Courier, also known as “express” is basically a “door to door” service, where the courier company will get your goods from Point A (normally your supplier’s address in origin country) to Point B (Your delivery address in destination country).
They will manage all the processes required in getting the goods from A to B, i.e. local pick-up & delivery, customs clearing at origin & destination port, payment of taxes & duties (They will bill you for this bit separately), etc. Popular courier companies are DHL, FedEx, UPS & TNT.
Air freight is essentially an “Airport to Airport” service, as opposed to a “door to door” service.
This means, the carrier is responsible for taking the goods after they have cleared customs at the origin airport & delivering them to the destination airport. A customs clearing/forwarding agent is required at each end to clear the goods & arrange further delivery to your door.
Air freight is often referred to as “air cargo”. Your trade terms with the supplier will dictate who arranges for & pays for the forwarding agent at origin & destination.
Importers often get confused about how courier & air cargo costs are calculated. When a courier services company, forwarding agent or supplier quotes you on per kg basis, they are normally referring to the cost per kg of “Chargeable Weight”.
Chargeable weight refers to the higher of actual weight of the goods & the volumetric weight of the goods. Volumetric weight (also known as “dimensional weight”) is calculated by multiplying the dimensions of the carton and dividing it by the “dimensional factor”.
Importers often ask suppliers for the weight of goods & take a quote from the agent based on the actual weight & end up surprised when they find a large courier bill, due to the fact that they were charged on volumetric weight, as it was higher than the actual weight.
To add to this confusion, the calculation formula for calculating volumetric weight for “courier” shipments is different from “air freight” as the “dimensional factor” for courier is 5000, while that for “air freight” it is 6000.
This is where even experienced importers trip, when they are trying to decide between courier & air freight, as they use the same weight to compare options.
So let’s look at an example.
Products: 10 Cartons.
Carton dimensions: 80 x 50 x 40 cm.
Actual total Weight: 200 kg.
Volumetric Weight (Courier): ((80x50x40)/5000)*10 = 320 kg
Volumetric Weight (Air Freight): ((80x50x40)/6000)*10 = 267 kg
As the volumetric weight exceeds the actual weight of the cargo in the above case, the courier charges would be based on 320kg & air freight charges based on 267kg.
Note: Nowadays courier companies use advanced laser scanning machines to calculate the volume of cartons. This means, even a small bulge in your cartons can lead to a significant increase in volume.
Courier Vs. Air Freight – Which one to choose?
Continuing with the above example, let’s say you were importing goods from China to the US & were quoted $5/Kg for courier & $4.5/Kg for air freight, your costs would be:
Door to Door courier: $5 x 320Kg = $1600
Air Freight = $4.5 x 267Kg = $1200
But wait, there is a reason why importers find comparing these quotes confusing. Let’s assume under both cases you have bought your goods on EXW basis, in this case, using air-freight you would need to pay for:
Haulage/domestic courier from factory to the airport.
Customs clearance costs & forwarder costs both in China & USA.
Haulage/domestic courier from the airport in US to your door.
Let’s assume that as a ballpark figure these come to $300 in China & $450 in US, so a total of $750. So now our options look like this:
Door to Door courier: $5 x 320 kg = $1600
Air Freight = $4.5 x 267 kg + $750 = $1950
In the above scenario, courier is clearly the better option. To add to that, another important consideration is that express courier is almost always the faster option, unless you have chosen for one of the super-slow courier services which tend to be cheaper and your package goes on a world tour for 7-10 days before reaching its destination.
So, the key question is, at what point does air freight become more economical than courier? From my experience of sending out many many courier & air freight shipments from China over the years, I find that in most cases, at around 400-500 kg chargeable weight, the “total cost” of air freight starts to become cheaper than using air courier.
For weight below the 400 kg mark, using air courier is also a simpler option than air freight, as you do not have to worry about dealing with forwarders etc. which means you can use that time to focus on other key areas of your business.
