1. What is air freight block space?
In air cargo, block space refers to the contracting of pallets, which is one of the ways international freight forwarding companies enter into sales agency contracts with airlines. The freight forwarder commits to delivering one or several 'boards' of cargo on each flight of a specific route, and for each board, the airline charges a minimum basic weight. The specifics are executed according to the agreement terms between the airline and the freight forwarder. Air freight block space means that on a fixed cargo route, there is an agreement with the airline to self-allocate cargo on fixed board positions, essentially buying out those board positions. Not having block space is the opposite.
2. The pros and cons of air freight block space?
The Pros of Air Freight Block Space:
1. Block space ensures capacity, especially during peak shipping seasons when this advantage is more evident. Those without block space typically resell their cargo to operators with block space, as securing capacity can be more challenging for them.
2. Operators with block space settle directly with the airline, giving them a pricing advantage. Without block space, rates are generally higher as they're sold to operators with block space, although there's also the issue of single loads.
3. Operators with block space have more flexibility in operations, allowing mixed loading of goods, such as combining light and heavy cargo scientifically, maximizing profit during palletization.
4. Another benefit of block space on dedicated routes is increased shipment rates. After obtaining air freight boards, freight forwarders can distribute goods more freely and flexibly, improving cargo handling efficiency, saving time for shippers, and enhancing air freight timeliness.
The Cons of Air Freight Block Space:
If the freight forwarding company fails to deliver the promised quantity of cargo to the airline, it still needs to pay the freight based on the original commitment's minimum chargeable weight (base weight, English term PIVOT).
The Qualifications Required for Air Freight Block Space:
For freight forwarders, becoming a first-class agent of an airline requires the following basic conditions and qualifications:
1. There must be sufficient cargo volume every month or per flight.
2. Adequate funds are required; a deposit must be paid to the airline upon signing the contract, and the settlement cycle for freight charges is relatively short.
3. The International Air Cargo Class I Agency Qualification (CATA) issued by the China Air Transport Association, commonly known as the bronze plate, must be provided.
4. The agent must provide IATA and CASS settlement qualifications.
5. Other qualification documents.