Air freight may not be as expensive as it seems, according to a logistics software specialist
March 13, 2012
Air freight may not be as expensive as it seems, according to a logistics software specialist.
JDA Software Australia Sales and Business Development Manager Emma Hose says by using software that estimates Total Landed Cost (TLC), manufacturers and suppliers using air freight can save money.
“By taking into account TLC, businesses can get a far better insight and an end-to-end view into exactly how much transportation will eventually cost them,” Hose says.
She says while air freight is perceived as more expensive, after the entire ground transportation process is taken into account, air can prove to be the cheaper alternative.
“For example, the costs of warehousing, or of lost sales due to slow delivery, could cancel out potential savings and thus make air freight the more cost effective option.”
She says as air transit is the fastest, most direct transport, it allows businesses to make last-minute logistics decisions and fulfill urgent orders.
“As such, it is estimated that such eleventh-hour shipments account for roughly 50% of the freight shipped by air,” she says.
She says in the automotive industry – where components can be quite expensive and customers unwilling to tolerate long delays –
TLC considerations and timeliness is vital.
“Today, the impact of globalisation and growing pressures to retain customers and keep the competition at bay means every decision has to be taken in the context of overall business profitability – no decision is an island anymore,” she says.