RVS Institute of Management Studies

(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

BA4058 AIR CARGO passenger aircraft may also act as a

MANAGEMENT preighter, in which the complete passenger
cabin is temporarily assigned for carrying
UNIT - II AIR CARGO
freight.
Air Cargo Console - Freighting of Air
On the other hand, cargo aircraft are
Cargo - Volume based Calculation of
air carriers specially designed to carry only
Freight - Weight based Calculation of
cargo. They load the freight on the main
Freight - Import Documentation - Export
deck and in the airplane’s baggage hold or
Documentation
belly to transport it to the destination.
Key Objectives:
AIR CARGO VS AIRFREIGHT:
 Ensure the rapid transport of goods,
The two terms may sound similar,
especially for time-sensitive shipments,
but the difference in the scope and scale of
meeting delivery schedules efficiently.
air transportation draws a line between air
 Provide a reliable and secure shipping
cargo and air freight. Air cargo covers the
solution, ensuring cargo safety
entire ecosystem of air transport of goods,
throughout the journey and minimizing
including the carriers, infrastructure,
risks of damage, theft, or loss.
logistics providers, and regulatory
 Optimize air cargo operations to
frameworks that help move goods smoothly
balance speed and cost, offering
from the origin to the final destination.
competitive pricing while maintaining
service quality for exporters and In contrast, air freight is only
importers. concerned with the physical transportation
 Enable extensive global connectivity, of goods by air. It does not involve any
linking various international markets, other aspects, like carriers, logistics
and providing access to remote or high- providers, and more, that are a part of the
demand regions through well- air cargo shipping process.
connected airport hubs.
TYPES OF AIR CARGO
 Offer services tailored to specific cargo
needs, such as temperature control for There are two types of air cargo –
perishables, safe transport of hazardous general and special cargo.
materials, or protection for high-value
items. General cargo includes high-value
goods, such as electronics, jewellery and
AIR CARGO CONSOLE: pharmaceuticals. Air shipping is more
expensive than shipping by sea, but due to
Air cargo is any shipment or items
the high margins and the fact that many
transported or carried via aircraft. It
electronic goods are fragile, air freight is
comprises air freight, airmail, and air
the most appropriate form of transport.
express. Air carriers may carry the cargo in
passenger flights or cargo aircraft. Special cargo requires special
Passenger aircraft put the spare volume in conditions for transporting goods, such as
an airplane’s baggage hold (the belly) temperature control, certain air conditions
which is not in use for passenger luggage. or protected casing (e.g. if the goods are
This is a usual practice followed by hazardous or livestock).
passenger airlines that transport air cargo
on scheduled passenger flights. A

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Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

WHAT NOT TO SHIP BY AIR the specifications of the respective airline,

FREIGHT? before shipping.
The following goods cannot be Cargo-Handling: As the cargo has the right
transported by air: labels and packaging on it, it’s ready for
transport to the airport. On reaching the
 UN classified dangerous goods airport, the cargo is loaded either onto a
 Lithium Batteries specific cargo plane or placed in the cargo
 Power Supplies or Power Banks hold of a passenger plane for shipping.
 Illegal Goods
 Firearms Transporting Cargo: The aircraft then
 Flammable Substances takes a flight to the destination airport. As
soon as the plane lands, the concerned
 Explosives
personnel unload the cargo and send it to
 Biochemical Products
the receiver’s destination.
AIR CARGO SHIPPING
Customs Clearance: Once the cargo hits
OPERATION:
the customs point, the customs duty
Air cargo shipping consists of a officials pitch in to inspect and clear the
complex network of airports, cargo planes, cargo for entry into the destination country.
ground handling services, and logistics
Delivery of Shipment: Finally, the airline
companies. The air cargo shipping process
or a local delivery service delivers the
begins with goods reaching an air cargo
shipment to the recipient as it reaches the
terminal, followed by a security screening.
destination.
After the necessary checks, the goods are
stored and then loaded onto the aircraft. BENEFITS AND DRAWBACKS OF
This complicated process requires AIR CARGO SHIPPING
coordination among air carriers, ground
services, and logistics providers to make Benefits
the operations error-free and efficient. Let’s throw some light on some of the
Let’s look into the detailed steps that benefits of using Air Cargo shipping.
facilitate the air cargo shipping process: Speed and Efficiency: Air cargo is
Finalising Booking: The first thing the renowned for its speed, offering the
shipper takes care of is booking the cargo quickest transportation method across long
with a preferred airline. The freight distances. This rapid transit time is crucial
forwarder also provides the airline with all for industries relying on just-in-time
the necessary information about the origin, manufacturing processes, emergency relief
destination, and type of cargo. efforts needing urgent supply delivery, and
businesses dealing in perishable goods or
Managing Paperwork: The freight time-sensitive products like
forwarder or shipper prepares various pharmaceuticals and fashion. The
documents like the bill of lading, efficiency of air cargo reduces the reliance
commercial invoice, or other necessary on large inventory stocks, allowing
certificates or permits involved in air cargo companies to operate on leaner supply
transportation. chains with lower storage costs.
Packaging and Labelling Cargo: The Global Reach: With air cargo, you can
shipper packs the cargo and labels it as per spread your wings across many destinations
2
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

