Air freight provides a fast and reliable way to ship goods internationally, but the costs of such a service may fluctuate from time to time. This can cause business owners to be unsure of how to predict and manage their expenses.
This guide, brought to you by Apollo Logistics, covers the key elements influencing air freight costs and offers actionable insights for businesses looking to manage these expenses.
Understanding Air Freight Rates
The weight and dimensions of the item you are shipping have the biggest impact on the cost of your air freight. Airlines calculate fees based on the cargo’s weight and the space it takes up in the aircraft. This is where the concept of chargeable weight comes into play.
Chargeable weight is determined by comparing the shipment’s actual weight and its volumetric weight (also known as dimensional weight). Volumetric weight takes into account the size of the package and is calculated using the standard formula:
Length (cm) x Width (cm) x Height (cm) / 6000
The airline will charge based on whichever of the two weights —actual or volumetric—is higher. This ensures that large but lightweight shipments, such as bulky packaging, are charged fairly for the space they take up.
Shipment Characteristics
The characteristics of the shipment itself should be taken into account when estimating the price of a shipment:
- Weight and size: The weight and size of your shipment directly impact air freight costs. Larger or heavier shipments will naturally incur higher fees, as airlines charge based on the space taken up and the overall weight of the cargo. Even lightweight but bulky items, like furniture or oversized packages, can lead to higher costs due to volumetric weight calculations.
- Type of Goods: Airports or freight handlers may impose extra fees for certain cargo types, particularly those requiring special handling or documentation. For example, at Changi Airport, cold-chain shipments receive priority handling to minimise exposure to external weather conditions and ensure that temperature-sensitive goods, like pharmaceuticals or perishable foods, remain in optimal condition.
Transportation and Logistics
When it comes to transport and logistics, you have several options for how your delivery is made. The choices you make will affect both cost and delivery speed:
- Direct vs Indirect Flights: Opting for direct flights ensures faster delivery but often comes at a higher cost. On the other hand, indirect flights involving stopovers are a more cost-effective option for businesses that are less time-sensitive but still need reliable service.
- Carrier and Air Cargo Availability: The availability of air cargo services on specific routes can drive prices up or down. High-demand routes, like those from Singapore’s Changi Airport, a critical regional hub, often have higher costs due to increased demand. However, with 20 freighter airlines operating at the airport, there is significant competition, which can help businesses find more competitive pricing options depending on their shipping needs.
Market and Economic Factors
Broader market conditions and geopolitical events can have a major influence on the air freight industry. When planning your shipments, here are some key factors to keep in mind:
- Trade shocks: In recent years, geopolitical conflicts such as the Russia-Ukraine war and unrest in the Middle East have created no-fly zones. These zones force cargo planes to take longer routes, increasing fuel consumption and travel times. This increases air freight costs for businesses worldwide, as fewer goods can be carried due to the extra fuel required.
- Changes in E-Commerce: Global e-commerce continues to thrive, particularly post-pandemic, with an estimated value of $6.3 trillion in 2024. This surge has increased demand for small, frequent shipments, driven by the rise in online shopping. As more consumers turn to e-commerce for everyday goods, businesses should anticipate higher air freight costs, especially during peak shopping seasons.
Destination and Delivery
The cost of the air freight can also be influenced by where the shipment is headed and the logistical factors in getting it there efficiently. This includes:
- Distance to destination: The distance between the origin and destination significantly determines air freight costs. The farther the destination, the higher the shipping cost due to increased fuel consumption and flight times. Additionally, shipping to remote or less-frequented locations might incur extra fees due to limited flight routes and lower availability of air cargo services.
- Customs and duties: When shipping internationally from Singapore, it is essential to understand the destination country’s customs regulations. Some goods may face higher duties depending on their classification, while others may require specific documentation. While this can seem complex, Apollo Logistics provides support by handling the process from start to finish, ensuring compliance and minimising delays.
Additional Costs
In addition to the core factors that impact air freight costs, there are other fees that business owners should take into account when budgeting for their shipments:
- Insurance: Purchasing insurance is often necessary for businesses shipping high-value or fragile items. While it’s an additional cost, you can ensure that valuable shipments are protected during transit. We recommend that businesses shipping sensitive goods such as electronics and pharmaceuticals take out insurance to cover their valuable cargo.
- Storage: Storage fees may apply if your goods need to be stored at an airport before or after their flight. These fees depend on the duration and type of storage required. Temperature-sensitive cargo, such as fruits, vegetables, and pharmaceuticals, often requires cold storage, which adds to the overall costs.
- Fuel surcharges: In times of volatile air fuel prices, air freight providers often pass on surcharges to their customers. Keeping track of fuel surcharges is important when budgeting for shipping costs.
How To Calculate Your Air Freight Costs in Singapore
Here’s a straightforward guide to calculating your air freight costs in Singapore:
- Find the chargeable weight: First, determine the volumetric weight of your shipment using the formula: Length (cm) x Width (cm) x Height (cm) / 6000. Compare this to the actual weight, as airlines will charge based on whichever is higher.
- Get the rate per kilogram: Next, contact your logistics provider to find the rate per kilogram for the route and service type you use.
- Add surcharges: Remember also to consider additional charges that may be added, such as fuel surcharges, handling fees, and customs duties.
- Seasonal and market demand: It is recommended to plan ahead when it comes to air freight shipments, especially during peak seasons like holidays or major sales events. During these times, air freight costs tend to rise due to increased demand and limited cargo space.
- Dangerous or hazardous cargo: If the cargo falls within the dangerous or hazardous class cargo, the air freight rates will be higher. Proper DG (dangerous goods) packing must be done to prevent the leakage of chemicals or other content within the cargo.
These costs can be difficult to manage, but partnering with Apollo Logistics simplifies the process. We offer custom solutions tailored to your needs, helping you navigate these complex pricing factors while ensuring your shipments arrive on time and are delivered within budget.
Partner With Apollo Logistics For Your Air Freight Needs!
Contact us for a custom solution to your unique logistics needs, and let us help you build a reliable, end-to-end supply chain.