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About Export Freight charges are based on weight or measurement whichever is the higher. The rate is per pound or per unit of 250 cubic inches called the "cube rule". Careful thought should be given as to the best way to ship the goods to market. In some cases, ocean shipping is the only alternative. But, often, there are different possibilities at the most reasonable cost. In choosing the method or methods of shipment, the exporter must keep in mind: 1. The delivery time, to be as fast as possible to achieve better customer satisfaction. 2. The cost, trying to keep transportation costs to a minimum. 3. The hidden cost, of working capital tied up in goods in transit. |
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5. The cost of packing and insurance, for different modes of international transportation.
In making an
export price quotation,
the exporter must indicate which method of transportation he plans to use.
Air Transportation However, air cargo is still very expensive for shipping goods that have a high weight or cubic dimension to value. Freight charges are based on weight or measurement whichever is the higher. The rate are per pound or per unit of 250 cubic inches. The contract between the airline and the exporter is called an airway bill. In 1999, it is estimated about 42 percent of the approximately $5.8 trillion worth of goods that were traded internationally were shipped by air. Published by Praxis Communications Ltd. Asia Inc. July, 2000 Vol.9. No.4, page 42, Contact: editors @ team.asia-inc.com The advantages of using air transportation are: 1. Speed of delivery (e.g. breeding cattle, fish or perishable goods) 2. Permits lower inventories at branch warehouse, etc. 3. Reduces working capital tied up in "goods in transit" and reduces packaging costs. 4. Avoids conditions of extreme heat, dampness, and vermin, often found in ocean-going vessels. 5. Both scheduled and non-scheduled air carriers offer a great variety of air cargo flights. 6. Reduces pilferage of and damage to goods being shipped compared with other methods. 7. Reduces insurance costs because of less theft, damage, etc. |
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Page 5/7 Transportation Strategy "airfreight charges; airlines uses the "cube rule".
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The disadvantages are: 1. The cost is prohibitively high for many goods. 2. Unsuitability for certain types of products as altitude and temperature can cause damage e.g. liquids may leak as pressure decreases with altitude and goods may become frozen. Air shipment can be arranged by using the services of an airfreight forwarder, for a fee, which usually offers a lower rates through consolidation of shipments from several exporters and handle the booking and paperwork. In calculating airfreight charges, the airlines use what is known as the "cube rule" namely, that every 194 cubic inches of space occupied by the shipment is considered equivalent to one pound. They then compare this dimensional weight with the actual weight of the shipment and base their charges on the greater of the two. A "cube rule" example: suppose a box being shipped weighs 60 pounds and measures 20 x 20 x 40 inches, or 16,000 cubic inches. The dimension weight, will be 82 LBS and is thus greater than the actual weight.
Page 1/7 Flag Preference, Freight Forwarder and Alternative Shipping Methods Page 2/7 Ocean Shipping Methods. "freight cost are computed by shipping company based on both weight and cubic size and charges ". Page 3/7 Ocean Shipping Procedure, Freight Surcharges & Stowage ...depending on the circumstances, shipping companies may levy one or more charges. Page 4/7 "you can still obtain a 'clean bill of lading' by signing a letter of indemnity" This Page 5/7 Transportation Strategy "airfreight charges; airlines uses the "cube rule" namely every 194 cubic inches of is considered equivalent to one pound" Page 6/7 About Freight Forwarding. What is Freight Forwarding? Page 7/7 About The Freight Forwarder |
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