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Reducing Air Freight Costs from China

May 02, 2024
Table of Contents

Managing air freight costs from China can be complex, but with careful planning and smart execution, it's doable. As worldwide trade grows, companies aim to improve their shipping methods and keep expenses in check. This article breaks down the key parts of understanding air freight costs from China. This includes preparing for what’s to come, choosing the right carrier, using tools and technologies to manage costs, understanding customs duties, taxes and fees, and how to negotiate effectively.

Shipping Costs from China by Air

To understand the cost of air shipping from China, it's critical to note several factors that affect the final cost. First up, the Air Freight Charge. It depends on the weight of your shipment, whether it's the actual or volumetric weight that's higher. That means the weight, volume, and destination of cargo play essential roles.

Next is the Fuel Surcharge. This depends on the changeable prices of jet fuel, forming a sizable chunk of your total expenses. It increases with the weight of your shipment, too. Then we have the Security Charge, which covers the costs for safety measures, including X-ray screenings.

Terminal Handling Charges are also crucial. These cover the costs of handling cargo at the airport. There are also Other Fees to think about. They cover customs, trucking, warehousing, and document handling, varying with your chosen freight service.

Don't forget about seasonal changes too. For example, during peak periods, such as Christmas, the cost can jump due to the General Rate Increase (GRI), and higher demand. To figure out the chargeable weight, you multiply length x Width x Height (in cm)/6000.

It's important to highlight that the method used to calculate the Chargeable Weight for air freight costs, as mentioned (length x width x height in cm / 6000), specifically applies to shipments where volumetric weight exceeds actual weight. This calculation, based on the International Air Transport Association (IATA) formula, plays a pivotal role in determining your freight cost. Knowing this, shippers can consider optimizing their packaging to reduce volumetric weight, potentially leading to significant savings, especially for lightweight but bulky items. This adjustment could be a critical cost-saving strategy in air shipping logistics.

For certain types of shipments, the Specific Commodity Rate (SCR) offers a discounted rate. Meanwhile, Dangerous Goods handling needs an extra charge for special care. Getting insurance is another expense, but this is highly recommended to protect your goods, and the cost will depend on their value and the insurance plan you choose.

Grow Your Global Reach with Abl-Logistics

Don't let the complexities of air freight shipping from China overwhelm you. With Abl-Logistics, your premier China Freight Forwarder, we'll handle all the important details for you. Offering cost-effective and reliable solutions, we ensure your goods are transported with utmost efficiency. From handling air freight and sea freight to providing warehousing, repacking, and more - we've got your logistics needs covered. Get in touch for a quote and let us ease your shipping process.

Lastly, keep in mind the Customs Duties and Taxes at the destination of your shipment. They can significantly affect your total freight cost, depending on the type and value of goods. When you understand all these parts, you can make better decisions about your air freight from China and possibly even lower your shipping costs.

Plan and Get Ready

If you're shipping goods through the air from China, a solid plan can save you cash. First, know everything about your package. This includes the weight and size, and also the type of stuff you're sending. These details will affect how it's packed and what kind of plane is used. These things could also change the cost. Keep in mind, if you're sending fragile or risky items, this could add extra fees.

Next, it's important to understand the details of trading, also called Incoterms. Being familiar with these rules lets you know who's in charge of what, and what fees there may be. This knowledge allows you to pick the best agreements like EXW or DDP. Also, think about the different paths your shipment could follow and how long it might take. Try to find the cheapest option that won't give you any headaches.

Always keep an eye on fuel prices. They can directly affect how much air freight costs. You might even find chances to save money. Take the time to get quotes from several companies. This way, you can compare prices and make sure you're aware of any extra fees.

Also, consider sending a bunch of items together. This could lower the cost of shipping large amounts. You could also try to send items during quieter times to avoid high prices. Be certain you're ready for dealing with customs. Pack your shipment carefully and get insurance to avoid surprise fees.

Using modern technology could make the process easier and might cut costs. Building strong relationships with freight forwarders and regularly checking how you're shipping things can also show you new ways to reduce costs without losing efficiency.

Choosing the Right Carrier

Picking the right carrier for your air freight from China is crucial. It heavily affects your costs and how reliable your service is. Start by checking out carriers that are known for being on time and keeping shipments safe. Look at their delivery times and how consistently they perform. This helps find the carriers you can trust. Plus, compare the rates they offer. Ask for quotes from different airlines. Factors like the size of your shipment, how often you ship, and your trade lanes will affect these rates. Doing this is key to finding the most affordable options.

Also, think about if the carrier can handle your specific needs. Make sure they can take care of your load quickly. A carrier with a wide network can also deliver your shipments faster to different areas. Consider the shipping terms they offer, too. Things like cargo insurance and shipment tracking can save you money and hassle in the long run.

Don't forget about extra services. Faster options and better tracking may cost more, but they can protect you from delays or losses. Keep in mind what other customers say about the carrier. Choose one that gets great reviews. Plus, go for carriers that care about the environment and use efficient technology. This can make your shipments run more smoothly. Finally, carriers with good relationships with customs agencies can get your shipments cleared faster. This can speed up your delivery time.

