Air freight and cost of handling in Daoflowers invoices 14-02-2020 / PFR

Air freight and cost of handling in Daoflowers invoices

In our system we have several different ways how to include an airfreight and handling cost to the invoices of our customers.

1) The simplest case is when the customer asks to give him the boxes of flower farms right at the departure points, in Ecuador, Colombia and Kenya. In this case, the farms deliver flower boxes directly to the transport agencies the customer cooperates with. In this case, the customer does not use Daoflowers logistics. The customer is responsible for the further air delivery of his flower cargoes, and receives invoices from Daoflowers with FOB prices at the points of departure.

2) The customer requests invoices on terms of delivery including airfreight at the point of arrival. In the most cases, the point of arrival is Amsterdam. We can also arrange an air delivery to alternative cities (for more details please see the section on airfares and directions )

3) The customer requests to invoice separately the cost of flowers and separately - the cost of freight and handling, if Daoflowers delivers the goods to the point of arrival.

Both methods of invoicing and logistics mentioned above are optional. The required method can be chosen by customer when placing orders or when purchasing flowers from the free market on our online trading platform.

The principle of invoicing with the customers of type 2 is as follows.

The cost of freight on all the airlines in this direction is averaged, and the average freight is included into the prices of flowers for customers.

It is this invoicing principle that is used by default in our system.

During the period of regular deliveries, we have a minimum variation in the cost of freight between different flights. The difference in airfare cost usually is in the range within USD 0.05 - 0.15 per 1 kg of flower cargo, depending on the day of departure and on the airlines we fly. We try to use reliable airlines with the positive statistics of timely arrivals, as well as convenient for our customers.

During pre-holiday season, the customers of type 2 receive invoices with an average freight between regular and charter flights, which we have to book more in order to deliver increased orders. The difference in airfare between regular and charter flights can be significant (USD 0.20 - 0.60 per 1 kg of flower cargo).

In any case, the entire air freight is averaged between all customers of type 2 evenly.

The 3rd type of customers has chosen the form of invoice so that they can see the cost of freight and the cost of handling separately of the cost of flowers for each invoice.

At any time, upon customer’s request we provide the customer with the copy of AWB under which his flowers were delivered, and he can always see the cost of the air freight.

However, during pre-holidays, if the customer’s boxes have been departed by expensive charter flight, we invoice the cost of delivery for this particular charter flight. Airfreight cost in the invoices of such a client (type 3 of invoicing) can be significantly more expensive than in invoices of clients where delivery and handling are included into the price of flowers (averaged between regular and charter flights). This is a significant disadvantage of working during the holiday period with the customers who require the airfreight cost to be reflected in the invoices separately from the cost of flowers.

Some of our customers wonder how do we select customers for the regular and charter flights during pre-holiday deliveries.

Answer. It is not technically possible to select whose of our customers’ cargo will be sent on charter or regular flights. We just book in advance the space on the airlines in order to meet the challenge – to deliver flower cargoes of all our customers to the point at proper time.