INTERNATIONAL AIR

TRANSPORTATION & INTERNATIONAL

LOGISTICS INTERMEDIARIES

Air transport charter, process, cost analysis and comparison with other modes.
Logistics intermediaries and the role they play in the logistics system. 3PL, 4PL
INTRODUCTION

Air Charter refers to a variety of services available that allow for the renting of an entire aircraft for
their use. Some of this air charter services include:

 Aircraft Charter and Jet “Services”

 Emergency Air Charter Services

 Contracts of carriage, and the management specialized movements of heavy lift aircrafts, Vessels,
Submersibles, Tugs, and Barges

 Critical Freight Shipments

 International Aircraft Charter

 Air Cargo Planes, Cargo Jets & Cargo Aircraft

•Chartering Process

•Step 1
get an instant cost-estimate online and request live market prices
•Step 2
receive a quote summary, detailing the most suitable aircraft for your trip
•Step 3
choose which option you would like to book, and provide your billing address
•Step 4
sign your charter contract and execute payment (see “How do I pay for my jet?”)
•Step 5
provide the passport details of all travelling passengers (this is required for the passenger
manifest)
Things To Consider Before Chartering an Aircraft

 The Flight Objective

What you pay to charter a private jet will depend on what your mission is. Everything about your flight—from the number of
passengers and crew, volume of the cargo being transported and the distance to how far out you’ve planned your flight in advance
—are all part of the mission.

 The Airport
The airport you fly out of may add to your cost as well. For example, you’ll pay more of a premium to fly out of an international
airport in a major city in than if you were to fly out of other secondary airports. In some cases, the difference is a 20-minute drive
to these secondary airports but you can save thousands of dollars in fees. Always look to tell your charter broker the airport you
want to go to and the address of the place, so they can look for secondary airports you can fly out of.

 Mission duration
You may need to pay for overnight fees to park the airplane and put the pilots up in a hotel room if you plan on staying overnight.
So, the length of your trip is another a cost factor to consider.
 Plane origin
It may also cost more depending on where the plane is originating from. If your plane isn't starting from. where you are, then you
might need to pay "repositioning" fees. If you can charter a plane that starts where you are or at. the airport that you're departing
from—that's going to save you money because the plane won’t need to reposition itself. Ask your charter broker/operator if there
are planes available near you or where you’re departing from and if that lowers the cost of your charter flight.

 Age of plane/ Airplane Model

It’ll cost more to charter a newer plane than an older plane. If safety is the reason you want a newer plane vs. an older plane.The
make and model of the aircraft may affect your cost. Sometimes you may get a better price on a newer, more efficient aircraft than
an older less efficient aircraft.

 Peak travel days

Flying on holidays (and peak travel days) may cost you more due to increased demands. Similar to the airlines, charter prices are
negotiable. If you want to get a good deal, negotiate during non-peak travel times where the demand is low.
 Fuel prices
The biggest cost of chartering a jet will be your fuel costs. Sometimes, you can save a few hundred dollars in fuel if you’re
flexible on your terminal. For example, different airports charge different prices for fuel. So always ask your flight broker which
airport and terminals have the cheapest fuel prices. If going to another terminal saves you $ 1per gallon and the plane burns 300
gallons per hour — that's $300 an hour that you're saving.

 The Distance
Airlines price based on the popularity of the route whereas charter flights price based on the distance.

 Cabin Preferences
Every cabin and interior preference that you want—from number of crew on board , flight operators, special crew needs —may
affect your cost.

 Weather Conditions
You may need to pay more during adverse weather conditions or if you are heading to a winter destination.
Cost Analysis and Comparison With Other Modes

The principal components of the cost for air cargo transport are: the aircraft’s capital and direct
operating costs, the airport and navigation fees, the ground handling charges and the cost for airline
administration.

• Billable Flight Time – Based on the hourly rate of the aircraft and the number of flight hours.

• Fuel Surcharge – Charges vary by type of plane, distance flown and the cost of fuel.

• Crew Fees – Per diem payments, hotel fees, meals, etc.

• Landing, Handling & Incidental Fees – Charges vary by type of plane, airport and other details.

