Air freight

1. What is air transportation?

Air transportation is a method of transportation that uses dedicated aircraft to transport cargo (Cargo Aircraft or Freighter) or carries them in the belly of a civil aircraft (Passenger Plane). Up to now, air cargo accounts for a small percentage of the total international freight weight (less than 0.5%), while it accounts around 30% of the total value. According to Boeing aircraft manufacturing statistics, in 2012, dedicated cargo aircraft transported approximately 60% of the global air cargo shipments and passenger planes handled the remaining 40%.

2. What is air freight?

Air freight is one of the highly competitive forms of transportation in the logistics industry today. It offers many advantages but also has several disadvantages. To decide whether to choose this transportation method or not, let's check some information below.

Air freight is also simply understood as using aircraft to transport cargo. The cargo are carefully packed and loaded onto dedicated cargo aircraft or cargo compartments of passenger aircraft. With the development of the economy and increased trade between countries, this method of transportation is becoming more popular and dominant.

However, due to the unique characteristics of the aviation industry, this transportation method is normally suitable for high-value cargo and short delivery times. It is commonly used for various types of cargo such as:

• Air mail, express courriers.
• Live animals, human viscera, human remains.
• Pharmaceuticals.
• Valuable items (gold, diamonds, antiques).
• Technical equipment (high-tech products, aircraft parts, marine equipment, cars).
• Luxury consumer cargo (electronics, fashion).
• Perishable cargo (food, fresh flowers, dry ice-packed items).

3. Advantages and disadvantages of air freight:

In logistics, each transportation method has its own advantages and disadvantages.

Air freight stands out with its fast and secure delivery but comes at a higher cost. Therefore, it is best suited for high-value cargo and time-sensitive cargo such as:

• Air mail, express post.
• Perishable cargo (food, fresh flowers, dry ice-packed items).
• Pharmaceuticals.
• Valuable items as gold, silver and diamonds.
• Technical equipment (high-tech products, aircraft parts, marine equipment, cars).
• Luxury consumer cargo (electronics, fashion).

3.1. Advantages of air freight:

The biggest advantage of air transportation is high speed. Aircraft have the highest speed among current transportation vehicles. On average, cargo or passenger planes have an average speed of about 800-1000km/h. Very higher compared to other common methods like sea vessels (12-25 nautical miles/hour), trains (in Vietnam only about 60-80km/h), or trucks (60-80km/h). Additionally, air transportation is safer than road, rail, and sea transportation.

Besides, there are other outstanding advantages such as:

Not hindered by terrain like roads or waterways. Therefore, it can connect to virtually all countries worldwide.

Fast, punctual service due to the high flying speed and the nature of high-value or perishable cargo.

Minimizes losses from mishandling, breakage, or theft.

Lower transport insurance fees due to less risk than other methods.

Low storage fees due to the nature of cargo and fast processing speed of procedures.

3.2. Disadvantages of air transportation:

High freight prices, calculated per kilogram.

Limited and less suitable for transporting low-value cargo.

Smaller transport capacity compared to other methods. Not suitable for bulky or heavy cargo. The cargo volume is limited by the cabin size, door dimensions, and payload capacity. In such cases, sea freight is more viable solution.

Stricter standard requirements. Related to regulations and laws to ensure flight security and safety. Many high-risk items (e.g. flammable, explosive) are not accepted for transport. For example, when traveling, during the process of checking passengers and cargo with scanning machines, you will feel the strictness of regulations in the aviation transportation industry.

Affected by weather conditions: flights can be delayed due to unfavorable weather such as fog, thunderstorms, etc.

4. Parties involved in air freight:

From the shipper's perspective, there are many parties involved:

Postal companies transport air mail, documents envelopes and packages weighing up to 30 kg. These companies subcontracting the transportation services from airlines. For example: EMS, Viettel,…

International courier companies transport documents envelopes and packages up to 75 kg. They also subcontracting the cargo transportation services from airlines. For example: Kerry Express.

International integrators transport envelopes and packages up to 75 kg. They often use their own transport aircraft and may also rent part of the services from airlines. For example: DHL Express, FedEx, TNT Express, UPS.

Air cargo forwarders transport packages and consolidated shipments over 75kg by subcontracting services from airlines. For example: Agility, CEVA Logistics, C.H. Robinson, Damco, DB Schenker,…

Airlines and air operators use their aircraft for transporting cargo and passengers.

According to statistics from the International Federation of Freight Forwarders Associations (FIATA), forwarder companies handle up to 80% of international air freight shipments. They manage shipments door-to-door for their clients, while airlines focus only airport-to-airport cargo transportation.