worldwide. It even becomes easy to access because it increases her carbon footprint
some remote and hard-to-reach areas by air. and puts her in a bad light for hampering the
This extensive reach particularly benefits environment. So, this trend clearly shows
global businesses that need to expand their how people are rapidly moving towards an
market presence or source materials from environment-conscious mentality. The
distant locations. environmental impact of air cargo is wildly
in talks among both regulators and
Safe Transit: The air cargo industry tends
consumers. It’s nudging the air cargo
to maintain stringent security standards,
industry to explore sustainable practices
which minimizes the risk of theft, damage,
such as investing in more fuel-efficient
or loss during transit. Businesses or
aircraft, optimizing flight routes, and
individuals wanting to ship high-value
considering alternative fuels to decrease its
goods especially benefit from the enhanced
carbon footprint.
security measures at airports, like
surveillance, restricted access zones, and Size and Weight Restrictions: Another
specialized handling. Owing to the secure drawback of taking this mode of transport
environment and speedy delivery, is that an aircraft has finite space and
businesses often prefer air cargo shipping payload capacity. Therefore, it imposes
for transporting their goods. limitations on the size and weight of cargo
eligible for transportation. These
Drawbacks
restrictions are a demerit for industries
Air Cargo also has a flipside with a few dealing in bulky or heavy goods, such as
drawbacks attached to it. machinery or automotive parts. These
heavy goods may need more space than
Cost: One of the primary drawbacks of air allowed within the dimensional and weight
cargo is its cost. The expense associated constraints of standard air cargo services. It
with air transport is significantly higher necessitates alternative logistics solutions
than other modes due to fuel consumption, for oversized shipments, which ends up
aircraft maintenance, and airport fees. potentially complicating the supply chain
These costs often translate to higher freight and increasing shipping costs.
charges, making air cargo less
economically viable for low-value or high- FREIGHTING OF AIR CARGO:
volume shipments. Businesses must
Air freight involves moving cargo
carefully weigh the benefits of quick
from Point A to Point B via aircraft. Using
delivery against the increased logistics
air freight, cargo is transported quickly
costs.
across the world, however, whilst it may
Environmental Concerns: Eco- seem simple, the process can get quite
friendliness and sustainability are a huge complicated.
concern when businesses opt for air cargo
You need to think about whether air
shipping because air transport is one of the
freight services right for you, understand all
most carbon-intensive modes of freight
that’s involved, have the right
transport. It massively contributes to
documentation so your shipment isn’t
greenhouse gas emissions and global
delayed, and engage a professional freight
climate change. For example, the famous
forwarder to ensure your transaction flows
singer ‘Taylor Swift’ recently received
smoothly.
backlash from the public for taking too
many flights in her private jet. This is
3
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

Below, we’ve explained the However, if you are determined that

complete process of how air freight works. air freight is the right option for your
You can also see a visual workflow business you will want to ensure it is
showing how the process works step-by- providing your business with the maximum
step. possible benefits. As an alternative, there
are two main options to consider: ocean
Step #1: Request quotes and order your
freight and air-sea solutions (the latter
product
being a mixture between air freight and sea
Once you’ve decided that air freight freight).
is right for you, you need to talk and
Air freight is much quicker than sea
negotiate with your overseas suppliers to
freight, but it’s typically more expensive.
ensure they can comply with air transport
By contrast, ocean freight may be cheaper
requirements. Air freight is a two-way
but there is a greater risk of delay.
transaction, so you’ll need to get your
supplier on board if air freight is your Step #2: Understand the impact of
transport of choice. airfreight
The homework you’ll need to do is: Before you sign any documentation
with your supplier, make sure you
Source the right supplier – do your
understand how air freight works and the
market research to find the best supplier out
impact of using air freight to transport your
there for your business. Our guide on
cargo.
choosing the right international suppliers
can help you do this. This includes doing some research into:
Decide on Incoterms – the How volumetric ratios work. When
“incoterms” are the international shipping cargo via aircraft, you don’t just
commercial terms governing the allocation pay for the kilograms of your airfreight
of risk throughout your shipment. You’ll shipment if your cargo takes up a large area
need to choose the term that best suits your of the aircraft.
interests, whilst also striking the right
Air freight containers. Cargo can be
balance with your supplier.
shipped in a unit load device (ULD), as a
Engage a freight forwarder – your palletised shipment, or as loose cargo when
freight forwarder can liaise directly with shipping via air freight. There are a range of
your suppliers. We here at ICE have restrictions based on the height, length, and
dedicated overseas partners who can speak width of your cargo.
to your suppliers on your behalf and
Air freight container LD-8
represent your commercial interests.
Air-freight-container-LD-3
Provide commercial documents –
yes, unfortunately in shipping, there is a lot Air freight container LD-4
of documentation. Air freight is no
exception. Your freight forwarder can
handle all the documentation with your
suppliers to ensure your transaction doesn’t
run into any unexpected costs and delays.

