Fuel Surcharge starts to creep down
For forwarders there are airlines who charge fuel and those who include the fuel surcharge in their freight charge. In the main though most airfreight forwarders base the freight cost on FFW. Freight + Fuel + War. All other surcharges are taken separately and there can be a lot of them but FFW is seen as the industry standard.
Why do airlines charge a fuel surcharge
Fuel surcharges were first introduced way back in 2004. At the time oil prices surpassed US$40 per barrel. Fuel surcharges were intended to offset the proportion of the airlines increase costs over this figure. Some argued at the time that when the bi-annual freight rate tariffs were updated fuel should be incorporated. This didn’t happen and similar to war surcharges some airlines haven’t got rid of them. They come in many names. Operational Surcharge, Variable Surcharge they all pretty much do the same thing. Allow airlines to have a way of adjusting for operating costs outside of the freight rate.
For those that do charge a fuel surcharge the lack of continuity is strange. Some charge a short / medium and long haul and some charge the same rate regardless. Consider Etihad for instance. Ex the UK their fuel surcharge on many destinations is often higher than their freight rate. A one fuel surcharge fits all whereas Emirates in the same region have a smaller two tiered fuel surcharge.
Are Fuel Surcharges reducing
The short answer is yes. Presently airlines like ANA who maintain a fuel surcharge are reducing there’s. Upcoming airlines with a UK fuel surcharge which are reducing are : ( Based on UK Sterling figure )
- Cargolux reduces down to £0.40 / Kilo << 12th April 2021
- Swiss Cargo reduces down to £0.47 / Kilo << 19th April 2021
- Lufthansa Cargo reduces down to £0.47 / Kilo << 19th April 2021
- All Nippon Airlines reduces down to £0.42 / Kilo << 19th April 2021
These reductions are small and both fuel and war surcharges continue to be a large proportion of the overall freight cost. Helping to hold airfreight rates higher than pre-covid levels. After a year of turmoil within the industry these small reductions continue to help promote airfreight which at a time when oceanfreight is under severe pressure can only be a good thing for the airfreight forwarder.
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