• Excise Tax  – Domestic flights incur a tax of 7.5% on top of all charges, in some countries.
COMPARISON WITH OTHER MODES
 Less Than Truckload (LTL)
Less Than Truckload, or LTL, is a ground shipping service where goods only occupy a portion of a trailer.
Most freight trailers are 8’-8.5’ wide, 12.5’-13.5’ high, and 40’-53’ long. These dimensions allow for several
loads of shipment to fit into a single truck to accommodate multiple customers and point of destinations. This
makes LTL cost efficient for freight shipping. LTL also offers many benefits not found in other shipping
methods. Those are eco-friendliness and access to extra service options.
Not only does LTL cut costs, but by sharing a truck bed with other shippers allow for a reduction in the carbon
footprint on Earth.

 Full Truck Load (FTL)

Full truckload will usually mean two things; either there are enough products to fill a full truckload, or there is
a need for a dedicated truck for a partial load. The volume of goods will fill out the truck from top to bottom,
front to back. Although there are some weight limitations based on vehicle laws, the standard size of each
shipment will range between 10,000 to 45,000 lbs. When it comes to what types of transportation methods are
used, full truckloads use dry can, flatbeds and refrigerated trailers.
This method is often chosen when shippers have 10 pallets or more, there are high-risk packages or when the
time is an issue.
 Rail Freight

Rail shipping is one the least expensive mode of transportation available for large and heavy goods. If goods and
commodities are located near the rail-head then this option should be considered. However, one fact to consider is
that if the destination is connected to the railway, or if additional modes of transportation is needed. This will
influence a cut down or increase in costs, so ensuring that shipping by rail fits within a specified budge. Railway
carries goods and commodities by freight car. There are a variety of railcars available per each type of goods. Some
of the more common cars are auto-carriers, coil cars, stock car, refrigerator cars, etc. These help transport
automobiles, coils of sheet metal, livestock and temperature-sensitive items, respectively. Other materials that
commonly are transported using this method are grain, stone, coal, ethanol, and petroleum .
 Ocean Freight Shipping Services

Even though air is preferred over ocean for international shipping, the benefits of using ocean freight shipping are
due to the size of cargo and total costs. There are no restrictions when using ocean freight, but where air freight may
take only a few days, ocean freight may take up to a few weeks. Much like ground shipping, ocean freight is
categorized into two different shipping types, Full Container and Share a Container. These are big factors to
determine shipping container costs, amongst other factors

 Full Container (FCL)

Full container shipping allows the shipper to use an entire container, whether it is filled up 100% or not. Benefits of
shipping FCL is damage protection from other cargo and no standby time for filling out the container, therefore
making it much safer and quicker to delivery.

 Share a Container (LCL)

Sharing a container lets shippers keep their inventory low, especially if they do not have the money or space to
accommodate a full shipment. Instead of paying for an entire container, LCL allows shippers to be priced based on
cost and size. This makes it easier to manage and restock seasonal inventory in different shipments.
LOGISTICS INTERMEDIARIES

 Freight Forwarder

FFs are the most common form of logistics intermediaries, linking international trade. As FFs are utilized in the day
to day business, their importance is high. The activities of FFs come into consideration when companies require
cargo transportation, as FFs act as intermediaries between the shipper and the transporter. Goods are commonly
moved between the exporting country, on behalf of the exporter, to the importing country, to the importer. As this
process consists mostly of cross border shipments, international freight forwarder (IFF) might be a better term to use.
IFFs consolidate small shipments into big ones, in order to create higher effectiveness and efficiency within the
supply chain. This activity eases the pick-up and delivery process as well as the time and costs for the companies.
 Non-vessel operating common carrier (NVOCC)

NVOCC are non-vessel operating common carriers, which evolved from the traditional freight forwarding business.
The function of those carriers is to act between the liner company and the shipper. The NVOCC primarily serves as a
wholesaler for ocean shipment capacities or blocks of container capacities. Two canvassing strategies can be used to
sell the capacity. On the one hand, the capacity can be sold from liner companies through freight forwarders in the
contract market, this is called freight forwarder canvassing. On the other hand, third-party canvassing strategies can
be used, which means, liner companies sell capacity through NVOCCS in the contract market. Those methods are
different, freight forwarders only arrange the transportation of the goods, which means they do not issue the bill of
lading (B/L) and are therefore not liable for physical damage or loss of the cargo. Whereas NVOCCS are
independent transport companies, which means the firm is physically responsible for transporting the goods. All
documents, including the B/L are issued, however NVOCCS do not operate the vessel used for the ocean transport.
Another difference is, that freight forwarders do not intervened in the transport processed, whereas NVOCCS do so