4
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

 Airfreight security regulations define cargo will obviously need to fit in the
that your cargo needs to be examined aircraft and be available for X-ray!
prior to export (which is mandatory). Compare different services. There
This can be at a Piece-level examination are many available options and routes for
– this means each box, carton, or other airfreight around the world. This was
item; Consolidated form – significantly impacted by the COVID-19
homogeneous cargo packed on pallets, pandemic, which forced many businesses to
boxes stacked and wrapped in plastic or adapt and think of new ways to transport
in unit load devices (ULDs); or as an goods across the world as air freight options
approved Known Consignor – air cargo became limited.
originating from these companies does Choose the right route. Usually, you
not require further examination prior to can choose between different airlines
uplift onto an aircraft. As a general offering different routing and transit times.
example, if your cargo is palletized, it Think of it as booking a flight for yourself.
will need to fit within the following After all, 80% of air cargo in Australia
dimensions to go through an x-ray arrives on passenger aircraft. You’ll need to
machine: 1.20m x 1.20m x 1.53m make sure the route is correct for you and
LWH, max 1000kg CW per pallet. It is offers you the best price versus transit time.
critical that cargo screening through a
metal detector is on plastic or cardboard Step #4: Freight forwarder arranges
pallets, as wooden pallets will likely shipment
have nails. If pallets need to be Once your cargo is packed and your
repacked, exporters will bear this cost. freight is booked, it’s time for your freight
forwarder to arrange your shipment. If you
Step #3: Pack your cargo and book your are importing into Australia, your supplier
freight will need to prepare the following
The next step is to pack your cargo documents:
and book your freight. Ensure that when Commercial Invoice – one the most
you do this, you: important documents in shipping. The
Speak to your forwarder about any commercial invoice outlines the items
restrictions applicable to the aircraft. Your being purchased and from whom, and the

5
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

terms and conditions between buyer and and goods subject to customs control. The
seller. CTO will segregate the cargo ready for
Packing list – shows the details of collection.
the cargo, including how it is packed.
Certificate of origin – if your If arranged on a Master Airway Bill
import is from a “free trade” country (i.e., a
country with which Australia has a free A “Master Airway Bill” (or a
trade agreement), this certificate will need MAWB) refers to an airway bill that is
to be prepared to avoid paying unnecessary issued for all goods covered by one or more
duty charges. “house” airway bills (or a HAWB, which
simply means an airway bill issued by a
Import permits or Manufacturers freight handler acting as the carrier).
Declarations as required for the product
type. If you’ve arranged your shipment
through an MAWB, the goods will
Dangerous goods forms – if a supplier is probably be consolidated (i.e. different
shipping dangerous goods as classified by shipments grouped together). On arrival,
the International Air Transport Association the cargo will then be moved to a Customs
(IATA) or the International Maritime Bond facility for deconsolidation.
Organisation (IMO), they will be required Deconsolidation means that the aircraft
to fill out and include relevant dangerous cargo will be taken apart and each
goods forms. consignment will be separated according to
the final destination.
Once your flight is booked, an
airway bill will be produced to outline the At the bonded facility, customs are
service and contract of carriage. The goods informed that the cargo has arrived by
will then travel on designated services and issuing an outturn report, which outlines the
can usually be tracked online through your details of air cargo that has arrived in
freight forwarder. Australia and has been discharged from an
aircraft. Each consignment received must
Step #5: Goods processed through export be out turned.
customs clearance and placed in transit:
If arranged on a direct airway bill
On arrival, your cargo will move
through many stages. A direct airway bill (or a DAWB) is
a bill of lading issued where freight is
During transit, we here at ICE will transported on the airline without a HAWB.
commence customs clearance so your
goods can arrive in Australia with all duties Direct shipments are generally used
and GST paid. when freight and service needs are
immediate. Freight will not be consolidated
Following this, when the cargo with other cargo. The goods can then be
lands, your goods will be moved to a CTO collected directly from the CTO and do not
or cargo terminal operator. CTOs have require deconsolidation.
obligations under customs legislation to
ensure the security of the cargo terminal

6
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

Step #7: Goods are transported from the fast, and the need for local warehousing is
airport to the buyer much lower.
VOLUME BASED CALCULATION OF
Once goods are customs cleared and
FREIGHT
out turned, a transport operator will collect
the cargo and deliver it to your final The cubic capacity of a load, also
destination. known as volumetric weight, is an
important characteristic in transport and
It’s important to know in advance if storage. The calculation of this indicator
the final delivery point will unload the allows you to:
cargo themselves, or if they need a tail lift
truck for delivery.  predict the cost of a transport operation
 optimize the use of space;
A tail lift is a mechanical device  choose the right packaging for
permanently installed on the rear of a work transportation.
truck, van, or lorry, and is designed to It can also be useful in a number of other
facilitate the handling of goods from cases. The standard formula for calculating
ground level or a loading dock to the level the volumetric weight of a shipment is:
of the vehicle bed, or vice versa.
L x W x H (in centimetres) / 5000
It’s also useful to know the delivery However, international shipping is
point’s opening hours to ensure cargo can full of nuances, For example, some
be delivered within your timeframe. companies, such as DHL, use the 4000
divisors (but only for shipments within
ADVANTAGES OF AIR FREIGHT England).

