In January 2013, World Trade 100 asked website visitors “Why are you switching between transportation modes?” 41% of visitors answered they use more air in order to keep their inventories lean, the primary motivation behind this is to reduce spend. As a lean inventory means reduced inventory carry costs and avoiding excess inventory, it does produce results; but approaching your air freight incorrectly may diminish or even cancel out those savings.
Companies choose air to maintain a lean inventory because it is the fastest mode of transportation. But few companies differentiate between expedited and consolidated options. There can be significant savings when choosing consolidation over expedited shipments. Don’t assume your current approach to air freight is the only option. Adjust your supply chain to accommodate consolidated air more often to achieve cost savings and improved efficiency. Air forwarders often offer consolidated air freight at a reduced cost. Savvy customers utilize this reduced pricing to cut their own costs. Air forwarders may offer a discounted price for consolidated freight because they are able to leverage multiple customers, thereby improving both load factor and pallet utilization.
There are certain times when expedited air shipments are unavoidable. Many reasons, from unexpected manufacturing delays to pressure from customers due to seasonal demands, may require a truncated timetable. Consolidation may still be a viable option for your freight even in these situations. If there is a delay in production, look at your entire supply chain before you jump to the conclusion that expedited air is your only option.
All too often, companies choose to expedite without knowing the situation at the delivery location. If expedited air freight arrives at a location on a Friday, it may sit untouched until Monday morning when the location reopens after the weekend. This defeats the purpose of paying a higher rate to expedite the shipment. Rather than having freight sit at the destination for two days, consolidating the freight with other shipments and planning the delivery for Monday saves money without extending the actual received date.
Make informed decisions when choosing consolidation or expedited air—know the situation at your destination. It’s important to make decisions knowing both sides of the equation rather than make a fast decision based on pressure. Air freight is the single fastest and most expensive mode of transportation; don’t let your decisions leave your freight sitting for days at a time.