Taking the time to carefully consider these factors ensures you'll choose a carrier that's not only affordable but also meets all your shipping needs.

Cost Management Tools and Technologies

Today, we see a range of smart tools and technologies that are crucial to manage air freight costs smartly. Let's talk about modern freight management software like Magaya Cargo System and Descartes.

Freight Management Software Clarified

It's crucial to highlight that while Magaya Cargo System and Descartes are potent tools in modern freight management, their capabilities extend far beyond just ease of shipping and logistics. These platforms are also pivotal in integrating various elements of the supply chain, offering a comprehensive suite that covers warehousing, Customs compliance, and even last-mile delivery services. This integration is vital for businesses looking to optimize their operations holistically, not just in freight forwarding. Understanding the full scope of these software solutions can empower businesses to leverage them for greater operational efficiency and cost savings across the entire supply chain.

These software solutions make things easier for shipping and logistics. They offer real-time quotes and track shipments. They manage inventory and sort out documents efficiently. Also, quoting tools such as those present in Freightos and Flexport help compare freight forwarder rates, including all extra fees. This quickens the process, saving time, and offering transparency.

Then, we have supply chain visibility platforms like Project44. These grant businesses a real-time view into their shipment status and location to increase efficiency and make better decisions. Emerging technology like Artificial Intelligence and Machine Learning predict air freight prices accurately to help select cost-effective shipping periods.

Innovations like IoT devices keep a constant check on shipment conditions, reducing damage risks and associated costs. Blockchain technology makes record-keeping transparent and secure, cutting down losses from fraud or miscommunication.

Next are data analysis tools and ERP systems. These dig deep into shipping data and merge processes to reduce costs. Rate management platforms and shipment consolidation tools help in negotiating better rates and optimizing space use. Furthermore, chatbots and APIs make customer service quicker and allow different apps to work together more effectively, boosting efficiency and cutting costs.

By using these technologies, businesses can work better and understand the complex world of international shipping while keeping costs in check.

Fees and Duties in Customs

When you import goods from China via air, it's crucial to know about duties, taxes, and fees in customs. Let's start with customs duties. They are a type of tax for goods that cross borders. They protect a country's economy and its people. When calculating these duties, the value of your shipment is used. This value sums up the cost of goods, freight, and insurance (CIF). Countries may charge a fixed fee per unit or a percentage of your goods' value.

Did you know that trade agreements can lessen or even remove these duties? A good example is how the North American Free Trade Agreement affected U.S. imports. Next, let's talk about taxes. Import taxes can vary depending on the type and value of the product you're shipping. You'll also encounter value added tax (VAT) or goods and services tax (GST). These taxes are included in your final sale price. Sometimes, there are extra tariffs due to international conflicts.

Customs-related fees include payments for brokers, storage, processing, and handling. These expenses are important. They fast-track your goods through customs. Moreover, paperwork fees and freight surcharges add up and can impact your final costs. Remember, shipping costs include more than transport. You also pay for packaging, documentation, and insurance.

Understanding the regulations of your destination country can help you manage costs. Make sure your shipping documents are correct to avoid delays or fines. A customs broker can guide you through the complicated process and may help you save money. Always remember to comply fully with import regulations to reduce duties and other potential costs.

Impact on Duties and Compliance

Please note, while the North American Free Trade Agreement (NAFTA) significantly impacted duties and taxes for goods among the US, Canada, and Mexico, it has since been replaced by the United States-Mexico-Canada Agreement (USMCA) as of July 1, 2020. The USMCA continues to facilitate free trade in many sectors but introduces updated regulations and provisions. It's essential for importers to familiarize themselves with these changes to maximize benefits and ensure compliance. Always double-check the current trade agreements affecting your imports to apply the correct tariffs and understand any exemptions or reduced duties.

Negotiation Strategies

Stepping into negotiations starts with understanding the market. First, look at the current air freight rates from different carriers. This helps compare prices and see if there's room for flexibility during talks. Plus, having strong relationships with freight forwarders can open doors to better rates. It shows the importance of good business partnerships. Another idea is to use freight consolidators to boost bargaining power. They can help save costs and space.

Negotiations aren't just about price. Changing payment terms can improve cash flow. Also, promising regular business can help swing negotiations your way. Airlines often give discounts to regular customers. Being flexible with scheduling can also help. It might mean access to off-peak discounts or cheaper service options.

Make sure to get full quotes. Everything from insurance to customs fees should be clear. This helps identify what costs can be negotiated. Look into backhaul opportunities too. This can help cut costs by using carriers' return journeys. A varied carrier portfolio gives more options and strengthens your negotiation position. And if needed, talk to logistics experts. They can advise on industry trends and pricing strategies. Just remember, every negotiation is different. Stay adaptable and use these strategies to navigate air freight costs.

Air freight from China may seem complex. But proper strategies and planning can help businesses negotiate this landscape successfully. Getting to grips with planning, picking carriers, using advanced tools, understanding extra fees, and mastering negotiation tactics is a great way to manage shipping expenses. This all-round approach isn't just about saving money. It sets businesses up for long-term success in the international market. With this knowledge, companies are ready to handle the complexities of air freight from China, ensuring smoother and more cost-effective logistics operations.

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