# Ocean vs Air Freight Total Cost Calculator with Inventory Carrying Cost

> Source: https://netray.co/tools/ocean-vs-air-freight-total-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compare air and ocean freight on total landed logistics cost, including the cost of capital tied up in transit, and find the breakeven unit value.

## Category

supply-chain

## Audience

- Logistics coordinator
- Supply chain planner
- Finance

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Units in shipment

**Key:** units

**Type:** number

**Default:** 5000

**Min:** 1

**Step:** 100

**Unit:** units

#### Value per unit

**Key:** unit_value

**Type:** number

**Default:** 40

**Min:** 0

**Step:** 1

**Unit:** $

#### Chargeable weight per unit

**Key:** unit_kg

**Type:** number

**Default:** 0.8

**Min:** 0.01

**Step:** 0.05

**Unit:** kg

**Help:** Use the greater of actual and volumetric weight for air.

#### Air freight rate

**Key:** air_rate

**Type:** number

**Default:** 4.5

**Min:** 0

**Step:** 0.1

**Unit:** $ per kg

#### Ocean freight rate equivalent

**Key:** ocean_rate

**Type:** number

**Default:** 0.35

**Min:** 0

**Step:** 0.01

**Unit:** $ per kg

**Help:** Divide the all-in ocean cost by the shipment weight.

#### Air door-to-door time

**Key:** air_days

**Type:** number

**Default:** 6

**Min:** 1

**Step:** 1

**Unit:** days

#### Ocean door-to-door time

**Key:** ocean_days

**Type:** number

**Default:** 38

**Min:** 1

**Step:** 1

**Unit:** days

#### Annual inventory carrying rate

**Key:** carry

**Type:** slider

**Default:** 20

**Min:** 5

**Max:** 40

**Step:** 1

**Unit:** %

**Help:** Cost of capital, insurance and obsolescence risk.

**Outputs:**

#### Total chargeable weight

**Key:** kg

**Expr:** units * unit_kg

**Format:** number

#### Cargo value

**Key:** cargo_value

**Expr:** units * unit_value

**Format:** currency

#### Air freight

**Key:** air_freight

**Expr:** kg * air_rate

**Format:** currency

#### Ocean freight

**Key:** ocean_freight

**Expr:** kg * ocean_rate

**Format:** currency

#### Carrying cost during air transit

**Key:** air_carry

**Expr:** cargo_value * carry / 100 * air_days / 365

**Format:** currency

#### Carrying cost during ocean transit

**Key:** ocean_carry

**Expr:** cargo_value * carry / 100 * ocean_days / 365

**Format:** currency

#### Air total cost

**Key:** air_total

**Expr:** air_freight + air_carry

**Format:** currency

**Primary:** true

#### Ocean total cost

**Key:** ocean_total

**Expr:** ocean_freight + ocean_carry

**Format:** currency

**Primary:** true

#### Air premium over ocean

**Key:** premium

**Expr:** air_total - ocean_total

**Format:** currency

#### Breakeven unit value

**Key:** breakeven

**Expr:** (air_freight - ocean_freight) / (units * carry / 100 * (ocean_days - air_days) / 365)

**Format:** currency

**Description:** Unit value above which air has the lower total cost.

**Chart:**

#### Air vs ocean total cost by unit value

**Type:** line

**X:** unit_value

**From:** 1

**To:** 400

**Steps:** 40

**Series:**

- air_total
- ocean_total

**Disclaimer:** Does not include safety stock, stockout cost, duties or insurance differences. Add those if the decision is close.

## Content

**Intro:** Air freight is expensive per kilogram, but it also gets the goods there weeks sooner, which cuts the cost of tied-up cash. This calculator adds that carrying cost so you can compare modes on total cost, not freight alone.

**Sections:**

#### How to use the mode comparison

**Body:** Enter the units, value per unit and weight per unit, then the air and ocean rates per kilogram. Ocean rates are easier to compare if you divide the full ocean quote by the shipment weight. Enter door-to-door transit days for both modes and your annual carrying rate, which combines cost of capital, insurance and the risk of obsolescence, often 15 to 25 percent for manufacturers. The result lists freight, carrying cost and total for each mode, plus the air premium.

#### The formulas

**Body:** Freight equals chargeable weight times rate. Carrying cost during transit equals cargo value times the annual carrying rate times transit days divided by 365. Total cost is the sum. The breakeven unit value is the freight difference divided by the carrying cost per dollar of unit value saved by the shorter transit time. Above that unit value, air is cheaper in total because the capital saved outweighs the freight premium. Below it, ocean wins.

**Bullets:**

- High-value, low-weight items such as electronic modules favour air.
- Heavy, low-value items such as castings favour ocean.
- A higher carrying rate lowers the breakeven value.

#### Reading the result

**Body:** The chart shows both total costs rising with unit value; ocean rises faster because it holds goods longer. The crossing point is the breakeven. If your unit value is near it, the decision depends on factors outside the calculation: stockout risk, customer penalty clauses, port congestion and demand uncertainty. A shipment that prevents a line-down event may justify air even when the numbers do not.

#### Common mistakes

**Body:** Using ocean port-to-port transit instead of door to door understates the ocean time by a week or more. Using actual weight for air instead of chargeable weight understates air cost for bulky goods. Forgetting that airfreight packaging is often lighter, or that insurance rates differ, can tilt the result. Also remember that duty is the same for both modes, so it does not change the comparison unless duty is paid before transit ends.

**Cta:** Netray can connect supplier lead times and open purchase orders in your ERP to mode-selection rules, so expedite decisions are made with total cost in view.

**Faq:**

#### What carrying rate should I use?

**Answer:** Use your cost of capital plus storage-independent risks such as insurance and obsolescence. Many manufacturers use 15 to 25 percent a year. Your finance team usually has a standard figure for inventory carrying cost.

#### What is chargeable weight in air freight?

**Answer:** It is the greater of actual weight and volumetric weight. Volumetric weight in cm is length times width times height divided by 6,000. Bulky light cargo is charged on volume, so using actual weight understates the cost.

#### Why not just compare freight rates?

**Answer:** Because transit time is money. Ocean freight can take five weeks longer, and the inventory is paid for but unusable during that time. For valuable goods this capital cost can exceed the entire freight difference.

#### Does this include safety stock?

**Answer:** No. Longer, more variable ocean lead times also require more safety stock. See the in-transit pipeline inventory calculator to add that effect to the comparison.

## Search terms

ocean vs air freight cost comparison, air freight vs sea freight calculator, when is air freight cheaper than ocean, total cost of transportation calculator, inventory carrying cost in transit, air vs sea breakeven, expedite air freight cost justification, mode selection calculator freight

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