Benefits of air freight consolidation in Nigeria
In this article, I enlighten you on the benefits of air freight consolidation shipping services. I will give more analysis on the reason many importers in Nigeria engage in such services.
Let me explain in details what air freight consolidation shipping means. Air freight consolidation shipping services is a system whereby a freight forwarding company in a particular country collects cargoes and shipments from various shippers. It is commonly referred to as “consol” in some countries like Nigeria. These goods are for different receivers. The company sends them as a single shipment to the country of destination.
The shipments may consist of some shippers that engage in mini importation business with less weight and little quantities. Most times, the shippers have to wait for freight forwarder to gather enough goods from shippers in order to meet up with the required weight the airlines can lift.
Benefits of air freight consolidation shipping in Nigeria
- Cheaper air freight cost for shippers
- Less Customs clearance cost and process time
- Less documentation for the shippers
Cheaper air freight cost for shippers
First of all, all shippers always look for ways to cut cost especially when the only option is air freight for shipping their goods. And the reason for this is because the airlines operators charge using either weight of the goods or the dimension (length, width, height) of goods which refers to volumetric weight.
Moreover, airlines operators lower the freight rate if the freight forwarding company declares high volume weight of single shipment. The more the weight in tons the less the cargo company pays the airline operators. With this system, the freight rate that shippers will pay be less because they will share the rate on each shipper which makes each them pay less. It is an advantage for those that engage in mini importation because they will avoid paying for minimum weight by the airlines operators.
Less Customs clearance cost and process time
This is one area that importers in Nigeria always have issues with due to the 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.
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