Therefore, depending on specific cargo requirements, you can use services such as:

• Domestic air transportation.
• International air transportation.
• Air express delivery.

5. How to calculate the “chargeable weight” in air cargo transportation:

The cost per kilogram of cargo will depend on the type of cargo, time requirements, type of transportation by sea or air, specific destination... then the freight price will be adjusted to be most beneficial to the customer.

Contact us for advice and the best quote for customers on accounting for insurance costs for imported and exported cargo, cargo for sale, purchase, capital contribution, and portable goods in accordance with air and sea regulations.

Calculation way of shipping costs for cargo abroad by sea is based on the volume in cubic meters is as follows:

(Length x Width x Height) = Volume (m3). Charge per cubic meter.

Calculation way of international air freight charges based on the “chargeable weight’, which is calculated as following way:

K1 = (Length x Width x Height) cm/6000; the unit is in cubic centimeters and is then divided by 6000 to get the volume K1 (Some airline divides to 5000).

K2 is the actual weight of the cargo when weighed.

Compare K1 and K2, whichever value is higher will be used to calculate the cost.

Shipping by sea will be cheaper than by air when the cargo are heavy and bulky. Meaning, cargo weighing 251kg or 1.5cmb and above should be sent by sea as it will be much more cost-effective than by air. Another factor to consider is the time to receive cargo from abroad, if it is urgent and need to receive cargo early, air transportation is mandatory. Because the delivery time will be quite long (approximately 1 month) if sent by sea to the US, Canada, Australia...

6. The process of importing air cargo

The import process is more complicated than export process, as our country encourages exports and has policies to support them, while imports require strict control.

Specific steps in air cargo import process include:

6.1. Step 1: Sign a foreign trade contract.

Once you find the source of export cargo, you will contact your partner to make the purchase transaction.

To accurately determine the purchase and selling of cargo with foreign partners, to ensure commitment, both parties will negotiate together and issue legal document governing this trade. Both parties will agree and provide information on the contract including:

•  Art. 1 : Commodity
• Art. 2 : Quantity
• Art. 3 : Quality
• Art. 4 : Packing and marking
• Art. 5 : Price
• Art. 6 : Shipment
• Art. 7 : Payment
• Art. 8 : Warranty
• Art. 9 : Penalty
• Art. 10: Insurance
• Art. 11 : Force majeure (Acts of God)
• Art. 12 : Claim
• Art. 13 : Arbitration
• Art. 14: Termination
• Art. 15 : Other terms and conditions (General Conditions)

This document is negotiated and agreed based on the practical needs and capabilities of the businesses involved in the trade of cargo. It is crucial for all parties to discuss each clause to ensure their optimal interests, serving as a foundation to prevent dishonest practices from partners. Therefore, the more detailed the contract terms, the better.

Many contracts do not mention rarely used terms in air cargo imports such as complaints or warranties, etc. However, when disputes arise, these terms serve as legal conditions for businesses to protect their interests.

International trade contracts may consist of multiple copies, notarizations; however, each party should have at least one contract signed with fresh signatures and stamp from the enterprise engaged in air cargo imports and exports.

After commitment, the parties must proceed to implement the air cargo import-export contract according to the agreed terms.

6.2 Step 2: Hiring a Transport Unit

After signing the contract, the next step in the air cargo import process is to hire a transport unit

Based on the delivery conditions in Incoterms, both parties can determine whether the responsibility for hiring this transport unit belongs to the buyer or the seller. In cases you are the importer responsible for hiring a transport unit (conditions E and F), you hire transportation companies (carriers), usually freight forwarders (must be designated by the airline and authorized to operate cargo transportation), or air cargo agents (GSA) to proceed the air freight.

Freight forwarders often have partners or employees in various countries to carry out export procedures in the exporting country. These units may be responsible for procedures at both the import and export ends if conditions permit.

When hiring transportation units, you must have a transportation commitment signed between both parties, usually an Master Airway Bill (MAWB) and/or House Airway Bill (HAWB).

6.3 Step 3: Customs procedures at the exporting country:

Preparing the export shipment, delivering it over to domestic transport units, taking the cargo to the export customs clearance location which involves:

• Receiving the cargo at the exporter's warehouse.
• Transporting them to the airport for the airline.
• Completing export customs clearance.
• After receiving the cargo from the seller, the forwarder must provide the seller with a certificate of receipt, warehouse storage, transportation, etc.

After completing customs clearance at the exporting customs, the airport, the airline, the forwarder will issues a House Airway Bill (HAWB) and sends it along with the cargo. The 2nd  original MAWB/HAWB (original for shipper) is handed back to the shipper along with a notice of relevant charges for the shipper to settle.

