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Aviation History
1961
1961 - 1387.PDF
LIGHT, 21 September 1961 TABLE 5: EXPORT VALUES OF CONSIGNMENTS Value (penee/lb) Under 100 101-240 241-480 Over 480 Totals No 30 42 26 18 116 Surface o//o 26 36 23 15 100 No 1 15 6 13 35 Air % 3 43 17 37 100 item in air freight is FC (airport-airport), and figures of 80 percent and over are common. The figures in fact vary with distance; e.g., for the markets lying less than 500 miles from the UK by air.they ranged from 20 to 50 per cent of TDC, but over 500 miles the percentages rose to between 60 and 90 per cent. Since FC and PC are of greatest significance, particularly in anycomparison between transport methods, they have been plotted in the form of dispersion diagrams (Figs 5a and 5b). These diagramsbring out the fact that the cost differential on PC, with respect to air and surface, varies with the weight. This is logical enough, andserves to emphasize the fact that savings on PC when air freight is used apply mainly to the consignments of over 500kg. A great deal of data were accumulated relating to both air andsurface freight rates. It was possible to calculate that the air rate figs la and 7b. Actual market area for a given air-rate structure, assuming that air freight is used when total distribution cost by air (ATDC) equals total distribution cost by surface (STDC). Fig la takes the weight group 45-100kg with a standard air rate whilst 1b takes the weight group 500-1,000kg using a special rate for machinery 491 Fig 6. Current air rates (continuous line) compared with rate levels required to equalize air and surface distribution costs (shown by broken line) RATES !N ptrxe/lb WEIGHTS IN ib(O-lOOttc) 101-500 60- 50 30- 20- 100 200 300 400 500 600 700 800 900 1.000 U00 UOO AIR DISTANCE (mlts) should be to equalize air and surface freight costs, and also toequalize air and surface total distribution costs. It was at once apparent that comparisons made on the basis of freight costs alonecan be most misleading—and, in fact, very pessimistic from the viewpoint of air freight. Table 6 gives some of the more strikinginstances. Thus, where the figures in cols 4 and 5 are higher than the current rate in col 3, it pays to use air freight, and vice versa.In some instances the consignment goes by air despite unfavourable cost figures, a reminder that other factors may override. For thetype consignments as a whole, there were only five cases where the current air rate was favourable in comparison with the appropriatesurface rate, but 23 instances where the ATDC was favourable (including the five favourable on FC alone.) Air freight was, infact, employed regularly for each of these 23 consignments; the remaining 12 air shipments were anomalous from the cost pointof view, and one of these anomalies is given in Table 6. It was too much to expect that all the anomalies would be favourable to airfreight, and six consignments were in fact shipped by sea or rail ferry despite the fact that the ATDC was lower than the surfaceequivalent. Taken together, the anomalies accounted for 12 per cent of the total. TABLE 6: COMPARISON OF CURRENT AIR RATES AND THE AIR RATES REQUIRED TO EQUALIZE AIR AND SURFACE FREIGHT COSTS AND DISTRI- BUTION COSTS (sample figures for machinery, I960) Consignment air gross weight (Ib) 26 72 1,552 10,120 216 Compare with: 56 580 580 2,600 22.400 Destination Stockholm Amsterdam Amsterdam Brussels Amsterdam Rome Basle Amsterdam Stockholm Amsterdam Rates (pence per kg) Current rate 65 16 12 6 8 66 20 9 49 12 Air rate required for AFC, SFC 21 9 4 2 10 14 7 4 7 1 Air rate required for ATDC, STDC 74* 36* 14* 7* 39* 23 4 4 * 14 1 * Indicates that air freight is currently used. The complete results may be plotted both graphically and bymeans of maps. Fig 6 compares current air rates with the rate levels that would be required to equalize air and surface distributioncosts. It has already been remarked that most shipments by air occur over the shorter distances, and Fig 6 brings out the pointthat, over these distances, costs are most favourable. When looking at the graph it is as well to remember that exact parity betweenATDC and STDC is not necessary. Indeed, an ATDC averaging 20 per cent more than STDC is usually sufficient to encourage theuse of air freight. In exceptional cases (e.g., TV tubes), the figure may reach 100 per cent. The actual market area may be plotted for any given air-ratestructure. This is demonstrated in Figs 7a and 7b. Fig 7a takes the weight-group 45-100kg and considers the results of the analysiswith respect to the standard rate, while 7b deals with the group 500-1,000kg, using a special rate for machinery. In each case theassumption is made that air freight is used only when ATDC equals STDC. This is to simplify the picture, and does, of course, give aconservative result. For each map current rates are plotted as a series of contours("isorates") at intervals of 5d per kg. For each consignment the air rates needed to equalize ATDC and STDC are known. We can.therefore, plot against the destination of each consignment the "equality cost." If this figure is equal or less than the ruling rateindicated by the underlying network of isorates. the consignment goes by air. In this way the market area is outlined, and can befinally drawn in as shown. (To be continued) ABBREVIATIONSFC, freight cost for main section of journey; PC, packing cost; AFC, air freight cost; SFC, surface freight cost; TDC, total distribution cost:ATDC, air total distribution cost; STDC, surface total distribution cost.
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