Time – transporting goods with air freight It is equally important (in our
saves time – it’s much faster than shipping, opinion) to tell you when you will need to
rail, or road transport calculate the volumetric weight of your
cargo and what nuances you should take
Reliable – flights generally have reliable into account to make your logistics
arrival and departure times with very few operations as efficient as possible.
delays, so the shipment of cargo by air is
very likely to arrive on time Where and why is this parameter used?

Low insurance premium – due to the A childhood riddle comes to mind:

shipment duration being so short, insurance “What is heavier: a kilogram of stones or a
premiums on air freight are generally lower kilogram of down?”. Carriers are guided by
similar logic. After all, the volume of the
Secure – the shipment of cargo by air is cargo compartment is limited, and it is not
tightly managed by security, so the chance economically viable to charge by weight for
of cargo being stolen or damaged is low large volumes.
Less warehousing requirements – the Therefore, to increase profitability,
clearance time for air freight is fast, and the cubic capacity indicator is used. It
there’s generally less stock to unload than allows you to correctly calculate the usable
that for cargo ships, so customs clearance is volume of the room and establish the fair
value of services.

7
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

The cubic weight is a standard Once you have the measurements,

indicator approved in global practice that calculate the volume of each item by
reflects the density, compares with the multiplying the length by the width and the
actual weight and allows you to obtain the height. Then add all the volumes together to
estimated value of the occupied space. get the total volume.
As a rule, the calculation of the V = 54 x 44 x 29 = 68904 – we convert
volumetric weight of cargo is used for air or centimetres to metres and get 0.0689 m3.
road transport. In the case of sea delivery,
The total volume (we have 5 boxes in our
the system of freight is used – payment per
example) is 0.3445 m3.
container. Only in some cases do sea
carriers also use the cubic metre STEP 3: APPLY THE COEFFICIENT
calculation.
0.3445 m3 x 167 = 57 kg.
It is also important to understand
that each mode of transport has its own STEP 4: COMPARING THE
adjustment factors calculated based on the ESTIMATED AND ACTUAL WEIGHT
cost of the service and cargo capacity. One microwave oven with the box
In various documents or calculators weighs 9 kg, so 9×5 = 45 kg. So, as a result,
from the freight carrier, you may come the carrier will charge your shipment as a
across the terms “gross”, “actual” and 57 kg shipment. In this example, the
“payable” weight. The fact is that the larger difference is relatively small, but when it
figure is always taken as the basis. comes to tonnes of goods, these figures can
be shocking.
STEP 1: MEASUREMENT
Important! In the example, we
You need to measure the length, calculated the cubic capacity with the
width, and height of each item. For this transport adjustment factor, but as
purpose, the metric system is used because mentioned above, there is another
it is generally accepted that the result calculation method with a divisor of 5000.
should be in centimetres. In this case, we would get:
Important! Figures are always 54 x 44 x 29 = 68904/5000 = 13.7 (14 kg)
rounded up. If your product is 144.5 cm * 5 pieces = 70 kg.
long, round up to 145 cm for the following
calculations. Determine the parameters of The choice of methodology depends
the goods in the package. on the country of shipment/receipt, the type
of transport, the manufacturer’s agreements
For example, our task is to send 5 with the logistics company, etc.
microwave ovens by air. Let’s find the
parameters of one of them: What else is important to know?

length – 53.5 cm = 54 cm It is not always the case that simple

geometric shapes such as parallelepipeds or
height – 44 cm cylinders can be used as cargo. Therefore,
when calculating the cubic capacity, keep
width – 29 cm
in mind that some items may be packed
STEP 2: CALCULATE THE VOLUME together or have gaps between them. In
OF EACH ELEMENT some cases, such as when stacking goods in
a container, space is left between items to
8
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

