How to Launch Your Own Air Freight Business

If you have an entrepreneurial spirit and want to get into the fast-growing transportation industry, starting an air freight business could be an exciting opportunity. Transporting goods by air is a complex operation, but for those willing to navigate the regulations and operational details, an air freight company can be highly profitable.

An air freight business picks up cargo from shippers, ensures all proper documentation and procedures are followed, then works with airlines and freight forwarders to get the shipments onto commercial flights or cargo planes for delivery to the final destination. For many businesses, speed is of the essence, so air freight provides an important service in today's fast-paced global economy.

The Air Freight Market

The air freight market serves businesses of all sizes that need to transport goods quickly over long distances or overseas. This includes manufacturers, e-commerce companies, pharmaceutical firms, and perishable goods shippers. While air freight tends to cost significantly more than ground shipping, for many types of cargo speed is the top priority.

The air freight business model can work well as either a local, regional, national or international company. Many start out focused on a specific geographic region or type of cargo before expanding. The largest air freight companies, known as integrators, operate worldwide networks and transport a wide range of goods. However, there are also opportunities for small freight forwarders and niche players focused on high-value or temperature-controlled cargo.

The air freight market has grown steadily in recent years along with the rise of global trade and e-commerce. According to the International Air Transport Association (IATA), air freight volumes increased by 3.5% in 2018 and revenue rose 8% to $117.7 billion. While growth has slowed slightly in 2019 due to trade tensions, the long-term outlook remains positive for this essential transportation service.

Your Air Freight Service

An air freight business provides the service of transporting cargo by air, acting as an intermediary between shippers and airlines. To stand out, focus on a specific market like pharmaceuticals, perishables or e-commerce. Develop expertise in handling these temperature-controlled or time-sensitive shipments. Provide value-added services like pickup, packing, labeling and customs clearance.

Work directly with major airlines and freight forwarders to reserve space for your customers' cargo on both passenger and dedicated cargo planes. Negotiate the best rates and pass savings onto your customers. For smaller shipments, you may consolidate cargo from multiple clients into single airline containers to maximize space.

Invest in a transportation management system to help track shipments, manage documentation, and provide customers real-time updates on their cargo. Build a user-friendly website where clients can get quotes, book and track shipments 24/7. Provide great customer service and competitive pricing to earn repeat business and referrals.

Economics and Finances

The economics of an air freight business depend heavily on managing costs and setting the right pricing. The major costs for an air freight company include:

•Airline cargo space - This is typically the largest cost and can vary significantly based on the type of cargo, destination and current fuel prices. Negotiate the best rates with airlines and look for opportunities to consolidate smaller shipments.

•Ground handling and transportation - Costs include pickup/delivery vehicles, warehouse space, loading equipment, and staff to load/unload and transport cargo.

•Labor - You'll need staff for sales, customer service, operations and administration. Salaries and benefits comprise a major portion of the budget.

•Technology - Invest in transportation management software, barcode scanners, and other tools to streamline operations.

•Marketing - Budget for a user-friendly website, digital marketing, and sales efforts to attract new customers.

On the pricing side, conduct a thorough analysis of competitors to determine typical rates for your target market and services. You need to price high enough to cover all costs with a reasonable profit margin. Many air freight companies use a base rate plus additional charges for extra services, oversized cargo, dangerous goods shipping, and other factors. Offer volume discounts and loyalty programs for high-volume clients.

Marketing Your Air Freight Business

A strong marketing strategy is key to building an air freight company. Some of the most effective techniques include:

•Search Engine Optimization (SEO) - Optimize your website to rank highly in search results for terms like "air freight company" and your location. Focus on content marketing by publishing blog posts on industry topics.

•Pay-Per-Click Advertising (PPC) - Run targeted ads on Google and Bing to reach people searching for air freight services. PPC can drive high-quality traffic to your site.

•Social Media Marketing - Build a presence on platforms like LinkedIn, Facebook and Twitter to raise brand awareness and engage with customers. Post updates on your services, accomplishments and industry news.

•Email Marketing - Start an email newsletter to stay in touch with clients and prospects. Send updates on your company, promotions and tips for shipping by air. Offer an incentive like a discount or free quote to encourage subscribers.

•Direct Marketing - For local businesses, direct mailers, flyers and cold calling can still be effective. Focus your efforts on companies that frequently ship goods by air. Drop off information packets and see if you can schedule meetings with decision makers.

•Industry Partnerships - Work with related businesses like import/export companies, freight forwarders, and transportation brokers. Set up mutually beneficial referral partnerships and cross-promote to each other's customers.

•Public Relations - Pitch relevant media outlets to be featured in news stories and articles on air freight and logistics. Becoming an industry expert in your region can raise your credibility and prompt new leads.

