Transportation Cost Control Strategies

15 Instant Impact Cost Control Strategies / Air Freight vs Courier – Chapter 4 January 14, 2008

Besides the obvious cost difference (courier is typically more expensive than air freight) shipping via courier rather than air freight has it’s advantages and disadvantages.

Size and weight permitting, to determine the best method I normally ask the following questions.

1) what is the cost per lb or kg
2) what is the transit time
3) what is the point of origin and the point of destination

Here are the basic differences when comparing the two methods. If the cargo is too large then it will likely have to go via air freight. Courier companies usually have a weight limit per piece. But don’t confuse this with total weight of shipment. In other words, if you have 500 lbs don’t automatically assume you cannot ship these via courier. If you have 10 pieces at 50 lbs each, courier is definitely a viable alternative.

If I have a deadline to meet where the product MUST be delivered by a certain date then my first option would courier providing the cost is not prohibitive. Sometimes the cost to ship is less expensive then the cost of paying late fees or penalties.

Air freight in general is port to port (airport to airport). If you exercise your right and use a freight forwarder then you can request a door pickup rate + air freight + local destination delivery rate. This will almost duplicate the courier service but at a much lower cost.

Using a carrier for small packages makes sense. Sending a package via air freight can at times be more costly than sending it via courier. With courier the rate usually starts around 1/3 of a kilogram and works it way up. With air freight there is a minimum rate for just about every rate applied to the shipment which makes it almost prohibitively expensive to ship.

There is no big secret when to move courier and when to move air freight. It all boils down to two factors.

1) cost – how much
and
2) time sensitivity – when does it need to be there

One last thing … if you are being pressured by another dept to move this as a rush, don’t hesitate to show them the cost difference. And when you show them the difference don’t give the cost per lb or per kg. Do the math THEN give it to them. Showing totals has a much more dramatic affect and makes your point come across real strong. You’ll be surprised how many times they’ll back away and settle for the cheaper method. There are times however when it just has to be there, no excuses!