Lessons · Lesson 6 of 7
- 01 · Every mode charges you on the greater of two numbers
- 02 · The last cubic metres are the expensive ones
- 03 · What a shared box costs, and who chose what is in it
- 04 · The air chain is not a flight
- 05 · Two routes, one promise: choosing by the tail, not the average
- 06 · If you fly part of it, fly the right part
- 07 · A missed hour costs one interval of the service
If you fly part of it, fly the right part
Rank an order's styles by what a kilogramme of air actually protects, and see the obvious choice lose by nearly three to one.
Lesson 6 of 7 · 18 min
The same money, three ways to spend it
Brantmere's USD 18,000 air allowance bought 2,900 snowsuits in lesson 4. Almost everybody makes that choice, for a reason that sounds solid. The snowsuits are the promotion. The promotion has a date. The snowsuit is the style with the story attached.
It is the worst of the three choices on this purchase order, and it loses by a factor of nearly three.
The reason it loses has nothing to do with which style matters most. It is this: an aeroplane sells kilogrammes, and a kilogramme protects a different amount of money depending on which garment it is spent on.
Cost of lateness for every chargeable kilogramme
PO BM-4412's late-delivery clause is 10% of the invoice value of any style that misses the distribution centre date. So each garment carries a number: the money at risk if it is late. Divide that by the chargeable weight it takes up. That gives you the only ranking that matters when you are buying air.
| Snowsuit | Trouser | Sweater | |
|---|---|---|---|
| FOB a piece, USD | 23.60 | 14.80 | 26.50 |
| At risk if late, 10% of FOB, USD | 2.36 | 1.48 | 2.65 |
| Pieces a carton | 10 | 20 | 24 |
| Chargeable weight a carton, kg | 16.00 | 19.44 | 13.20 |
| At risk a carton, USD | 23.60 | 29.60 | 63.60 |
| At risk for each chargeable kg, USD | 1.48 | 1.52 | 4.82 |
The sweater protects 3.3 times as much money per kilogramme as the snowsuit. The snowsuit finishes last of the three, behind the continuity work trouser nobody would ever think of flying.
Two things did that. The sweater packs twenty-four to a carton, and it is dense enough to be charged on what it weighs. The snowsuit packs ten to a carton and is charged on its size, so 43.75% of every kilogramme you buy for it is air. That is lesson 1.
Rank by FOB a piece instead and you get sweater, snowsuit, trouser. The right style is on top, but the gap is badly wrong: 26.50 against 23.60 looks like a close call, and 4.82 against 1.48 does not. Rank by which style feels urgent and you get the snowsuit. The per-piece price and the sense of urgency both measure something real. Neither of them is what the aircraft charges for.
Three plans, one budget
Thornbeck's air rate steps down at weight breaks, and the step matters here:
| Chargeable weight of the shipment | Base | Fuel | Security | All-in, USD a kg |
|---|---|---|---|---|
| Under 1,000 kg | 3.40 | 0.68 | 0.22 | 4.55 |
| 1,000 kg and over | 2.95 | 0.68 | 0.22 | 4.10 |
| 3,000 kg and over | 2.62 | 0.68 | 0.22 | 3.77 |
| 5,000 kg and over | 2.44 | 0.68 | 0.22 | 3.59 |
Fixed charges are USD 365 a shipment: air waybill, export entry and the truck to the airport. Those are Thornbeck's numbers for this lane in this week, not a market rate.
| What flies | Cost, USD | Value protected, USD | |
|---|---|---|---|
| Plan 1, the booking | 2,900 snowsuits, 290 cartons, 4,640 kg | 17,857.80 | 6,844.00 |
| Plan 2, spread across the order | 132 snowsuit, 63 trouser and 100 sweater cartons, 4,656.72 kg | 17,920.83 | 11,340.00 |
| Plan 3, ranked | all 7,200 sweaters and 440 snowsuits, 4,664 kg | 17,948.28 | 20,118.40 |
Plan 3 protects USD 13,274.40 more than Plan 1, for USD 90.48 more money, and it moves almost the same weight. Nothing about the freight changed. The cargo changed.
