Understanding "Special Rate" in Air Cargo: Beyond the Standard Tariff

What is a "Special Rate" in Air Cargo?

In the dynamic world of air freight, efficiency and cost-effectiveness are paramount. While airlines publish standard tariffs for various routes and cargo types, the term "Special Rate" (often abbreviated as "SP" or "SR") refers to a rate other than a normal, published tariff rate. These rates are typically negotiated between airlines and freight forwarders like Ocean Cargo, or directly with high-volume shippers, to accommodate specific circumstances, cargo characteristics, or market conditions.

A special rate isn't just a discount; it's a tailored pricing structure designed to provide a competitive edge or facilitate the movement of particular goods that don't fit neatly into standard categories. For businesses relying on air freight, understanding and leveraging special rates can lead to significant cost savings and improved supply chain flexibility.

Why Do Special Rates Exist?

Special rates are a fundamental part of air cargo pricing for several key reasons, reflecting the complex interplay of supply, demand, and operational specifics:

• Volume Commitments: Large freight forwarders, such as Ocean Cargo, often commit to shipping substantial volumes of cargo with specific airlines over a period. In return, airlines offer preferential, special rates that are lower than their public tariffs. This ensures consistent business for the airline and better pricing for the forwarder's clients.
• Specific Commodity Types: Certain goods may qualify for special rates due to their nature. This could include perishables, Dangerous Goods (with specific handling requirements), or high-value items that require enhanced security. Airlines might offer special rates to attract these niche markets, balancing the additional handling costs with the potential for higher yield.
• Off-Peak Seasons or Routes: During periods of lower demand or on less popular routes, airlines may offer special rates to fill available cargo space. This is a common strategy to maximise aircraft utilisation and revenue, even if it means accepting a lower per-kilogram rate.
• Backhaul Cargo: When an aircraft flies a return leg with less cargo than its outbound journey, airlines are keen to fill that empty space. Special rates are often available for "backhaul" cargo, making it more attractive for shippers to utilise these less conventional routes or timings.
• New Route Development: To stimulate demand on newly launched routes, airlines might introduce temporary special rates to encourage freight forwarders and shippers to use the service.
• Competitive Market Conditions: The air cargo market is highly competitive. Airlines frequently adjust their pricing, including offering special rates, to win business from competitors or respond to market shifts.

Ocean Cargo's extensive network and long-standing relationships with major airlines enable us to access and negotiate these advantageous special rates, passing the benefits directly to our clients.

Types of Special Rates You Might Encounter

While the term "Special Rate" is broad, it encompasses various specific pricing structures:

• Contract Rates: These are long-term agreements between an airline and a freight forwarder, based on committed volumes and specific lanes. They form the backbone of many forwarders' pricing strategies.
• Spot Rates: For one-off or urgent shipments, a freight forwarder can request a "spot rate" from an airline. This is a rate quoted for a specific shipment at a specific time, often reflecting current capacity and demand.
• Commodity-Specific Rates (SCRs): These are rates tailored for particular types of goods, identified by specific IATA commodity codes. For example, rates for live animals, Pharmaceuticals, or certain types of machinery.
• ULD (Unit Load Device) Rates: Instead of charging per kilogram, some special rates are offered for an entire ULD (e.g., a container or pallet), regardless of its exact weight, up to a certain maximum. This can be highly cost-effective for dense cargo.
• Minimum Charge Waivers: While most shipments have a minimum charge, special rates might waive or reduce this for very small, frequent consignments.

Navigating these different types of special rates requires expertise. Ocean Cargo's team understands the nuances of air cargo pricing, ensuring you always get the most suitable and cost-effective solution for your air freight needs.

How Ocean Cargo Leverages Special Rates for Your Benefit

At Ocean Cargo, our primary goal is to provide seamless, cost-effective, and reliable global logistics solutions. Our ability to secure and utilise special rates is a significant advantage for our clients:

1. Extensive Airline Network: With over 25 years in the industry, Ocean Cargo has cultivated strong relationships with a vast network of global airlines. This allows us to access a wide array of special rates across numerous routes and services.
2. Volume Aggregation: By consolidating shipments from multiple clients, Ocean Cargo achieves the volume commitments necessary to negotiate highly competitive special rates with airlines. This collective buying power translates into savings for individual shippers.
3. Expert Negotiation: Our experienced team possesses deep market knowledge and negotiation skills. We understand when and how to secure the best possible rates, whether it's a long-term contract or a last-minute spot rate for an urgent consignment.
4. Optimised Route Planning: We don't just look for the cheapest rate; we find the most efficient and cost-effective solution that meets your specific requirements. This includes considering backhaul opportunities, less congested routes, and optimal transit times that might be available under special rate conditions.
5. Transparency and Advice: We clearly explain the benefits and conditions of any special rate applied to your shipment. Our consultative approach ensures you understand the value and how it contributes to your overall logistics strategy.
6. Global Reach: Whether you're shipping air freight to the USA, Canada, or complex project cargo to Australia, our access to special rates extends across our entire service portfolio.

Choosing Ocean Cargo means partnering with a freight forwarder that actively seeks out and applies the most advantageous pricing structures, ensuring your air cargo moves efficiently and economically.

The Impact of Special Rates on Your Supply Chain

Leveraging special rates effectively can have a profound positive impact on your business:

• Reduced Shipping Costs: The most direct benefit is lower freight expenditure, which directly improves your bottom line.
• Improved Budgeting: For regular shipments, contract-based special rates provide predictable pricing, making financial planning easier and more accurate.
• Enhanced Competitiveness: Lower shipping costs allow you to offer more competitive pricing for your products in international markets.
• Greater Flexibility: Access to a wider range of pricing options means more flexibility in choosing routes, transit times, and service levels to match your specific needs.
• Access to Niche Services: Special rates can open up opportunities to ship unique or challenging cargo types that might otherwise be prohibitively expensive or difficult to arrange.

Ocean Cargo acts as your strategic partner, simplifying complex supply chains and ensuring you benefit from every available advantage, including the strategic application of special rates.