiki Commons

Beluga
Super Guppy

 

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Air Freight – To Consolidate or not?



SUPATH
International Air Freight Consultant

Introduction

Almost every importer has faced the situation, mentioned in the title, and many took a decision without thinking much about the term consolidation and/or how it functions.

Economy moves fast and every company needs to keep pace with its high-speed. As technology grows, so do the demands. Especially in the field of manufacturing, the supply of goods, be it machinery or machinery parts, be it packaging parts or tools for production, everything must be available within the shortest possible time.

Understanding Air Freight Price

Many companies do not even have a warehousing system, because goods in the warehouse  are considered dead capital. These companies wish their orders to be delivered “just in time” (that is how the process is called) ,directly to the production line. This way of  managing the figures may have its positive sides. However, there are innumerable factors that cannot be ascertained in advance. Unforeseeable points are the hidden risk here and they can really hurt.

Moving goods across the continents by sea is cheap. However, the strongest argument against this mode of transportation is the time taken.Ecologically speaking sea freight is a better solution. However, many companies cannot afford to wait that long to get their orders. Economy and Ecology become conflicting factors.

The air freight price is not a merely the question of weight . The volume of the consignment will be taken into consideration. The customer is paying for the amount of room the freight takes.  If the volume is greater than the total weight, the former will be used to calculate the air freight price. Cubic meter is the unit used in calculating volumes and the way to determine this is to multiply the  length, width and the height of the goods  (meters). The result is then multiplied by 166.6666 (it is better not to round off the figure) .

Example: if your consignment of 75 Kg  measures 1.2 x 0.8 x 0.80 meters, the volume = 1.2 x 0.8 x 0.8 = 0.768 cubic meters.  0.768 x 166.666=  127.99. As per the IATA (International Air Transport Association) rules, the figure will be rounded up to the next 500 gm, resulting in 128. This is the volume weight of your consignment. Between the gross weight and the volume weight, the higher figure will be used for calculating the air freight price. Assuming the consignment had a total gross weight of 130 Kg, the price will be based on 130 Kg.

Understanding Direct Consignments

A direct consignment is one that is addressed directly to the consignee and the air freight agent (freight forwarder) forwarding the goods is not involved directly with the consignee. The company from which you bought your product becomes the consignor (also called shipper) and you are mentioned on the air way bill as the consignee.The freight is tendered to the airline, immediately after the final export customs clearance is through.  The air way bill which accompanies the consignment is called an IATA air way bill. The freight forwarder is the authorised identity entrusted with flying the cargo.  He will  tender the consignment to the airline after the final export customs clearance and his task ends there. The consignee has to find a broker to interact with the airline to get the freight cleared.

Understanding Consolidation

Consignments going to the same destination but from various shippers are booked under one master air way bill and each Shipper is provided with  a house air way bill. The freight forwarder can negotiate a better air freight rate, which will give each shipper or the consignee the opportunity go enjoy a better and cheaper price in comparison to direct consignments. The cost of the air freight is distributed over several consignments, which results in keeping the rate down.  Consolidations are usually booked to leave on the weekends. Depending on the amount of business, a freight forwarder will set up bookings for the middle of the week.

Deconsolidation

The master air way bill is almost always addressed to a freight forwarder at the airport of destination. It is his job to split the consolidated cargo into its individual units. This deconsolidation is carried out in a bonded warehouse at the airport of  arrival. Here again the handling charges at the airport is distributed over a large number of freight, thus effectively reducing individual prices. The  deconsolidation takes a bit of time and is not suitable for emergency freight.

Consolidate Or Not

Considering the above facts, one can say, if your consignment is not very urgent, a consolidation is advisable. It will save you a lot of money. However, please note, not every forwarder may fly a consolidation to the particular airport a customer has in mind.

 

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