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Air Freight – Along with the development of Vietnam’s economy, the demand for air freight service is increasing. Besides transporting passengers, the flights also optimize the transportation of goods to all countries. With the expansion of trade between countries, air transport has become one of the most popular forms of international freight transport because of its flexibility in routes and the ability to transport valuable goods.
What is air freight?
Air transportation is the transportation of goods, postal items, passengers, letters and luggage from one place to another by air. According to the provisions of the Law on Civil Aviation of Vietnam, air transportation business is a conditional business and is carried out by airlines.
Advantages of air transportation
Air transport has some advantages that sea transport does not have. It is important to mention that the shipping time is faster than seagoing ships and boats. Moreover, high value goods are transported by plane.
In addition, air transport also has the great advantage of being unobstructed in terrain. Does not require investment in the construction of expensive infrastructure such as railways and seaways. Therefore, it is possible to expand the shipping network to many countries around the world.
It is possible to transport goods that are perishable and need to be transported in a short time. Minimizing the loss, incurred costs due to the process of making goods, breakage.
Air traffic is safer than other forms of transport so there is less risk, and customers who buy insurance for transportation will also spend less.
Minimum storage fee due to fast shipping and handling time, so the storage time is very short.
Disadvantages of air freight
High freight rates, usually only suitable for transporting high-value products
Air freight is often affected by severe weather. In the rainy and stormy seasons, flights are often delayed in order to ensure the safety of passengers and cargo on the flight.
Due to the low load capacity, the aircraft is a very picky means of transporting goods, so the customer group is not as diverse as other forms of transport.
What items can be shipped by air?
Due to the limited variety of items shipped by air. So when there is a need to use air freight services, you need to determine if your shipment is suitable for this transportation method.
- General goods: Goods that are not restricted in size, content, packaging, etc. when transported by air.
- Special Goods: Certain goods with distinct properties such as live animals, high value goods, remains, perishable goods, dangerous goods, wet goods, smelly goods, etc. However, before the goods are put on the plane for transport, they will have to go through a rigorous inspection process.
For special items, goods owners need to have a careful packing method, many layers of protection, shock resistance, etc. Dangerous goods need to apply for a transport permit in accordance with regulations.
Fees that you need to be aware of for air freight service
Estimating transportation costs when importing and exporting helps businesses control the cost of shipments. Therefore, to know what types of costs and surcharges are included for air freight, please refer to the costs below.
Domestic shipping fee from customer’s warehouse to the airport
Compared with other forms of transport, the cost of domestic freight services by air is also very high. Not suitable for bulky, large-volume goods. However, businesses can combine multimodal transport to reduce transportation costs.
Customs clearance fee
This is a mandatory fee when businesses import and export goods. This fee includes: the cost of preparing the customs documents, the service fee for making the customs documents if you use the customs declaration service on your behalf, the fee for changing orders. In addition, there may be additional costs for storing frozen goods, unloading fees, costs for product inspection, etc.
Airway Bill issuance fee
The bill of lading fee is the surcharge collected by the airline from the customer to make a bill to declare the necessary information for transportation. Note that, for air freight, it is considered a document of ownership and is not transferable. The Airway Bill is considered a certificate that the carrier has received the goods from the sender, and is also a proof of contract between the carrier and the charterer.
THC (Terminal Handling Charge)
THC is a surcharge for loading/unloading at the airport’s port. Accordingly, each airline will designate a port to park aircraft to exploit cargo. THC fee is calculated according to the weight of the goods.
D/O fee (Delivery Order fee)
Delivery order fees are applied to imported shipments after the carrier issues notice of arrival.
The importer will bring the necessary documents and documents to receive the D/O and pay the D/O fee. The importer brings the D/O paper and presents it to the customs authority of the importing country, then he can go to the yard/warehouse to pick up the goods.
The delivery order fee will be calculated based on the number of original bills of lading issued.
Handling fee is a type of surcharge applied in handling goods according to the regulations of the shipping line or forwarder. This fee is collected from the shipper/consignee to offset the cost of loss for monitoring and keeping the shipment safe.
X-ray fee and Security
A fee that an airline collects from a shipper to compensate for the performance of security checks at the airport. This fee is usually fixed by the airline and has a very low cost. Depending on the number of packages to be inspected, this cost may vary.
How to determine the air freight?
Similar to sea freight, to determine freight by air we also apply 3 steps as follows:
Step 1: Volume of the whole shipment
CBM = volume of 1 carton x number of cases = (length x width x height) x quantity
Step 2: Convert weight to volume, with the unit: 1 CBM = 167 KGs
Step 3: Compare volume and weight
- TH1: If CBM > KGs => apply by volume (bulky goods)
- TH2: If CBM < KGs => apply by weight (heavy goods)
*Note: For goods shipped by air: 1 CBM = 167 KGs. Different from the converted weight of sea freight, you need to note the unit of conversion between the two modes of transportation to avoid mistakes in estimating freight.
In addition, you can also refer to the method of calculating sea freight charges at: How to determine sea freight charges
The process of importing goods by air freight service
Sign foreign trade contract
Exporters send samples, negotiate prices with overseas buyers. Then, the buyer and the seller negotiate, deal and sign a foreign trade contract between the two legal entities. The foreign trade contract stipulates that the seller must provide sufficient and correct information about goods and relevant documents to the buyer. The buyer is obligated to pay for the goods to the seller.
Besides, The contract will be signed by both parties. Importers need to carefully consider the terms of the contract to protect their benefits. Any misleading information, the two parties need to exchange and discuss the content of the contract to correct it.
