Air Freight Consolidation, Calculating Air Freight Charges

Your company offers a weekly consolidation service to Narita Japan (NRT), via Japanese Airways. The carrier has given you a 1,000 kg buying rate of CAN $1.45/kg (1000kg or less) and a plus 1,000+ kg buying rate of CAN $1.10/kg. You sell this service to clients who ship below 1,000 kg at a rate of CAN $2.38/kg and for clients who ship in excess of 1,000 kg at a rate of CAN $2.10/kg. This is an all–in rate, no additional charges.

i) Shipper:

Leather Co. Ltd.

123 Bloor Ave.

Toronto, ON, Canada, M5H 3K5

Buyer:

Yamacho Shoe Manufacturers

Taito-Ku 234

Narita, Japan

Shipment:

20 sheets of leather

Total weight: 1,000 kg

Dimensions of each sheet: 200 cm x 50 cm x 5 cm

Total value: CAN $5,000.00

Goods sold: prepaid airport to airport

ii) Shipper:

Kingsway Mattresses Ltd.

456 Avenue Road

Toronto, ON, Canada, K2S 1R2

Buyer:

Sleep Country Japan Ltd.

Nishi-ichinoe, 132-0023

Narita, Japan

Shipment:

15 foam mattresses

Total weight: 600 kg

Dimensions of each mattress: 120 in x 36 in x 16 in

Total value: CAN $1,500.00

Goods sold: prepaid airport to airport

Based on the above, answer the following questions.

a) What is the total actual weight of the consolidation?

b) What is the total volume weight of the consolidation?

c) How much will you charge each customer?

d) How much will you pay the air carrier?

e) What is the profit on this shipment?