The rule that does most of the work
Plan 3 flies the whole of the sweater style: all 300 cartons, all 7,200 pieces, 3,960 kg, for USD 15,294.20. Then it spends the remaining USD 2,654.08 on 44 cartons of snowsuits.
That is not an accident of the arithmetic. It is the second rule of this lesson, and it is worth more than the ranking:
Fly whole styles, not proportions. A distribution centre allocates a style across its stores as a unit. Seven thousand two hundred sweaters arriving early removes 100% of that style's exposure. Two thousand nine hundred snowsuits arriving early removes 22.31% of the snowsuit's exposure and leaves the style late. The promotion still cannot open, and the clause still bites on the other 10,100 pieces.
Look again at Plan 2 in that light. On paper it protects USD 11,340. In practice it may protect nothing at all. It flies part of three styles and completes none of them. So all three still miss the date, and all three still carry the clause. Splitting an air budget evenly across an order is the most natural thing in the world, and it can buy you a distribution centre full of incomplete assortments.
Two more things the weight breaks do
Consolidating into one shipment rather than three also earns the break. Three separate 1,320 kg shipments would price at USD 4.10 a kilogramme instead of USD 3.77. On 3,960 kg that is USD 1,306.80. And each would carry its own USD 365 of fixed charges, which is another USD 730. Flying one whole style rather than three slices is worth USD 2,036.80 before a single garment has been ranked.
There is a warning in the same table. A shipment sitting just under a break is worth checking against the break above it. 4,900 chargeable kilogrammes cost USD 18,473 at 3.77. 5,000 kilogrammes cost USD 17,950 at 3.59. A hundred kilogrammes more cargo, USD 523 less money. Ask where the breaks are before you cut a shipment down to fit a budget.
Check yourselfYou have budget to fly 4,000 chargeable kilogrammes. Which cartons do you send?Show the answer
For each style, work out the money at risk if it is late, divide by the chargeable weight of a carton, and sort. Then fill the budget from the top of that list in whole styles, not in proportions, because a distribution centre cannot open a style that is only partly there. Check the weight breaks in both directions before you finalise. And check whether the top-ranked style is the one people expect. It usually is not. The styles that feel urgent are the bulky seasonal ones, and bulky is exactly what an aircraft charges most for.
Prompt · Choose what to fly, and defend the choice
The moment there is a budget for air freight and more cargo than it will carry, whether that budget was planned or has just been granted.
Act as a merchandiser's analyst. I have a fixed budget for air freight and more cargo than it will carry. I need the cargo chosen on arithmetic, not on which style feels urgent. Facts: budget [AMOUNT]. Air rate [AMOUNT] a chargeable kilogramme, with the weight breaks and the rate at each if I have them, plus [AMOUNT] of per-shipment charges. Volumetric divisor on the quotation [NUMBER]. For EACH style: code, pieces still to ship, pieces a carton, carton external dimensions in millimetres, carton gross weight, FOB a piece, and what being late actually costs for that style. For that last one, give the contract clause if there is one, and separately my own view of the real cost, such as a markdown, a missed window or a cancelled promotion. Do the following. First, for each style compute chargeable weight a carton and the money at risk for each chargeable kilogramme. Rank the styles by that figure alone. Second, tell me whether the ranking differs from a ranking by FOB a piece. If it does, explain in one sentence why. Third, fill the budget from the top of the ranking in WHOLE STYLES wherever a whole style fits, and tell me what each plan costs and what it protects. Fourth, build me the plan most people would choose instead, which is usually the seasonal or highest-profile style. Put the two side by side with the difference in money. Fifth, check the weight breaks in both directions, and tell me whether adding cargo would lower the bill. Sixth, warn me where flying part of a style protects nothing, because a distribution centre allocates a style as a unit. Seventh, say which of my inputs the answer is most sensitive to. Use only my figures, and name every assumption at the end.
AI can make mistakes — check anything you act on.
What to take away
- Rank by the money at risk for each chargeable kilogramme. Not by price a piece, and not by which style feels urgent.
- Bulky seasonal outerwear is usually the worst thing to fly, because you buy its size rather than its weight.
- Fly whole styles. Partial protection of a style protects nothing at a distribution centre.
- Consolidate the air into one shipment. That reaches the weight break and pays one set of fixed charges.
- Check the break above your shipment size. More cargo is sometimes less money.