What are international air freight rates based upon?

Answer 1

Air cargo rates are based on the value of service or the cost of service. Value of service rates are demand based and consider the sensitivity of the cargo being shipped to freight rates. The less sensitive cargo is to rates, the higher the rate will be. On traffic lanes where demand is strong and plane capacity is limited, the air rates will be high and vice versa for traffic lanes where supply exceeds demand. Also, products with high prices or emergency conditions surrounding the move will be charged high rates because the freight rate is a small portion of the landed selling price.

Cost of service factors also enter into air carrier pricing of cargo. Given the limited cargo-carrying capacity of a plane, space is at a premium. The utilization of this space is related to the density of the cargo, with low-density cargo requiring more space per weight unit than high-density cargo.

Air carriers calculate the dimensional weight (dim weight) of a shipment to evaluate the weight versus space issue. Freight carriers use the greater of the actual weight or dimensional weight to calculate shipping charges. Carriers calculate international air shipments as (Length _ Width _ Height)/(Dimensional Factor). The common dimensional factor for international freight is 139 for shipments measured in inches and 5,000 for shipments measured in centimeters.

For example, an international shipment weighing 1,500 pounds with 100 cartons measuring 16 inches by 12 inches by 18 inches has a dim weight of 24.86 pounds per case (16 _ 12 _ 18/139) and a total dim weight of 2,486 pounds. Thus, the air carrier will charge the customer based on the higher dim weight of 2,486 pounds instead of the actual weight of 1,500 pounds.