Everyone's watching their wallets these days, and that includes shippers of heavy air cargo. Even shippers that move high-value, time-sensitive commodities are looking for opportunities to keep their shipping costs in check without compromising service levels.

How can you get the most for your airfreight dollar? We asked airfreight forwarders and airlines for advice. Here's what they had to say:

Know how size and weight affect costs. Airfreight rates generally are assessed as a specified price per pound or per kilo. In most cases, the higher the shipment's total weight, the lower the rate per pound. Thus, if you can consolidate orders and ship a large quantity to a single destination, you'll reduce your freight costs.

The potential downside is that if the shipment is bulky in relation to its weight—i.e., it is low-density cargo—the airline will charge according to cubic volume rather than weight. It's therefore worth experimenting to see whether changing a shipment's size or weight will have a significant impact on freight costs.

To figure out whether a shipment will be charged on a weight or volume basis, multiply the shipment's length times the width times the height (in inches). Then divide that number by 166 for international shipments or 194 for domestic shipments. This gives the dimensional (also called volumetric) weight. The rate will be based on either the actual weight or the dimensional weight, whichever is greater (noted on the waybill as the "chargeable weight").

You should be aware, however, that this formula is scheduled to change on Oct. 1, 2003. The International Air Transport Association (IATA), an industry group representing international airlines, plans to reduce the number of cubic inches per pound from 166 to 138. This change, which is opposed by many shipper and forwarder groups, will effectively raise rates for shippers of lightweight cargo by about 20 percent.

Keep on top of capacity conditions. The availability of capacity (or "lift," as it's often called) has a big impact on rates. Rates for busy routes where there is sufficient capacity to meet demand will be lower than rates on routes where demand exceeds the supply of space. When there's excess capacity, rates drop as airlines fight to fill empty space with revenue-producing cargo. Knowing the score can alert you to opportunities for negotiating lower rates.

In addition, if a shipper can offer both inbound and outbound shipments on an imbalanced route, it can negotiate substantial discounts, says Yuichi Nakagawa, marketing manager for freight forwarder Nippon Express.

Seasonal demand, though, can change the capacity picture very quickly. Products that have a short shelf life, such as fruit or holiday merchandise, may dominate the available space for weeks at a time. Shippers that don't already have space commitments may find themselves paying premiums when capacity is tight.

Keep it simple. Multiple transshipments and complicated routings will raise both the forwarder's and the airline's costs, and will result in a higher rate for the shipper as well. John McVaney, executive vice president of logistics and North American sales for EGL Eagle Global Logistics, says that putting a shipment in a single carrier's or logistics provider's control throughout the journey saves money because it eliminates extra handling and handoffs. "That is most likely one of the primary reasons why shippers are consolidating suppliers," he observes.

Plan ahead. Forwarders and carriers say shipment forecasting is an important tool for securing lower rates and better service. "We understand that it's not the easiest thing in the world to do, but forecasting the volume and the number of shipments will benefit both us and our customers," Nakagawa says. "If we have that information ahead of time, we can get a better deal with the airline and we can schedule our consolidations better."

Planning ahead also lets shippers take advantage of the low rates available through airfreight consolidations. Consolidations may move out daily, several times weekly, or once a week, depending on the volume of cargo for each destination. Advance planning makes it possible to schedule shipments so they're in sync with consolidation schedules. And unless a shipment is truly an emergency and must move right away, the potential cost savings make it worthwhile to wait for a consolidation, says Frank Perri, executive vice president for sales and marketing at Pilot Air Freight.

Rethink your packaging. Packaging can make a significant difference in total shipping costs. The book International Logistics (by Donald Wood, Anthony Barone, Paul Murphy and Daniel Wardlow) tells the story of a shipper that always used the same type of carton for all of its shipments, regardless of mode or the size of the order. The boxes often had so little inside that they were half-filled with dunnage. As a result, air shipments were always rated on the dimensional weight, and shipping costs were high in relation to the value of the goods. By changing its packaging, the shipper achieved a sharp reduction in its airfreight costs.

Shipments that are palletized or containerized also offer big savings. Palletizing cartons or filling airline containers (commonly referred to as "unit load devices" or ULDs) reduces handling costs for both the forwarder and the airline, and shippers will share in the savings, says Perri. "Ask your forwarder for packaging recommendations. There's a lot of money to be saved if you can put cargo into a container ... [or have it] shrink-wrapped or banded to a skid."

Another way to keep airfreight costs in check, says McVaney, is to package not only for price but also for protection. "Most shippers don't realize the importance of quality packaging," he says. Improper packaging drives up total costs because it can lead to loss and damage. That means costly claims filing and followup as well as late delivery and the cost of replacing lost or damaged products.

Know your aircraft. Aircraft configuration has a greater impact on cost than many people realize. Shipments that move in the "belly space" of scheduled passenger flights, for example, are cheaper per pound than those that move via all-cargo freighter aircraft. That's because passengers cover the cost of operating the aircraft, so cargo is a bonus—"the icing on the cake," as McVaney puts it. But beware: Belly cargo moves on a space-available basis, depending on what's left after crews stow luggage, mail and express shipments. The likelihood of a delay has increased as airlines cut back on flights and use more economical, narrow-body aircraft that offer less room for cargo than the wide-body aircraft that were prevalent in better times.

Scheduled freighter aircraft service is more expensive but may be more reliable when it comes to space availability. Oversized cargo, though, incurs extra charges if its height dictates that it be stowed in the center of the main deck because it prevents the airline from fully utilizing the aircraft's capacity.

Don't run on autopilot. When they need time-definite service, some shippers automatically turn to express carriers. Although express carriers offer a wide array of excellent services, it's worth checking out overnight, next-flight-out and same-day delivery services offered by airlines and forwarders.

The key to getting the best value for your money, says Shelly Neal, cargo marketing manager for Southwest Airlines, is to choose only the level of service that the situation actually requires. The faster the service, the more expensive it is, so she recommends that shippers think carefully about whether they really need next-flight-out service or if 24- to 48-hour service would do.

Many shippers, though, shy away from deferred service because it was unreliable in years past, Perri observes. Those who do so are paying a lot more than they need to, he says. "Because of competition, technology, and shippers' desire to know where their shipments are 24/7," he says, "the quality of second-day service that exists today is top shelf."

Check on ancillary charges. In addition to the base freight rate, forwarders charge for services requested by the shipper, such as customs clearance, documentation, and pickup and delivery. These types of fees are assessed by the forwarder and may be subject to negotiation. Make sure that you are billed only for services you specifically requested or actually needed.

In addition, the airlines assess a fuel surcharge and a security surcharge on every shipment, and the forwarders pass them directly through to the shipper. Fuel surcharges, says McVaney, are affected by speculation in the petroleum industry, so they fluctuate continually.

The security surcharge is intended to help airlines cover the cost of increasing cargo security to meet new federal requirements. Typically, it costs 10 cents or more per kilo for international shipments, and around 3 cents a pound for domestic air cargo. Southwest Airlines, however, charges a one-time, $50 fee for a site visit to verify the legitimacy of a shipper's operation, notes Jon Kantenberger, senior cargo analyst.

Choose a good partner. Having a close, long-term working relationship with a reliable freight forwarder can help shippers get the most for their airfreight dollar. "It's important to establish a long-term relationship so they can make an informed decision," says Perri. "It pays off because, rather than getting shipment-by-shipment pricing ... you can get predictable, favorable pricing."

McVaney agrees with Perri's assessment. "If you are building a partnership with your supplier," he says, "he is going to know your business and will make recommendations that will make you competitive in the global marketplace."