Chargeable weight ratios - Freights

Chargeable weight ratios

You receive a call from one of your established customers saying they’ve received an order for a delivery to China and being their main transport provider on road transport around Europe they expect you to have the answers and be able to help.
You’re left with the difficult decision, either you say you have no experience in ocean and air freight leaving your customer to contact other transport providers. This in a world of multi modal forwarders leaves you open for a future attack on the business you already carry, which in the cut throat business of road is likely to leave you at best reduced margins and at worst a loss of business.

Your other option is to insist that it’s no problem which may seem daunting if you have no experience in this area but you may quickly find that adding these services to those you already arrange can not only be profitable but can also strengthen ties with customers as you will quickly be able to offer your organisation as a “one stop shop”.
As with all modes of transport there are nuances of each method which need to be appreciated quickly to prevent costly mistakes being made. Perhaps the most fundamental of these are the chargeable weight ratios which are used. For ocean freight this is 1cbm = 1000kgs and for air freight 1 cbm = 167 kgs and from these you can quickly determine (if speed is not important) the cheapest method of shipping. Of course in many cases this is likely to be ocean freight but if the order is for just one or two cartons it can potentially be just as cheap to send by air freight or even courier (although they use a whole manner of charging ratios so you need to check carefully for pricing if you select this channel).
Also important to consider are the transit times and lead times to both shipping and delivery on arrival. You will quite often see transit times quoted on ocean Shipments of for example 20 days to Yantian (ex UK). This is merely the port to port transit time and for shipments being consolidated into containers can easily add 7 days at origin for container stuffing and an equivalent amount at destination for unpacking. Airfreight too will take longer than the true flying time and in reality although much quicker most destinations can take 2 or 3 days if moving on a direct service or up to 7 days if moving indirect.

The other key aspects to consider on air and sea shipments are the packing specification of goods and the Customs formalities at both origin and destination (subject to the INCO terms used). Whilst the onus in both these points is ultimately with the Shipper and Consignee as with all modes of transport any issue can quickly become the transport providers problem (as the booking party). Storage costs can be extremely penal so ensuring (as best as you can) that all documents and shipment is packed correctly for shipping is essential to avoid delays and disputed costs further down the line.

From just these few basic points you may well be thinking what is the point and is it really worth it? Despite the earlier mentioned potential of protecting business it’s also certainly valuable to mention that both ocean and air shipments remain more profitable then there normal road freight counterparts. The turnover and profit can quickly make significant improvements in your balance sheet. Also in a world with rapidly emerging markets such as South America and the Indian Subcontinent and more established ones like China and the USA it’s increasingly likely that these areas will see continued growth in the number of shipments being arranged and the opportunities this provides.
Once you’ve taken the decision to add Air and Ocean services to your customers you then have the next decision of choosing how and where to book, how ocean bills and airway bills of lading should be produced and how you monitor and track the progress of these shipments.



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