The benefits of Air Freight Consolidation can never be over-emphasized. With our analysis, you should, by the end of reading this post, be able to determine what best way to save money while importing. This is obviously what you don’t want to miss especially if you are on a low budget; if you into mini-importation or simply importing goods at small capacity.
What Air Freight Consolidation Shipping is.
Simply put, the word consolidate means ‘to merge’.
Airfreight Consolidation is, therefore, a system of collecting cargoes and shipments from various shippers and delivered to different receivers.
Consolidating cargos of numerous consignees into one lot and then prepare them for shipping is known as consolidation in the freight industry. This includes Air, Sea and Road freight.
The idea is, the freight forwarding company merges goods shipped by different shippers as a single shipment and ships them to a country common to the receivers.
In Nigeria (and most other countries), air freight consolidation is commonly referred to as ‘Consol’.
Why Importers in Nigeria offer Air freight Consolidation Services?
In an early post, we shared with you why air freight shipping is best considered of the 4 modes available, (i.e. Sea, Air, Land and Railway). All 4 modes can be used to offer consolidation services one way or the other.
But, while the other 3 modes are relatively great for shipping, especially sea shipping, they leave out the aspect of speedy delivery as air freight shipping guarantees a fast and a more shipping and delivery process.
Importers generally consider consolidation services using air freight because it is relatively cheap (i.e. affordable), fast and reliable method. As a freight forwarding company, we recommend this method to our client in order to help save the cost of shipping while enjoying fast and reliable services.
Is Freight Consolidation same as Groupage?
As in our earlier post on Groupage, Groupage was defined by Global Negotiator as simply meaning “Combining cargo from more than one shipper or importer and/or to more than one consignee for shipment together, usually in a single shipping container.
What then is the difference?
Consolidation is the act or process of consolidating, making firm, or uniting; the state of being consolidated; solidification; combination while groupage is the consolidation of several small shipments into a single container.
In context, both words are synonymous may be used interchangeably.
Most of the time, air freight consolidation may consist of those who venture into small scale importation business as this method turn out the best bet. This is due to the fact that your items may be too small for a full container load, there the need to group with other mini importers.
It is a great way to start importation business with a tight budget.
Is there any form of disadvantage?
The most glary disadvantage may be that most times, the shippers have to wait for the freight forwarder to gather enough goods from shippers in order to meet up with the required weight the airlines can lift.
Save Money Enjoying the Benefits
- It reduces the cost of shipping drastically
- Customs clearance cost and process time lessen
- Less documentation for the shippers
Air Freight Consolidation helps to reduce shipping cost
In order to cut cost and amass profits as an entrepreneur, one of the several ways is to seek airfreight consolidation, especially when it is the only option available.
If the freight forwarder declares a higher the volume weight of a single shipment, the airline operators lower the freight rate. In other words, the more the weight in tons the less the cargo company pays the airline operators.
With this opportunity-based-system, the rate payable by the shippers will be less. This is so because shippers share the rate among themselves for the cargo, therefore, minimizing the rate payable.
Reduces Cost of Clearing and Process Time
Besides the reduce freight rate, the shipper pays a reduced cost on customs clearing.
If you are in Nigeria, you’d have heard or known that shippers usually run into loggerhead with customs in fulfilling their requirements by Nigeria customs service and other government agencies.
Many importers enjoy the drastic reduction of customs clearance cost at airport due to cut-cost on the customs benchmark charges for each shipment. The more the weight of the goods in tons the less the customs agencies pay for clearing the goods at the airport.
For example, assuming an importer buys 20kg of goods from China, the rate he or she supposes pay for the goods will depends on the HS code import duty of the goods. And the rate will also depend on value of the goods.
Let’s say he buys it with the value of 50, 000 USD and the import duty is 20% HS code
Import duty is 10,000 USD @ 305 NGN = 3, 050, 000 NGN
Port Surcharge 7% of import duty = 213,500 NGN
CISS 1% of CIF = 500 USD @ 305 = 152,500 NGN
ETLS 0.5% of CIF = 500 USD @ 305 = 76,250 NGN
VAT 5% = 2,500 USD @ 305 = 762,500 NGN
Total = 4,254,750 NGN
Other charges at the port are warehouse charges, airline advice charges, agencies charges, FAAN charges. With this agencies he or she will still pay additional cost of 50, 000 NGN
In contrast, if the importer engages in air freight consolidation shipping, he will pay less than this. Let’s assume the customs agent charges him at most 1500 NGN per kilogram (kg) will be paying 30, 000 NGN compare to the single shipment declaration above that result in millions. Even, after examination by customs officer at tarmac, he later discovers the value of the goods of the goods. The charges will never resolve to millions as I calculated with it with standard calculation with customs.
In addition, you can see the benefit of using consolidation shipping services if the option is available in the country of origin. It helps in cutting customs clearance at port of destination for importers to maximize profit on imported goods.
Less documentation for the shippers
Documentation is very important aspect of shipping. When there is any problems with shipment’s documentation, it can cause the import spend more as well as delay of clearance at ports. Customs agencies always advise the importers to best ways to handle documentations and declarations.
With the consolidation shipping services in Nigeria, documentation that may pertain to any consignment in bulk shipping will be overlook. The freight forwarding company will declare one or two shipments that may cover other goods that can have high value if they undergo customs clearance as a separate shipment with airway bill documents.
Some goods may require special import permit or license as single shipment but with consolidation shipping it may attract waiver. This is one of the great benefits of air freight consolidation shipping system in Nigeria.
Moreover, for normal air shipping to Nigeria, the list of documentations will be required by customs.
List of documents for Customs Clearance
Form M – This document that the importer will request from Customs service through Central bank of Nigeria and commercial bank. It will consist of commercial value of the imported goods. It states the country of origin and country of destination. The information of the importer, his details and shipper of the goods, his details will be document. The clear description of the imported goods, its HS code and other important details on the goods that the importer want to ship to Nigeria
PAAR (Pre-Arrival Assessment Report) – This document contains the processed customs payable to the federal government of Nigeria. Nigeria customs service processes this document and issue the correct amount that ought to be paid to the government as taxes.
Government agencies licenses or permits – these are the documents that different agencies issue for smooth customs clearance at ports. They are NAFDAC import permit, SON product certificate, SONCAP certificate, Phytosanitary certificate and other licenses.
Airway bill – this will be issue by the airline operator. It contains the information of the shipment on the aircraft: the weight, port of origin, port of destination, nature of the goods and the tracking code.
In Conclusion, air freight consolidation shipping is great way for importers to cut cost. It is not available in all countries in the world. It is available in China, India, United Kingdom, United states of America, Dubai, Ghana and some other countries. If you have any question on shipping your goods, we are available to render you the best shipping services with convenience.
Consolidating cargos of numerous consignees into one lot and then prepare it for shipping is known as consolidation in the freight industry. This includes Air, Sea and Road freight. At Bowagate Global, We pride ourselves on providing superior freight shipping solutions to our clients at cost effective prices.
Our freight shipping consolidation service capitalizes on our global network of transportation providers to safely secure sharply discounted and competitive freight rate for shipments by Air and Sea
We can accommodate 1kg and above, less than a container load (LCL), large multi modal project or full container. We also provide secure warehouse solution/facilities, coordinate swift precise shipment and deliver your cargo wherever you want.