prevent damage during transport. Measure Gross weight, also called actual
the dimensions of these spaces and add weight, is the total weight of a shipment. It
them to the total volume of the shipment. includes the net weight of the actual
product coupled with the weight of the
WEIGHT-BASED CALCULATION OF
packaging.
FREIGHT
Gross weight of an aircraft is the
Considered a high-value industry,
summation of the aircraft, fuel, crew,
air cargo is critical for serving markets that
passengers and cargo weights.
demand speed and reliability for the
transport of goods. Though it only accounts On the other hand, the weight of
for 1% of world trade cargo by volume, only the product itself is called net weight.
35% of world trade value is carried by air. And the weight of only the packaging is
called the tare weight.
Air freights are particularly well
suited for transporting high-value goods There could be several instances in
because they provide highly controlled which the net weight and gross weight of
transport, direct routing, reliability, and cargo remain the same. For example, for car
unique capacity considerations. These tires which are shipped without any
capacity considerations decide how your packaging, both net and gross weights will
cargo's weight is calculated and how it is be the same.
priced.
How to calculate air freight gross
Generally, the cost of your shipment weight?
is calculated based on the following factors:
Here’s the formula to calculate
 What does the shipment consist of? (the gross weight:
commodity)
Product Weight + Packaging/Pallet
 Where is it going? (the origin,
Weight = Gross Weight
destination and distance)
 How soon do you want it to get to the It is generally accepted that the
destination? (transit time) actual weight of the cargo is measured
 How heavy is the cargo? (the weight) using the metric system, e.g. kilograms and
 How much space does the cargo any imperial units such as pounds are
occupy? (the volume) converted into metric units for ease of
calculation (1 kg = 2.205 lb). Let’s take a
In this we shall discuss the last two factors, look at the example:
which are the weight and volume of the
shipment. When you plan for air freight Product Weight +
transportation, you need to know how your Packaging/Pallet Weight = Gross Weight
shipment is weighed and therefore priced. 50 lb + 10 lb = 60 lb, converted to
Your cargo is weighed based on kilograms = 60 / 2.205 = 27.2155 kg
multiple criteria. Your shipment’s What is Volumetric Weight?
chargeable weight could be based on either
its gross or volumetric weight. The air freight volumetric weight,
or dimensional weight, is an estimated
What is Gross Weight? weight value based on a package’s length,
width and height. It is a theoretical weight
calculated using a minimum air cubic
9
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

conversion factor chosen by the freight to calculate the airfreight chargeable weight
carrier. This is generally stated as 6000 cm3 of your shipment. It rests on the below
= 1 kg or 1 cbm (cubic metre) = 167 kg. principle.
How to calculate air freight volumetric Imagine two shipments of cotton
weight? and steel of similar weight. It is quite
obvious that the cotton shipment will
To calculate the volumetric weight,
occupy more space than the steel shipment.
there are a few steps. First, you need to
The steel shipment, however, will weigh
calculate the volume of the shipment.
more. In such a scenario, should both
Length x Width x Height = Volume shipments be charged by volume? Or
should they be charged on the basis of
Make sure that the volume is weight?
converted into cubic metres (m3) or cbm. If
you are measuring the dimensions in Volumetric weight is significant to
inches, then you need to convert the volume measure the space occupied by the
from cubic inches to cbm (1 cbm = 61,024 shipment (volume or density). Whereas,
cubic inches). And lastly, you need to do gross weight is more focused on the weight
the air cubic conversion factor. of the shipment.

Here is an example of calculating What is Chargeable Weight?

the air freight volumetric weights if you
Air freight chargeable weight is
measure the volume in cubic centimetres:
different from the volumetric or
100 cm x 200 cm x 500 cm = 100,000 cm3 dimensional weight and gross weight.
Rather, the chargeable weight is the
100,000 cm3 / 6000 = 16.7 kg quantified weight upon which the carrier
Or, if you got the volume in cbm, here’s charges you on the invoice, which can be
what it's like: either the gross or the volumetric weight of
your shipment, whichever is higher.
100,000 cm3 = 0.1 m3 or cbm
In any situation, freight carriers
0.1 m3 x 167 = 16.7 kg would always choose the higher value
You can also calculate the volume if between the volumetric and the actual
the dimensions are in inches by using the weight of the cargo. This is fair enough
formula: Length x Width x Height/366 because cotton shipments will occupy more
space while steel shipments will weigh
Here is another example of more. In both cases, carriers would be
calculating the air freight volumetric choosing the measurement with greater
weights if you measure the dimensions in value.
inches:
Let’s take a look at a measurement
10 inch x 20 inch x 50 inch = 10,000 inch3 example. Here’s the known shipment
10,000 inch3 / 366 = 27.3 kg measurement:

Difference Between Gross Weight and Length: 50 cm

Volumetric Weight Width: 25 cm
You must be wondering why there’s Height: 70 cm
a need to have two different measurements