6.4 The airline transports the cargo from the exporting country to the importing country:

Besides cases of transit or air import through a third country, airlines usually transport cargo directly from the exporting country to the importing country.

When the plane lands, the airline's service department will transport the cargo from the airport warehouse onto the transport plane. This shipment can be transported by dedicated aircraft or in the cargo hold of passenger planes. In the case of passenger planes, the cargo is placed in the belly of the aircraft, below the passenger seating area.

After the cargo is loaded onto the plane and before it is delivered, the airline informs the estimated time of arrival at the destination airport, so that the forwarder knows and notifies the consignee to prepare necessary procedures.

6.5 Step 5: Customs clearance procedures for air imports

In the importing country, the forwarder will be authorized by the shipper to handle customs clearance for air imports. The forwarder will electronically declare the cargo before arrival. The customs clearance process will involve:

- Receiving arrival notice from the airline, informing the importer of the shipment schedule.

- Go to the airline or their agent to pay fees such as delivery order fee (DO), handling fee, labor fee, etc., and receive the documents enclosed with the cargo (mentioned in step 4),

- Collect the original Airway bill (HAWB copy no.2 - original for shipper),

- Handle the cargo reception from the carrier, settle all collect charges, complete procedures and pay fees at the airport.

- Prepare documents and carry out customs clearance in the air import process,

- Register to pick up cargo at the airport warehouse (such as TCS, SCSC at Tan Son Nhat airport, or NCTS, ACS, ALS at Noi Bai airport).

SEE MORE: CUSTOMS PROCEDURES

6.6 Step 6: Delivering cargo to the warehouse

Once all necessary procedures are prepared, the forwarder will leave necessary information for customs officers to contact and notify when the cargo arrive at the airport warehouse.

When cargo arrival at the airport warehouse, personnel will carry out cargo receipt procedures, complete customs declaration, arrange for the cargo to be taken out of the airport, and deliver them to the designated company warehouse of the importer.

7. Air export procedures:

The following steps outline how to export cargo by air. It is essential to follow these steps in sequence:

7.1 Step 1: Negotiate and then sign an international sales contract:

Both parties negotiate and agree on various contract details including basic information such as: package details, pricing, payment methods, delivery terms, service fees, promotions, complaints.

These terms have been agreed upon by both parties in the negotiation, meeting current practical needs. After completing this step, we move on to step 2.

7.2. Step 2: Signing the contract:

The importing air cargo process.

When you export under conditions, you will be responsible for the transportation of cargo. You need to hire a transportation service company to handle the necessary steps in the shipping process.

7.3 Step 3: Applying for an export license:

In the export air cargo process, the next step after signing the contract is to apply for an export license. There are usually two cases for applying for an export license that you must know.

Case 1: No need to apply for an export license for regular cargo or services, with permission from the relevant authority.

Case 2: Mandatory requirement to apply for an export license for cargo under special government control. For example: wood, antiques, explosives, etc., require a permit from the governing department.

This process will take a lot of time, so you might consider using the customs clearance services of Hung A Logistics!

7.4. Step 4 Prepare cargo for delivery to the carrier:

According to the agreed schedule, you hand over the cargo to the FWD along with necessary instructions for them to deliver to the airline.

7.5 Step 5 Customs clearance and delivery in the import country:

At the airport of the import country, the FWD agent will contact and coordinate with the importer to handle procedures related to the airline, airport, customs, taxes... with the purpose of completing the import procedures for the shipment.

7.6 Step 6 Prepare for payment:

Also in the export air cargo process, one crucial aspect is the payment issue. Problems in payment often bring high risks for exporters. The payment confirmation procedure is one of the essential tasks when an organization executes an international trade contract based on the terms specified in the agreement.

8. Regulations for air freight transportation business:

According to the provisions of the Vietnam Civil Aviation Law 2006 and guiding documents, cargo transportation business in particular and air freight in general, are conditional sector carried out by air transport enterprises (also known as airlines). Accordingly, the entities permitted to engage in air freight business must be airlines, including Vietnamese airlines and foreign airlines.

The general conditions for obtaining a license for air freight business include:

• Having a business registration certificate with the main business activity is air transportation.
• Having a plan to ensure aircraft operation.
• Having an organized structure with licensed personnel and appropriate certifications to ensure aircraft operation and air freight business.
• Meeting capital requirements as Government regulations.
• Having a business plan and product development strategy for air freight that aligns with market demands, aviation industry development plans
• Having a headquarter and main business location in Vietnam.

In addition to these general conditions, Vietnamese laws also has specific requirements for each airline.

