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Air Freight and Sea Freight
To choose between using air freight transportation and sea freight transportation is essentially a trade-off between time and money. If you are looking for a quick transit time, air freight is the way to go; If you are cost-aware and are not in a hurry to deliver your goods, then sea freight is the method of choice. As the supply chain gets more sophisticated and yet more efficient, especially with the advent of multimodal transportation, one needs to consider more factors before choosing between air freight and sea freight. There is a matter of pure physical restrictions of both air freight and sea freight, and there is a matter of differing customs regulations with air freight and sea freight. All in all, both are perfect supplemental solutions that help deliver goods to the intended destination.
Decision Matrix for Air Freight vs Sea Freight
Time and Money Matrix
This time and money matrix is a rough guide that would aid your decision-making process. We describe people with low-cost tolerance as decision makers that is very sensitive to pricing and every cent counts; On the other hand, we describe people with high-cost tolerance as decision makers that couldn’t care less about the cost, as long as the cargo arrives on time.
|Very Urgent Cargo
|Somewhat Urgent Cargo
|Not Urgent Cargo
Of course, this matrix is not a one-size-fits-all guide. The key factors that guide your decision-making process are not only cost and urgency, certain limitations such as the nature of the cargo, the volume of your cargo, the safety of your cargo, and the intended destination of your cargo may weigh more than mere time and cost. This is what we will discuss further in this article.
When to Use Air Freight
We’ve covered to an extent the benefits of using air freight in this article here. But we can elaborate further as to what guides a shipper’s choice to use air freight.
Instead of listing the benefits of using air freights, let’s name a few examples of air freight transportation.
Parcel deliveries are almost always delivered via air freight.
Logistics companies come in many shapes and forms. Particularly, the courier business is built differently from many other logistics companies.
Customers opting to deliver cargo via a courier service prefer door-to-door services.
Large companies such as FedEx, DHL, and UPS are companies that have mega infrastructures built to provide that favored door-to-door service.
The term door-to-door service may understate the number of logistical hurdles that a company has to take on to provide that service.
Here are some of the processes that a door-to-door service covers: –
- Customs clearance at the exporting country and the importing country,
- Cargo loading into either a pallet or a unit load device
- Freight booking and stowage planning
- Warehouse storage
- Parcel pick up service and delivery service at the destination
Large courier companies have competitive advantages that no other standard logistics company provides.
To provide a seamless service that efficiently covers all the above requirements, large courier companies invest in their fleet of trucks, charter their plane, build their warehouses, invest in sophisticated parcel sorting infrastructures, and employ thousands of bee-like workers to deliver one particular parcel to your doorstep.
In addition to that, these huge investments can only work if the courier companies invest in multiple strategic companies as well. This business model has a high barrier to entry and therefore such service can only be served by those specific niche courier companies.
Courier companies profit with volume. Therefore, the more homogenous the cargo’s size and shape are, the more efficient a courier company can be.
If your cargo size is small enough and light enough, then air freight services provided by courier companies are the transportation method of choice.
Delivering to Timbuktu
Now, consider that you have an atypical delivery that needs to arrive at Timbuktu.
The cargo size in question is enough to fit in one unit load device, you can also transport the cargo via sea freight with Lesser-Container-Load (LCL).
The question is, should you choose to deliver via air freight or sea freight?
Timbuktu is situated in Mali, a landlocked nation. This poses some difficulties in arranging sea transportation. But it is not impossible, there is a river port called Koulikoro, outside the city capital of Bamako.
It takes 90 days to transit from Port of Los Angeles to Bamako, and conservative estimates for ocean freight are roughly USD 450 per metric cube (minimum). Then it is a 15-hour drive from Bamako to Timbuktu.
All in all, including customs documentation, shipping documentation, and destination delivery charges (excluding customs duty and tax), the conservative estimated charges of a Port to Door delivery is around USD 1200 per metric cube.
So, for a 90 days transit, delivering a 250kg cargo via sea freight would cost you USD 1200.00. This is also assuming that the vessel schedule is frequent.