10
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

Product weight: 18 kg includes the trade of Indian Currency

into foreign money. The Exchange
Packaging weight: 2 kg
Control Department of the Reserve
Let’s calculate the gross weight: Bank of India (RBI) manages foreign
trade exchange in India. According to
18 kg + 2 kg = 20 kg rules, each merchant needs to secure the
Now let’s calculate the volumetric weight: sanction of foreign trade.
2. The importer puts in an import
(50 cm x 25 cm x 70 cm) / 6000 request or indents with the exporter
= 87,500 cm3 / 6000 = 14.58 kg for the supply of merchandise. The
request contains information with
Since the chargeable weight always respect to cost, quality, quantity,
uses the measurement with the greater size and grade of goods instructions
value, in this situation we will use the gross with respect to packaging, delivery
weight, which is 20 kg. Next, you can check shipping, a method of payment and
with the carrier or carrier’s agent for the so on.
price per kg and multiply it by your 3. At the point when the payment
chargeable weight (20 kg) to get your total terms concur between the importer
freight amount, excluding taxes and and the overseas provider, the
surcharges. importer gets the letter of credit
IMPORT DOCUMENTATION from its banker and forwards it to
the overseas provider.
Import is a very important function 4. The importer arranges for money in
of our economy. It is one of the most advance to pay the exporter on
regulated sectors of our economy. Let us arrival of goods at the port this
understand the in-depth import procedures empowers the importer to avoid
and their important documentation. huge penalties on the imported
IMPORT PROCEDURE goods lying uncleared at the port for
the need of payment.
1. The initial step engaged in importing a 5. The overseas supplier after loading
product is to accumulate information the merchandise on the ship
about the nations and firms that send dispatches the “Shipment Advice”
out the item required by the exporter. It to the importer. It gives information
can be accumulated from trade with respect to the shipment of
directories, trade organizations, and goods like receipt number, bill of
associations. The exporter readies a lading/airway bill, the name of the
quotation otherwise called Performa ship with date description of
Invoice and sends it to the importer. merchandise and amount, and so
2. The Importer Consults the export- forth.
import (EXIM) Policy in power, all
together to know whether the Furthermore,
merchandise that he/she needs to import 8. After dispatching the merchandise, the
are subjected to import licensing or not. abroad exporter hands over the different
3. In the situation of an import transaction, documentation like an invoice, bill of
the provider resides in a foreign nation lading, insurance certificate of origin to his
and subsequently requests the banker for their forward transactions to the
installment of foreign cash. This
11
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

importer when he receives the bill of DOCUMENTS USED IN AN IMPORT

exchange drawn by the provider. The TRANSACTION
acknowledgment of a bill of exchange by
Proforma Invoice: It is a record that
the importer to get a confirmation of
contains points of interest with regards to
delivery is known as the retirement of
the quality, review, design, mass, weight,
import documents.
and cost of the exported merchandise and
9. At the point when the sent merchandise the terms and conditions on which their
comes in the importer’s nation, the transportation will occur.
individual accountable for the merchandise
Import order or Indent: It is a
conveys the officer in control at the dock or
documentation in which the importer orders
the airport about it. The individual
for supply of imperative merchandise to the
responsible for the ship or airway gives the
supplier. The order containing the data, for
report with respect to import.
example, amount and nature of
10. Imported merchandise are subjected to merchandise value, a technique for sending
customs which is an exceptionally the merchandise, packing process, method
extensive process and includes a of payment and so forth.
considerable time to complete. The
Shipment counsel: – The exporter sends
importer more often than not appoints a
shipment advice to the importer for telling
C&F operator for completing these
him that the merchandise has been
customs.
dispatched. It contains invoice number, bill
Essentially, the merchant acquires a of lading/airway bill number and date, the
delivery order which is otherwise called an name of the vessel to date, the port of
endorsement for delivery. This order allows export, description of products and amount
the importer to take to take the delivery of and the date of cruising of the vessel.
merchandise subsequent to pay the cargo
Bill of lading: – It is readied and marked by
charges.
the captain of the ship recognizing the
Importer likewise needs to pay dock receipt of merchandise on board. It contains
dues for getting port trust dues receipts for terms and conditions on which the products
which he submits two duplicates filled in are to be taken to the destination.
the form is known as “application to
Bill of entry: – It is a form provided by the
import” to the Landing and “Delivering
customs office to the importer who filled it
Dues Office”. Subsequent to paying dock
at the duration of getting the merchandise.
dues the importer gets back one copy of the
It must be in triplicate and is to be submitted
application as a receipt which is called as
to the customs office.
‘port trust levy receipts’.
Letter of credit: - It is a document that
At long last, the importer fills in a
contains a certification from the importer
frame known as ‘bill of entry’ for appraisal
bank to the exporter’s bank that it is
of customs import duty. An inspector
attempted to respect the payment up to a
inspects the merchandise and gives his
specific sum of the bills issued by the
report regarding the bill of entry. This bill
exporter for transportation of the products
is then introduced to the port administration
to the importer.
which on getting the important charges,
issues the discharge arrangements. Trade Enquiry: It is a written request
made by a logistic firm to the abroad
12
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

