Air freight fuel surcharges are rising sharply without people noticing
Fuel surcharges in air cargo have been quietly raised sharply in recent weeks. While the main focus is on rising freight rates, airlines appear to be increasing their fuel surcharges by up to three times. In doing so, they are trying to compensate for skyrocketing paraffin prices.
According to market information, major players such as Emirates SkyCargo and Cathay Pacific Cargo have significantly increased their fuel surcharges. For intercontinental flights, surcharges are now well above $1.60 per kilo, with similar increases on other routes.
Fuel surcharges rise faster than freight rates
The rise in fuel surcharges is faster than that of freight rates themselves. On routes between the Far East and Europe, shippers now pay around $5 per kilo on average, while the base rate is considerably lower.
This development makes air freight significantly more expensive and puts pressure on margins of companies that rely on fast transport solutions. Especially for large volumes, the extra costs add up quickly.
The cause lies in the sharp rise in paraffin prices, which have increased by about 100 per cent since the outbreak of the Iran war. Airlines are trying to pass on these costs as quickly as possible.
Did you know
Fuel surcharges in air cargo are often variable and can be quickly adjusted to fluctuations in the price of fuel.
Fuel surcharges remain sensitive issue
It is notable that airlines give little disclosure on increases. This probably has to do with the past, when airlines received hefty cartel fines for colluding on fuel surcharges.
That issue is still in play, with ongoing court cases in which shippers are demanding compensation. This has made airlines reluctant to communicate about price adjustments.
Still, the increase does not seem to have ended. According to recent signals, fuel surcharges are now being raised further, possibly to four times their original pre-Iran war levels.
For logistics parties, this means that air freight is becoming more expensive again and costs remain difficult to predict. Read more about air transport and cost structures on the air cargo page.
As long as fuel prices remain high, fuel surcharges will play an important role in total transport costs. Transparency remains an issue in the industry in this regard.