The air freight industry is notoriously volatile. General Rate Increases (GRIs) are a regular occurrence, making securing air freight capacity, especially during peak seasons or unexpected global events, a significant challenge for businesses relying on timely deliveries. Obtaining competitive air freight quotes requires strategic planning and a deep understanding of the market dynamics. This article will guide you through the process, offering insights into navigating the complexities of GRIs and securing the capacity you need.
What are General Rate Increases (GRIs) in Air Freight?
General Rate Increases (GRIs) are across-the-board increases in air freight rates implemented by airlines. These increases are usually announced in advance but can be sudden and significant, impacting the overall cost of shipping goods by air. Several factors contribute to GRIs, including fluctuating fuel prices, increased demand, and operational challenges. Understanding the reasons behind these increases helps businesses better prepare and negotiate quotes.
How to Secure Air Freight Capacity Despite GRIs?
Securing air freight capacity amidst GRIs requires a proactive approach. Here’s a breakdown of effective strategies:
1. Book Early and Secure Contracts:
This is perhaps the most crucial step. Booking your air freight well in advance, especially during peak seasons (like the holiday shopping period or major trade shows), allows you to lock in rates before GRIs take effect. Negotiating long-term contracts with freight forwarders can also provide price stability and secure your allocation of space, safeguarding you against capacity constraints.
2. Be Flexible with Your Shipping Schedule:
If your deadlines are flexible, consider adjusting your shipping schedule to avoid peak seasons when demand and rates are highest. Shipping during off-peak periods can significantly reduce your costs and improve your chances of securing capacity.
3. Diversify Your Shipping Options:
Don't rely solely on one airline or freight forwarder. Exploring alternative routes, carriers, and even modes of transportation (e.g., combining air freight with ocean freight for certain parts of the journey) can provide more options and potentially lower costs.
4. Optimize Your Cargo:
Careful planning of your cargo can reduce costs and improve efficiency. Optimizing packaging to minimize volume and weight, consolidating shipments, and ensuring accurate documentation can reduce overall expenses and make your shipment more attractive to carriers.
5. Negotiate with Freight Forwarders:
Develop strong relationships with freight forwarders. They possess market expertise and can help you navigate GRIs by identifying potential savings and securing favorable rates. Don't hesitate to negotiate contracts and explore volume discounts to leverage your purchasing power.
How Do I Get Accurate Air Freight Quotes?
Getting accurate air freight quotes requires providing detailed information to your freight forwarder or airline. Include:
- Origin and Destination: Precise locations are crucial for accurate rate calculations.
- Cargo Details: Weight, dimensions, and type of goods are essential. Hazardous materials require specific handling and documentation.
- Shipping Schedule: Your desired departure and arrival dates greatly influence the price.
- Incoterms: Clearly state the Incoterms (International Commercial Terms) to define responsibilities and costs between buyer and seller.
What Factors Influence Air Freight Quotes?
Several factors beyond GRIs influence air freight quotes. These include:
Fuel Surcharges:
Fuel costs are a major component of air freight pricing. Fluctuations in fuel prices directly impact the overall cost.
Currency Exchange Rates:
International transactions involve currency conversions. Fluctuations in exchange rates can affect the final price.
Seasonal Demand:
Peak seasons experience significantly higher demand, leading to increased rates.
Congestion and Delays:
Airport congestion and potential delays can add to the overall cost.
Insurance:
Insurance costs vary depending on the value and nature of the goods being shipped.
Are There Alternatives to Traditional Air Freight?
Exploring alternatives can provide cost savings or capacity solutions during GRIs. Consider:
Less-Than-Container Load (LCL) Consolidation:
Shipping smaller quantities as part of a larger consolidated shipment can reduce costs.
Ocean Freight:
For less time-sensitive goods, ocean freight can be a more cost-effective option.
By understanding the factors that influence air freight quotes and implementing the strategies outlined above, businesses can effectively navigate the challenges of GRIs and secure the air freight capacity they need for their operations. Remember, proactive planning and strong relationships with freight forwarders are essential to securing competitive rates and reliable shipping solutions.