provider for giving data in regards to the  The payment term of the sale, which
cost and different terms and conditions for would typically be expressed as one of
trading merchandise. the 11 current Incoterms.
 The delivery details, including how and
EXPORT DOCUMENTATION
where the goods will be delivered and
1. Proforma Invoice how much that will cost.
2. Commercial Invoice  The currency used in the quote, whether
3. Packing List it’s U.S. dollars or some other currency.
4. Certificates of Origin
5. Certificate of Free Sale Be sure to date your proforma
6. Shipper's Letter of Instruction invoice and include an expiration date.
7. Inland Bill of Lading There can be a lot of volatility in the export
8. Ocean Bill of Lading process, so minimize your risk by setting a
9. Air Waybill specific time frame for your quote.
10. Dangerous Goods Forms 2. Commercial Invoice
11. Bank Draft
Once you’ve sent a proforma
1. Proforma Invoice invoice to your international prospect and
In a typical export exchange, received their order, you need to prepare
everything starts when you receive an your goods for shipping, including the
inquiry about one or more of your products. paperwork that must accompany the goods.
That inquiry may include a request for a Of those documents, the commercial
quotation. invoice is one of the most important.

If the inquiry came from a domestic The commercial invoice includes

prospect, you probably have a standard most of the details of the entire export
quotation form to use. However, in an transaction, from start to finish.
international transaction, your quote would I often get questions from people
be provided as a proforma invoice. That’s who look at this sample commercial invoice
because your international prospect may and wonder why it looks so different from
need a proforma invoice to arrange for the invoices their company uses for
financing, to open a letter of credit, to apply domestic orders. Keep in mind that the
for the proper import licenses and more. invoices you create from your company’s
A proforma invoice looks a lot like accounting or ERP system are accounting
a commercial invoice, and if you complete invoices used to get paid, not export
it correctly, they will be very similar invoices.
indeed. A proforma invoice specifies the The commercial invoice may look
following: similar to the proforma invoice you initially
sent your customer to serve as a quote,
 The buyer and seller in the transaction.
although it should include additional details
 A detailed description of the goods.
you didn’t know before. For example, once
 The Harmonized System classification
you have the commercial invoice, you
of those goods.
probably have an order number, purchase
 The price. order number or some other customer
reference number; you may also have

13
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

additional banking and payment Some countries require a certificate

information. of origin to identify in what country the
goods originated. These certificates of
Make sure to include any relevant
origin usually need to be signed by some
marine insurance information and any other
semi-official organization, like a chamber
details that will ensure prompt delivery of
of commerce or a country’s consulate
the goods and full payment from your
office. A certificate of origin may be
customer.
required even if you’ve included the
3. Packing List country of origin information on your
commercial invoice.
An export packing list may be more
detailed than a packing list or packing slip Usually a chamber of commerce
you provide for your domestic shipments. It will charge you a fee to stamp and sign your
may be used in the following ways: certificate or require you to be a member of
the chamber. You’ll need to deliver a
o Your freight forwarder may use the completed form to the chamber office
information on the packing list to create where they will stamp and sign it for you.
the bills of lading for the shipment.
o A bank may require that a detailed More and more companies are
packing list be included in the set of foregoing the time-consuming process of
documents you present to get paid relying on expensive courier services or
under a letter of credit. taking the time to hand-deliver a certificate
o Customs officials in the U.S. and the of origin to a chamber of commerce for
destination country may use the certification and are relying on electronic
packing list to identify the location of certificates of origin (eCO) for their
certain packed items they want to shipments. An eCO is often quicker to turn
examine. It’s much better that they around, allows you the option of delivering
know which box to open or pallet to the certificate electronically to the importer,
unwrap rather than needing to search and can be registered with the International
the entire shipment. Chamber of Commerce to provide added
credibility.
The packing list identifies items in
the shipment and includes the net and gross Country-Specific Certificates
weight and dimensions of the packages in
In addition to the generic certificate
both U.S. imperial and metric
of origin form, there are also country-
measurements. It identifies any markings
specific certificates of origin. The United
that appear on the packages, and any special
States currently has signed 14 free trade
instructions for ensuring safe delivery of
agreements with 20 different countries in
the goods to their final destination.
which U.S. goods are eligible for reduced
If cargo is lost or damaged, a or zero duty rates when imported into those
packing list is required to file an insurance countries. Some free trade agreements,
claim, and it is also used if there is a including the United States-Mexico-
disagreement between the carrier and the Canada Agreement (USMCA) and the
exporter regarding the weight or United States-Central America-Dominican
measurement of the cargo. Republic Free Trade Agreement (CAFTA-
DR), cover multiple countries, including
4. Certificates of Origin the U.S.

