Computation of Freight Rates
Computation of Freight Rates
Rates and charges
- Rates and charges are formalized by IATA and published in the TACT Manuals, available worldwide.
- The main purpose of IATA standardizing published rates and charges is to prevent competition among member airlines.
- This is the lowest amount that applies to a shipment regardless of the weight or volume.
- That is if the actual or volumetric weight of a shipment is lower than the published minimum weight, the minimum charge will apply for general cargo.
A) General Cargo Rates:
- Tariff given for the General Commodity shipments that do not come under specific commodity or commodity classification rates.
Basically these are rates for general cargo.
B) Normal cargo rates:
- These are published rates that apply to any consignment weighing 45kg and below, however there are variations.
- In some countries the normal cargo rate can start from 100 kilograms. The NCR is calculated by multiplying the chargeable weight by the published rate per kilogram.
- Normal cargo rates
- This is further divided based on the transit period of Normal, Express and Time Definite.
- Normal: Under this Rate class, the airline can take transit time beyond 5 days.
- Express: Goods transported to destination within 48 hours under Express Mode and a higher price is charged than Normal rate.
- Time Definite: The Delivery of goods will be within a certain time frame. Tariff will be higher than Express rate.
- Express and Time Definite goods are accepted only on the On-line destinations where an airline use own aircraft.
2. Quantity Rates:
- These are published rates that apply to consignments weighing more than accepted general cargo say 45 Kgs or 100 Kgs
- This rate is further reduced at higher weight break for example 300 Kgs and 500Kgs that is the heavier the shipment the lower the chargeable rate per Kilogram.
C) Specific/ Special Commodity Rate
- Airline offers special rates for specific commodities which are lower than general cargo rates.
- These rates apply to certain goods with specific descriptions and are published from particular point of origin to a particular destination.
D) Commodity Classification rates
- These are a percentage increase (surcharge) or percentage reduction (Rebate) on general cargo rates applicable to a few commodities within or between IATA designated areas.
- Such commodities include, live animals, Valuable cargo like gold, legal bank notes, baggage shipped as freight, Human remains etc.
E) Unit Load Device (ULD) Rate
- ULDs are used for the storage of cargo on the aircraft and are divided into two types; Pallets and Containers.
- Cargo on the Pallets are secured to its rim by a net and made according to the loadability into the allotted aircraft type.
- Various types of Containers are providing by the Airline based on the aircraft used to serve a location.
- Cargo is secured either by the container doors closed or a door net being secured to the rims of the container walls and floor.
- The rates are charged as per ULD Maximum Weight e.g. LD3: Chargeable Weight 700 Kgs
You are an employ of a forwarding company in Nairobi/Kenya with branches all over EAC, you are responsible for all order processing and operations dealing with consolidation in the company’s export department. You are preparing your weekly CONSOL, you receive the following different customers.
- Customer A has 1 carton of corrugated boards weighing 80 kgs with dimensions 125cm x 100cm x 80cm from NBO- DXB.
- Customer B has 5 cartons of fabrics of total weight 120kg with dimensions 40inc x 45 Inc x 45inc NBO- DXB
- Customer C has 6 bales with dimensions 80cm x 80cm x 80cm total weight 320 Kgs NBO- DXB
- Your customer from A-C require full detailed transport counselling as well as detailed information on transport costs.
- Explain in detail your consideration regarding the complete transport process
- Explain the calculation of freight for each single consignment
- Explain the calculation of freight for the full consolidated consignment
- Show how much profit you would make after consolidation
- Base your calculation on the below tariff
IATA Published rates
General cargo Rate (< 45Kgs)
General cargo Rate (>45Kgs)
- Explain the criteria for freight rates
- Discuss the elements of an airfreight tariff
- Write short notes about the following rates clearly giving examples in each.
- Time definite rates
- Minimum rates
- Quantity rates
- Special commodity rates
- ULD rates