Our next few topics covers basic concepts in logistics. Understanding it is critical for anyone embarking on SCM strategies. We’ll get started by exploring and understanding freight concepts.
Freight or shipping in the 3PL world happens in 3 modes.
Air Freight, Ocean Freight and Land Freight.
Although the industry jargons are common and easy to its users. The layman needs time to figure out the different offering of freight methods in the market.
Thus this article is a continuation of logistics and an introduction for understanding freight terms and concepts.
Take Air Freight for example. If you’re not working in this business, you may feel that air freight refers to anything that ships via airplanes. You may even group courier companies like DHL Express or Fedex with other air freight providers.
This way of thinking about freight is useful for describing the general method of shipping. To make it work though we have to understand freight like one of the players in the industry.
This is because different freight modes make different assumptions and have different cost structures. Not understanding it deep enough may cause you to incur high shipping fees.
Let’s look at air transportation industry as an example. In the world of air transportation. There are at least 3 different types of products. Air mail, Air Courier and Air Freight. They each serve different business needs and requirements.
A quick method to distinguish between them is this. Courier services are best for anything which can fit into a parcel, weighing less than 45kg. Air freight does anything which is bulky and above 45kg. Stretching this further, Air Mail is for anything of low value and light.
The only common thing about the above 3 descriptions are they use Airplanes. Thus we term it air transportation. Let’s apply our understanding to real life examples. Let’s use 3 generic examples below to see why it makes sense.
Say you are in the business of cardboard games for example. What you would like to do is to ensure that your games gets out to your customers in a short period of time.
Your main wish is transportation costs needs to be low as compared to the game. One suitable air product service may be air mail. This is because mail as a service is not expensive. Transit time is both consistent and well known in advance.
If you were instead doing custom costume jewellery that focuses on weddings or events. You would want to ensure your product reaches the customer on a certain date. You would also want assurance that your buyer actually received the product.
To ensure receipt of product and delivery by a certain time. Courier services would best for you. All if not most courier services return a timestamp for completed delivery. They usually also demand an actual recipient to receive the products. In terms of pricing, it is more expensive due to the need for assurances of services.
While if you were in the plane maintenance business (MRO), you would use air freight most of the time. This is because movement in this business are usually bulky, time sensitive and needs deep focused attention and coordination.
Air Freight can allow this because this service can be designed to match the service requirements and it deliver the goods within the time frame required in the manner required. The customisation and specialisation required needs a charging structure that is unique to each shipment.
The above 3 examples are quick snapshots for understanding freight and its uses in air transportation. It is a very generic description and there are times when the examples mentioned may need to be changed.
If you need air transportation services and would like to see how you can better use the various freight services. Let us know and we’ll be glad to assist in helping you strategise a plan on using air freight in the best manner.