Monday, January 12, 2015

'All In' Air Cargo Pricing Pleases Freight Forwarding Groups

Warm Reception for Dropping of Fuel and Other Surcharges
Shipping News Feature

UAE – WORLDWIDE – In a move that has been welcomed throughout the freight forwarding industry, Emirates SkyCargo is set to return to an ‘all-in pricing’ structure that will see the airline put an end to the current setup of a base rate plus surcharges, and instead bring back a single charge based on weight/cube, and include fuel and security surcharges. The new pricing strategy will initially be rolled out on air freight shipments to and from Europe from February 1st and then on the airline's global network from March 1st.

The Middle Eastern airline can apparently afford to take such a step financially, what with the current fall in the price of oil and its own burgeoning revenue after reporting a 9% increase in SkyCargo’s revenues for the year end May 2014. SkyCargo, and other carriers from the region subsequently continuing the strong performance they’ve seen throughout 2014, with Freight Tonne Kilometres (FTK) growth of 10.9% and a 10.5% increase in capacity for the year to November.

CLECAT, the European association for forwarding, transport, logistics and customs services, welcomed the decision saying that the new rate structure will provide shippers and forwarders with a better picture of the full cost of shipment without the add-ons. Nicolette van der Jagt, Director General of CLECAT added:

“Today the issue of surcharges continues to raise questions with many shippers and freight forwarders. While we accept that air carriers offer different rate structures due to the impact of fuel prices on carriers' operating costs, surcharges are ostensibly linked to the oil price. It remains notable that carriers have shown a greater tendency to increase surcharges in line with a rising oil price than to reduce them when the oil price has fallen.

“What we have seen is that additional surcharges for fuel costs tend to be 'fixed' and not to fluctuate on a large scale over time. This is of particular significance as the oil price drops below $50 per barrel for the first time since 2009. The recent remarkable slide in oil prices should, by definition, lead to a corresponding reduction in fuel surcharges. CLECAT believes that the current market situation represents a perfect opportunity for creating greater transparency.”

The British International Freight Association (BIFA) has been a little more cautious in applauding SkyCargo, after BIFA Director General, Robert Keen last year called for the world's container shipping lines to provide clearer explanations of the growing variety of surcharges which they apply. Keen did acknowledge that the move was a ‘step in the right direction’ and was hopeful that it would lead to the transparency that freight forwarders require. He commented:

"The move should provide simpler and more transparent cost structures, something that freight forwarders have been calling for, having faced various surcharges with questionable names and purposes from shipping lines and airlines. Perhaps Emirates SkyCargo is responding to previous comments that freight forwarders stop accepting at face value opaque and unjustified surcharges."