Cost is only one factor to consider before using air service. For many products, markets, and industries, air freight service is exactly what is required to meet customer demands. At the same time, all air services are not created equal. There are a variety of air services that can purposely be employed to achieve a competitive advantage in ways that more than offset the cost.
The decisions and activities undertaken by companies constantly interact in ways that can impact the supply chain. Sometimes, the gains achieved are worth the cost. For instance, some companies can justify the higher cost of using air service if it also helps them lower inventory carrying costs, capture more market share, or achieve efficiencies.
How can this be done? First, realize that air service is not a one-size-fits-all solution. There are specific reasons why companies choose the air service they do. The trick is to choose solutions that are intentionally tailored to fit strategic objectives. Here are a few examples.
- Next flight out. When freight must move as fast as possible to meet a timeline, next flight out is the obvious choice. A provider locates capacity that will be available at the last minute—literally, the next flight out. Because this is expedited transportation, it is typically the most expensive form of air cargo service, but it can play an important role in customer satisfaction in certain situations.
- Deferred air. Some companies use deferred air as a strategy to be employed on a regular schedule. These businesses postpone the shipment of their lower priority freight until space becomes available on an aircraft. By deferring their cargo to the third, fourth, or fifth business day, they agree to a longer transit time in exchange for air service at a savings.
- Air consolidation. Consolidated air shipments move on a set schedule. An air consolidation service provider combines the cargo of several shippers together. By pooling this combined volume and transporting the shipments on a regular schedule, the provider can often secure better rates.
- Air charter service. Few businesses intend to use air charter service regularly. But it can become an essential resource in a nimble, adaptable supply chain. Perhaps the transportation industry is disrupted by a natural catastrophe or strike, and truck and rail equipment is unavailable. Air charters offer a fast, flexible option for getting products to market on time. Chartering a whole plane gives you decision power on location and scheduling for the ultimate in achieving timely, flexible deliveries. It is also possible to procure a partial air charter. This is similar to an air consolidation option, where a company pays for some space on a chartered plane rather than the entire thing. It can be a good option when a shipper does not have enough freight to fill a plane, but still needs capacity.
As these examples show, freight costs are just one factor to consider when evaluating air freight service options. There are strategic reasons for incorporating air into your supply chain. Inventory carrying costs and the sales opportunities associated with being first to market are important considerations for shippers. As airlines use more fuel-efficient cargo fleets, they also make contributions to changing the cost equation.
It is also important to acknowledge that securing certain air services can be extremely difficult without the right relationships. Working with a financially strong provider who offers both committed and transactional capacity options is vital. It is also important to note that air consolidation service providers must be large enough to have regular shipments of consolidated air freight, or delays can result.
The solution to this is to work with a company that has the scale, capital, relationships, and knowledge to work with airlines, move planes, and resell space (especially for partial charter service) so you can deliver your products as planned.
For a better understanding of air cargo, read the new white paper, Optimizing Your Supply Chain with Air Cargo, which takes a deeper look at the many facets and benefits of air cargo.