Sales Strategies for an Air Freight Business

A successful air freight company relies on a steady stream of new customers and sales. Here are some effective sales strategies:

•Focus on lead generation - Identify prospective clients that frequently ship goods by air like manufacturers, perishable goods producers, and e-commerce companies. Research key contacts within these organizations and reach out to pitch your services. Offer them a free quote or consultation.

•Build a professional sales team - Hire experienced sales representatives to actively prospect new accounts and handle the sales process. Provide training on your services and key selling points. Offer a competitive compensation package with bonuses for hitting targets.

•Highlight your value proposition - Develop a clear message that conveys why customers should choose your company. Focus on factors like expertise in their industry, customer service, competitive pricing, and value-added services. Your sales team should emphasize these points at every stage of the sales cycle.

•Manage sales leads efficiently - Use a CRM system to track leads and monitor the status of each prospect. Follow up persistently but avoid being pushy. Understand that the sales cycle can be long, so patience and consistency are important.

•Ask for referrals - Satisfied clients are the best source for new leads. Meet with key customers regularly to ensure they remain happy with your service. Ask them directly if they know of any other companies that may benefit from shipping with your freight business. Offer a small incentive for any referrals that result in new sales.

•Negotiate mutually beneficial deals - Be willing to negotiate pricing and service terms to land big accounts. While you need to maintain a reasonable profit margin, closing a large new client at a slight discount could be worth it for the volume and long-term business. Look for ways to create win-win solutions.

Operations and Execution

The operations side of an air freight business involves efficiently managing the shipment of cargo and ensuring compliance with all regulations. Key aspects include:

•Warehousing and ground transportation - Secure warehouse space to temporarily store cargo before flights and equipment like forklifts, dollies and trucks to move shipments. Hire staff to load, unload and transport goods.

•Documentation - Prepare and check all paperwork required for air freight like packing lists, certificates of origin, hazardous materials declarations and customs forms. Submit documentation to airlines, customs brokers and border control agencies.

•Scheduling and coordination - Work closely with airlines and freight forwarders to reserve space for cargo on upcoming flights. Ensure your customers' shipments are ready for loading and meet the cut-off times. Track all cargo in your system.

•Security procedures - Follow all TSA and airline regulations for screening and clearing cargo. Properly seal and track high-value goods. Conduct background checks on employees and limit access to cargo.

•Compliance controls - Stay up-to-date with complex air freight regulations including customs, TSA, DOT and FAA policies. Train staff thoroughly on procedures and incorporate checks into your processes. Conduct internal audits to identify any issues early.

•Technology integration - Use transportation management software to automate documentation, track shipments in real-time, plan cargo loading, and provide customers updates. Invest in tools like barcode scanners, EDI systems and GPS to streamline operations.

•Contingency planning - Develop contingency plans for scenarios like flight delays, weather disruptions, mechanical issues, or errors that could impact your customers' cargo. Work closely with airlines and other partners to minimize problems and get shipments back on track quickly in an emergency.

Legal Requirements and Regulations

Operating an air freight business requires compliance with many laws and regulations. Consult with legal counsel to understand all requirements before getting started. Key areas include:

•Licensing and permits - Obtain proper business licenses and permits to operate from your city/county clerk's office. Check if any additional licenses are needed for international shipments or hazardous materials handling.

•TSA and CBP regulations - Follow all Transportation Security Administration and U.S. Customs and Border Protection rules for air cargo screening and customs clearance. Register for programs like the Customs Trade Partnership Against Terrorism (CTPAT).

•DOT and FAA regulations - Adhere to Department of Transportation and Federal Aviation Administration policies on air freight operations, hazardous materials shipping, and employee safety.

•Privacy laws - Protect customers' personal information and shipping data to comply with privacy laws like HIPAA and GDPR. Develop privacy policies, security plans, and confidentiality agreements for employees.

•Insurance requirements - Carry proper insurance coverage including general liability, cargo, and workers compensation. Coverage levels can vary for domestic vs international freight forwarding.

•Labor laws - Follow all laws regarding employee wages, benefits, discrimination, workplace safety, and union regulations. Pay close attention to rules for drivers and warehouse staff.

•Contracts and agreements - Carefully review contracts with airlines, freight forwarders, vendors, landlords, and customers. Consult a lawyer for guidance to avoid legal issues.

In Summary

Starting an air freight business requires significant time and capital, but can be a very rewarding endeavor. Focus on a specific market segment, provide great customer service, and build close partnerships with airlines and freight forwarders. Invest in the right technology and equipment to streamline operations. Follow all regulations carefully to ensure compliance and avoid legal issues. With hard work and persistence, you can build a successful air freight company that provides an essential service to clients while generating substantial profits.