8.1. For Vietnamese local airlines:

Capital conditions: Air transportation is a service industry that requires large investments in machinery and equipment, not only for transportation vehicles but also for ground equipment, which can be costly.

According to current legislation, in order to be licensed for air freight business, investors or airline companies operating air transportation with 1 to 10 aircraft and engaging in domestic air freight market must have a minimum charter capital of 200 billion Vietnamese Dong, and 500 billion Vietnamese Dong for international air freight market operations. When using more than 10 aircraft, airlines must comply with a larger amount of legal capital according to the provisions of Decree 75/2007/ND-CP.

8.2 For foreign investment airlines:

According to Vietnamese law, only Vietnamese airlines are authorized to operate domestic air transport. International airlines are only allowed to operate domestic air transport in cases of disaster prevention, response to epidemics, and urgent humanitarian assistance, with the approval of the Ministry of Transport. This is a common regulation that many countries apply, typically the US.

In addition to the legal capital conditions as prescribed in Decree 75/2007/ND-CP, foreign airlines establishing in Vietnam must also adhere to capital contribution ratios: foreign parties not exceeding 49% of the charter capital for airlines or aviation businesses in general, and individual foreign entities not exceeding 30% of the charter capital. The legal representative of the airline must be a Vietnamese citizen, and foreigners must not make up more than one-third of the total management team.

9. Cargo transportation airlines in Vietnam:

There are five domestic airlines in Vietnam: Vietnam Airlines, Pacific Airline (comes from Jetstar Pacific), Vietjet Air, Viettravel Airlines and Bamboo Airways. These 5 airlines operate 49 domestic routes from major airports like Ho Chi Minh City, Hanoi, Nha Trang, Da Lat... There are also many international routes to countries across Asia, Europe, Americas, Australia, and Africa. Each airline has its own advantages and disadvantages in terms of service quality, seat classes, discount and promotional programs for customers.

However, their common goal is to ensure safe flights at the most affordable ticket prices.

10. Air freight in domestic:

In recent years, Vietnam's air freight industry has continued to rapidly develop in both scale and quality. Access to air cargo services for domestic residents has never been more convenient than it is now. The emergence and growth of domestic and international airlines have significantly contributed to the country's economic development, expanding opportunities, and promoting economic, cultural, and social exchanges among provinces and cities.

Currently, there are 5 active airlines in Vietnam, including Vietnam Airlines, Pacific Airline (comes from Jetstar Pacific), Vietjet Air, Viettravel Airlines and Bamboo Airways, operating at airports such as:

Rach Gia Airport, Phu Quoc International Airport, Lien Khuong Airport, Vinh International Airport, Tuy Hoa Airport, Dong Hoi Airport, Chu Lai International Airport, Sao Vang Thanh Hoa Domestic Airport, Phu Bai International Airport, Con Dao Airport, Phu Cat Airport, Ca Mau Airport, Can Tho International Airport, Buon Ma Thuot Airport, Da Nang International Airport, Dien Bien Phu Airport, Pleiku Airport, Cat Bi Airport, Noi Bai International Airport, Tan Son Nhat International Airport, and Cam Ranh International Airport.

Hung A provides services for Sea freight transportation, Air freight , international transportation, door-to-door international transportation services, FCL/LCL international transportation services. Contact us for advice and support.

SEE MORE: DOMESTIC TRANSPORTATION

11. Hung A Logistics services:

Since its establishment, Hung A Logistics has continually grown and established a strong position in the air freight field in Vietnam. Currently, Hung A Logistics has contracts with major international airlines with high flight frequencies, large cargo capacities, and flights to almost anywhere in the world such as Vietnam Airlines, Air Mauritius Cargo, British Airways World Cargo, Singapore Airlines, Thai Airways, Garuda Indonesia Airways…. As a trusted partner of airlines, Hung A Logistics has the most favorable conditions to provide customers with high-quality air freight services from Vietnam to major international airports around the world.

Hung A Logistics offers comprehensive air transportation services to meet all customer requirements including

• Import and export air freight, delivery from shipper's warehouses or airports to airports or recipient’s warehouses
• Packaging and parceling
• Warehouse storage and distribution
• Agents for freight and transportation contracts with many major airlines worldwide such as SQ, TG, VN, BA, etc.

12. Contact information:

If you have any questions and/or enquiry, please feel free to contact our hotline directly or visit the official website of Hung A Logistics. Your satisfaction is our success!

VIET NAM OFFICES:

HEAD OFFICE AT HOCHIMINH CITY

HUNG A LOGISTICS CO., LTD

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Telephone: +84-28-3821-6685

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Email: info@hungalogistics.com; viet.tq@hungalogistics.com (CS)

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