Apply for an import license (if any)
Depending on the imported goods, the buyer must apply for an import license before importing the goods to Vietnam. If your goods are subject to an import permit, you should prepare the procedures early before the goods are on board. Avoid incurring storage time, storing at the port will lose the storage fee. Items required to apply for an import license are under the management of ministries and branches such as:
- Ministry of Information and Communications: Postage stamps
- Ministry of Natural Resources and Environment: Plant protection drugs, plant varieties, wild animals and plants
- Ministry of Agriculture and Rural Development: Vaccines, biological products, veterinary chemicals, pesticides, fertilizers…
- Ministry of Industry and Trade: Industrial precursors, chemical substances used in industry
Make a payment
Depending on the payment method that the two parties agree to determine how much the prepayment is.
International payment methods include:
- Remittance: At that time, the customer (payer, buyer, importer…) will request the bank serving them to transfer the money to the beneficiary (seller, service provider, exporter…). The sending bank must make the remittance through its agent in the beneficiary’s country. Forms of money transfer include: telegraphic transfer (Telegraphic Transfers – T/T) and form by mail (Mail Transfers – M/T). This method of money transfer has many potential risks, should only be applied when the purchase and sale relationship is reliable and the payment value is not too large.
- Method of delivery of payment documents: The importer requires the bank to open a trust account to make payment to the exporter when the exporter presents the correct set of documents for the shipment.
- Documentary Credits: The bank opens a letter of credit at the request of the requester to open the letter of credit, promising to pay an amount to the beneficiary. Or accept a draft drawn by a third party, in which case the third party presents a set of documents for payment in accordance with the letter of credit. Documentary credit methods include: D/P at sight (Document against Payment), which means that in order to receive documents, the buyer must fulfill the obligation to pay the seller; D/A (Document against Acceptance), the buyer must accept the bill of exchange, must pay for the goods at the specified time to receive the documents, then receive the goods.
- Collection method: After fulfilling the delivery obligation, the seller will draw a draft to ask the collecting bank to collect money from the buyer. There are 2 types of collection, including: Clean Collection is a method where the seller asks the Bank to collect the draft from the buyer but does not add anything; Documentary Collection means is after the seller fulfills his delivery obligation, prepares a collection of payment documents (shipping documents and draft) and then asks the bank to collect the draft on the condition that the buyer pays or accepts to pay, the Bank will send documents to them to receive the goods.
- Letter of Credit (L/C): A form of payment by a letter of credit issued by a reputable bank, capable of guaranteeing payment and guarantee for purchases and sales.
Among the international payment methods, L/C is the most commonly used method . This method ensures benefits and safety for both importers and exporters. If the two parties are partners for the first time cooperating with each other, they should use the L/C to avoid risks in the buying and selling process.
Check goods documents
In the process of importing and exporting goods, the verification of documents should be done accurately. The information on the vouchers must be shown in sync with each other. The set of goods documents includes:
- Sales Contract
- Airway Bill
- Commercial Invoice
- Packing List
- Certificate of Origin
Receive notification of arrival and do necessary procedures to receive imported goods at the airport
Before the plane arrives at the destination, the airline sends a notice of arrival to the consignee to do the necessary procedures. Consignee brings ID card and Referral to pick up goods at the airport. Before delivery, it is important to check and determine the condition of the goods.
The consignee goes to the airline to pay the necessary freight and receive the delivery order. The airline withdraws the original bill of lading No. 2, the consignee completes the import procedures.
Customs clearance for goods imported by air
When the goods are brought to Vietnam (importing country), the importer must make a customs declaration for the shipment. This is a mandatory procedure when importing goods, because for goods imported into or out of Vietnam, they are under the management of the Customs and relevant ministries.
For more information about the detailed Customs declaration process, please see: customs service
Drag the goods to the warehouse
After customs clearance of goods, the importer completes the procedures for receiving goods and liquidating the declaration. Then, proceed to hire a means of transport to transport the goods to their own warehouse.
Some difficulties when importing goods by Air
The seller did not pack the goods properly because of breakage for items or the markings on the boxes that do not match the product specifications. Therefore, when damage or breakdown occurs, it will easily lead to conflicts and disputes between buyers and sellers.
High transportation costs, not suitable for low value agricultural products. Due to the short terms of using, quick spoilage, seasonality… Therefore, the production, harvesting, packaging, storage, transportation, and export to other countries must be effectively integrated.
The time of transporting goods may be delayed due to the influence of weather.
With the above mentioned problems when transporting goods by air, businesses can use air freight service. The company providing transportation services will cooperate with customers to find the optimal method of transporting goods from abroad to Vietnam, carry out customs procedures, deliver goods… Enterprises importing and exporting goods by air can save costs and time, and increase profits.
Why should you use air freight services at Expander Logistics?
- Expander Logistics provides import and export services of goods from many countries around the world at low cost.
- Expander Logistics will arrange a dedicated department to advise and support customers continuously until the safe shipment is delivered to the recipient. We are always ready to answer all questions and support customers even before and after using the shipping service at Expander Logistics.
- With a professional working etiquette, we provide accurate and efficient services to meet customers’ demand in the fastest way.
- A team of experienced staff with extensive knowledge of industry specifics helps customers determine the right procedures, import and export procedures, carry out Customs procedures, prepare documents…
Through the above article, Expander Logistics hopes to help customers in the process of learning about the advantages and disadvantages of air freight. If you have a need to transport goods, advise on customs procedures, import and export, apply for a license, etc., please contact us immediately through contact information:
EXPANDER Logistics Company
Mr. Kenny Pham
Address: No. 146, Street 16, Van Phuc Urban Area, Hiep Binh Phuoc, Thu Duc City, Ho Chi Minh City