Unlocking your profit potential and expanding your market reach can become seamless with international air cargo. The biggest advantage businesses gain when choosing international air cargo is speed and reliability. Quick and efficient means of transporting goods worldwide allow businesses to safely move their products while ensuring timely delivery and reducing inventory costs.
When shipping products from India on a global scale, you must collaborate with the cheapest international air cargo company in India to transport your goods without much expense. It will help you save significant money for your next shipment.
January 2024 had a “remarkable” 18.4% year-over-year increase in air freight demand. According to industry researcher Technavio’s Air Cargo Market Analysis, the air cargo market is expected to expand by 19.5 million tons between 2023 and 2027. For the projection period, this translates into a compound annual growth rate of 5.3%.
This article will help you gain insights into air freight services and the considerations for finding a low-budget air freight service provider.
Understanding Air Freight Services
Air freight services play a vital role in shipping goods faster. Goods are typically transported using commercial airlines, charter flights or cargo flights. Air cargo companies usually transport high-value and perishable goods worldwide.
Faster, although more expensive than sea freight, air freight services have become a popular choice for time-sensitive shipments. However, certain types of goods are not acceptable for shipping by aircraft, such as goods prohibited by law and regulations of the country of origin and destination and the ones posing a threat to the aircraft or the people.
Delivery Options in Air Freight
Listed below are some delivery options available when you send cargo by air:
1. Consolidated Air Freight
Consolidated air freight benefits shippers as these cost less. This is because, in this method, one seller is transporting the goods with the consignments of others. So, the cost of the flight is shared between the shippers. One shipment contains many halts, which minimises the cost to a great extent.
2. Direct Air Freight Service
When one shipment is directly shipped from one location to another without intermediate stops, it falls under direct air freight service. This service prioritises speed and efficiency and is a suitable option for transporting goods with shorter shelf life or that are to be delivered urgently.
3. Commercial Airline
Commercial aircraft also offer freight transport. In passenger flights, there is a cargo storage space in the belly of the airframe. This service is also known as passenger-freight combination or belly cargo service.
4. Charter Air Freight
This is the most expensive air freight service you can opt for. You can rent an entire aircraft to transport cargo from one destination to another. Opting for a charter gives you an upper hand by optimising transit times and minimising handling. So, paying more is worth it if you have high-value goods that you want to deliver urgently and do not want to consolidate with other shipments or transport on scheduled flights.
5. Cargo Airline
Cargo aircraft have larger cargo holds and are ideal for carrying freight than commercial airlines. Some of the examples of these airlines include UPS, DHL FedX, and many more.
Factors Influencing Air Freight Costs
Freight prices frequently fluctuate, and this can impact your bottom line. There are several other factors as well that influence the cost of air freight. These include the following:
1. Distance and Location
The farther your destination, the higher the cost of shipping. The reason is evident: longer transport distances mean higher fuel consumption. This means a huge expense in the form of fuel charges.
Another factor that determines the air freight price is the location. Popular routes will cost less than the routes with low competition.
Origin and destination airports also impact the cost. For instance, busy airports may charge more fees as compared to remote international hubs.
2. Flexibility and Speed
Delivery speed is a vital factor that affects air freight rates. Choosing the same-way delivery option, which is also called express delivery, will cost you more than normal or deferred delivery.
3. Freight Weight and Size
The weight and dimensions of your shipment are also key players in deciding the price of air cargo. Heavier and bulkier goods incur higher costs due to the resources needed to transport and handle them.
4. Fuel Prices
Fluctuations in oil prices directly impact air freight costs, as fuel accounts for up to 22% of airline operating costs.
5. Manpower
It is a prominent factor in determining the price of air cargo shipping. If the cargo size is vast, an extensive workforce is required to ship them safely. Simultaneously, if you choose skilled professionals to handle your valuable cargo, they will charge more, increasing the air freight rates.
6. Seasonal and Economic Factors
Seasonal and economic factors can cause a surge in shipping demand, leading to potential rate increases. In contrast, these factors may also cause a decline in the prices. Some factors that play a significant role in air freight prices include inflation, global economic trends, and currency exchange rates.
Calculating Import Duties and VAT
VAT and import duties apply to almost all international air cargo. Customs authorities impose these taxes at the airports to ensure the cost of the imported goods equals the cost of the locally produced goods. Thus, levying VAT and import duties on the cargo coming from overseas prevents unfair competition.
Now, the question is how do we calculate import duties and VAT on the cargo we want to send to another nation by air? The amount of tax you have to pay as import duty and VAT on your air freight is based on the following factors:
- Product Value
- The HS code of the product
- Description of the product
- Trade agreements
- Country of manufacture
- Country-specific rules
All this information is available on the commercial invoice or other relevant documents.
You first need to evaluate the product value on the commercial invoice to calculate import duty and VAT. Primarily, the product value is the value paid before the product is imported. Other costs that will also be added to the product value include:
- Packaging fee
- Mediation cost
- Royalties and license fees that a buyer must pay
- Transport charge
- Insurance amount
- Commissions, excluding buying
- Profits on goods resold, if any
The VAT amount is calculated by multiplying the product value (including import duties) by the VAT rate of the product, which is 0%, 5%, or 20%.
Size and Volume’s Influence on Pricing
When it comes to air freight pricing, weight, size, and volume are key factors. The bigger the shipment, the more the weight and dimension. Bulkier cargo will take up more room and consume more fuel for the aircraft, which increases the cost of such shipments. You will be charged for actual or volumetric weight, whichever is greater.
Conclusion
The improved air connectivity in India represents a key element to sustainable economic growth. The rapid construction of airports in many parts of India will allow for faster and greater volumes of cargo flows. Air freight service can be an incredible choice if you want to transport high-value items, luxury products, perishable goods, or medical supplies on an urgent basis. As it is the fastest mode of transport and accessible to most locations, it turns out to be an expensive shipping method.
Are you finding it difficult to find a cheap international air cargo service in India? Worry not, you can seek the service of Shiprocket’s CargoX. They provide businesses with international air cargo service. CargoX offers a seamless mix of operational ease and expertise. It makes cross-border B2B shipments a click away. CargoX also adheres to SLA compliance, ensuring your goods reach their destination within the desired time. They cover 100+ countries and provide tailor-made shipping plans that fall within your budget.