14
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

5. Certificate of Free Sale I often describe the SLI as a cover

memo for your other export paperwork.
Sometimes called a “Certificate for
Depending on whether or not the forwarder
Export” or “Certificate to Foreign
works for you, the SLI may include a
Governments,” a Certificate of Free Sale is
limited Power of Attorney, providing
evidence that goods—such as food items,
authority to act on your behalf for this
cosmetics, biologics or medical devices—
shipment.
are legally sold or distributed in the open
market, freely without restriction, and AES Concerns
approved by the regulatory authorities in
Depending on who hired the
the country of origin (the United States).
forwarder, the SLI may also grant the
A Certificate of Free Sale is used forwarder permission to file the export
when you are registering a new product in a information electronically through the
country. You’re essentially informing the Automated Export System (AES). Most
customs authority in that country, “This is a exports valued at more than $2,500 per item
new thing I’m going to start importing, and must be submitted to customs via AES,
here are my support documents that which makes filing through AES an
confirm this product(s) is legal to sell in the important consideration for many
country of manufacture.” exporters.
If your international customer If the freight forwarder is hired by
requests a Certificate of Free Sale, you can the buyer, then the forwarder typically does
easily apply for a certificate online (there’s the AES filing. Even if you, as the seller,
no cost or obligation for registering). hire the forwarder, you may pay the
forwarder to do the AES filing on your
6. Shipper’s Letter of Instruction
behalf.
One of the most important people
In either case, even if you aren’t
you will work with in the export process is
doing the AES filing yourself, you are
your freight forwarder, who usually
legally required to provide certain data
arranges the transport of your goods with a
elements to the forwarder for filing
carrier and helps ensure you’ve taken care
purposes; this is usually done via SLI. As
of all the details.
an aside, I strongly believe that you, as the
Depending on your agreed-upon exporter, should almost always be the party
terms of sale—remember, that’s typically that does the AES filing—even in a routed
the Incoterm you choose—either you hire a export transaction where the buyer picks a
freight forwarder to work for you, the forwarder.
exporter, or, in the case of a routed export
It’s simple to file the documents
transaction, the buyer hires a freight
needed for shipping through AES, and
forwarder.
doing it yourself gives you more control
Regardless of who hired the over the process. More and more of our
forwarder, it’s important you provide a clients are assuming that responsibility for
Shipper’s Letter of Instruction (SLI) with every export shipment for just that reason—
all the information needed to successfully get a step-by-step guide to filing here.
move your goods. (Here are several good
However, I understand that many
reasons why a letter of instruction is
companies do rely on a freight forwarder
necessary.)
15
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

for their AES filings, so an accurately goods at the destination only to the party the
completed SLI is very important. bill of lading is consigned to.
8. Ocean Bill of Lading 10. Dangerous Goods Forms
Ocean Bill of Lading (1) If your Dangerous Goods Download Now
goods are shipping by ocean vessel, you’ll If your products are considered dangerous
need an ocean bill of lading. An ocean bill goods by either the International Air
of lading can serve as both a contract of Transport Association (IATA) or the
carriage and a document of title for the International Maritime Organization
cargo. There are two types: (IMO), you need to include the appropriate
dangerous goods form with your shipment.
Straight Bill of Lading
Shipping dangerous goods or hazardous
A straight bill of lading is consigned materials can be tricky. Before you do it,
to a specific consignee and is not the appropriate people at your company
negotiable. The consignee takes possession need to be trained to properly package,
of the goods by presenting a signed, label and document these shipments.
original bill of lading to the carrier.
The IATA form—the Shipper’s
Negotiable Bill of Lading Declaration for Dangerous Goods—is
required for air shipments. There is a
A negotiable bill of lading is different version of the form for ocean
consigned “to order” or “to order of shipments. Again, these forms need to be
shipper” and is signed by the shipper and completed by someone who has been
sent to a bank in the buyer’s country. The trained to handle dangerous goods
bank holds onto the original bill of lading shipping.
until the requirements of a documentary
collection or a letter of credit have been 11. Bank Draft
satisfied.
A bank draft is an important part of
9. Air Waybill the international sales process for
transferring control of the exported goods
Goods shipped on a plane require an from the seller in exchange for funds from
air waybill. It is a contract of carriage the buyer. It is often called a documentary
between the shipper and the carrier that is collection because the seller attaches
distributed by the International Air various documents to a bank draft and a
Transport Association (IATA). Unlike an cover letter.
ocean bill of lading, an air waybill cannot
be negotiable. Usually, the seller’s bank will send
the bank draft and related documents via
The purpose of an air waybill differs the freight forwarder to the buyer’s bank or
from the purpose of a bill of lading: a bank with which it has a relationship in
An air waybill is a receipt of goods; the buyer’s country. When the buyer
the carrier or agent sends it in order to show authorizes payment for the goods, the
the place of delivery. buyer’s bank releases the documents to the
buyer and transfers the funds to the seller’s
A bill of lading is a document of bank.
title to goods. It is a receipt by the shipping
company with an agreement to deliver the The bank draft may or may not
include a transmittal letter, which includes
16
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS
 RVS Institute of Management Studies
(Approved by AICTE, New Delhi & Permanently Affiliated to Anna University, Chennai),
Kumaran Kottam Campus, Trichy Road, Kannampalayam, Coimbatore-641 402.

details of the bank draft transaction,

including the types of additional documents
that are included and payment instructions.

17
Prepared by:
AIR CARGO MANAGEMENT LOGISTICS AND SUPPLY CHAIN G. Kathiresan, ME.,MBA
MANAGEMENT Assistant Professor - RVSIMS