Whereas for air freight, the estimated door-to-door rate from Los Angeles Airport (LAX) to Bamako-Senou International Airport is USD 4607 (excluding tax and duty)
|Door to Door Delivery (Estimated)
|90 Days (subject to vessel schedule)
So, if your main priority is speed, there is no question that air freight is the faster option, but if cost is your enemy, then choose sea freight. Sea freight transport costs around 4 times less, but the transit is well over 3 months!
Shipping Valuable Goods
Two major concepts we have to know to understand why shipping valuable goods via air freight is much more sensical.
The first concept is, the shorter the transit time, the safer the cargo will be. Longer periods of cargo transit poses a significant risk for transportation. This is natural as you wouldn’t want your cargo in the hands of a third-party logistics provider for as long as 90 days, looking back at our example of transport from Los Angeles to Timbuktu. Instead, a 9 days period where cargo is in possession of a third-party service provider is much more preferable.
The second concept is, the fewer parties that are involved in the transportation, the less risky it is to transport the cargo. Sea freight transportation arguably requires more coordination with multiple parties to proceed.
In standard sea freight transportation, parties involved could be: –
- Customs brokers
- Freight Forwarders
- Air Carrier
- Inland Truck Transporter
- Port Stevedores
Assumably, parties involved in airfreight transportation do require the same coordination, except for the port stevedores.
However, air freight carriers provide a more seamless service as compared to sea freight transportation. Recall our example with parcel delivery companies, well those large courier companies, with all their infrastructures in place, do provide ad-hoc services that are catered towards special cargoes.
The key difference is, large parcel delivery companies offer all those services under one roof. This equivocates to lesser parties involved in the transportation.
When to Use Sea Freight
Shipping Dangerous Goods
Statistically speaking, airplane accidents are rare, but when an airplane malfunctions midair, the resulting accident is catastrophic.
This is why the security of an aircraft is of paramount importance.
The Asiana Cargo Flight 991 claimed the lives of two souls, Captain Choi Sang-Gi and First Officer Lee Jeong-Woong.
54 tonnes of cargo were loaded on board, of which some of the cargoes include dangerous goods such as lithium batteries, paints, and photoresist fluids.
Lithium-Ion Batteries are classified as dangerous goods class 9, miscellaneous dangerous substance, and articles
Paints are classified as dangerous goods class 3, a flammable solvent.
According to reports, several hypotheses may cause the cargo fire, a theory is that: –
electrostatic energy that could be accumulated in the plastic wrap used for bundling pallet-loads of products together prior to loading since the Board concludes that electrostatic energy could play a role as an ignition source.
Another theory is that the lithium-ion batteries, under mechanical damage, disassembly, and electrical stress caused by abuse, could rupture and cause the fire.
With all that has been said, air freight transportation is still a viable choice to transport dangerous goods. Although, extreme care has to be taken in terms of cargo loading, packing, and stowage. These measures have to be supervised by qualified personnel.
All these safety restrictions are, by no means, only restricted to air freight transportation. In fact, sea transportation also applies the same DG classification, loading, packing, and stowage. The major difference is that air freight transportation of dangerous goods is much, much more restrictive.
Shipping Large Volumes of Cargo
The largest cargo plane, the Antonov An-225, has a carrying capacity of 250 metric tons.
To juxtapose that with a cargo vessel, that is equal to roughly 12 twenty-foot containers worth of cargo.
The largest container vessel, or Ultra Large Container Vessels(ULCV), on the other hand, has a carrying capacity of 23,964 TEUs. That equals roughly 479,000 metric tons worth of cargo.
Imagine, that the largest container vessel can carry up to 1900 times more than the largest cargo plane.
The rules of economics dictate that there is no real incentive to build planes larger or faster. Furthermore, the rules of physics also limit the size of planes built in modern times.
On the other hand, larger vessels and larger port facilities are a necessity to increase the economies of scale, and therefore increase the profitability of vessel operators.
There are other benefits to building and operating larger vessels.
The variable costs such as ship maintenance and fuel are distributed to more containers, making the cost per container cheaper. Moreover, slow steaming requirements mean that the vessel emits less carbon dioxide per container, which is good for the environment.
Air freight, sea freight, and land freight are the means that is readily available to every trade and manufacturing business. Ultimately, the decision of choosing between air and sea freight may be a case-to-case basis. Not all products are the same, in terms of the nature and urgency.