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How do you decide when to switch from sea freight to air — do you have a formal threshold?

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Muataz Thaaer
(@muataz)
Member Admin
Joined: 1 week ago
Posts: 16
Topic starter   [#7]

The cost difference between sea and air on a standard 20-foot container equivalent is roughly 8-12x depending on origin. For most FMCG operations, sea freight is the default and air is the emergency option.

But "emergency" is vague. We spent a lot of time last year debating whether a specific shipment justified air freight and it came down to gut feel each time. We've since built a simple decision rule:

  • Stock coverage below 3 weeks at current consumption rate → evaluate air
  • Stock coverage below 2 weeks → air freight approved without further escalation
  • High-margin SKUs get a lower threshold than commodity products
  • Seasonal items get evaluated separately during peak periods

The calculation also factors in the cost of a stockout — lost sales, customer penalties, emergency local sourcing — versus the premium for air freight. When you put actual numbers in, air freight is often cheaper than a stockout.

Do you have a formal policy for this or is it still case by case?



   
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