newstodate.aero
Jan 08, 2015 (newstodate): The introduction of all-in cargo rates in the market will not make any big difference, according to one industry observer.
-Since most carriers already calculate on the basis of chargeable weight, the abolition of specific fuel and security surcharges will not change the game, says Jesper Nielsen, BWS Business Development Manager, Airfreight Scandinavia.
-Also, most shipments are actually ad-hoc shipments, so a turn to all-in rates will mostly concern shipments under longer-term agreements with shippers, and this will of course require a risk calculation to cover the rate fluctuations involved over time. Which is the case in all business contracts.
-If the actual rate for a shipment to, say, Shanghai is 10 DKK it will not matter to the shipper how this is balanced between rate, fuel and security.
-For the airlines, all-in rates may of course provide a potential source of incremental revenue as no customer, shipper or forwarder, can know what the carrier actually pays for fuel.
-Carriers hedge fuel over longer periods, and given today's low fuel prices hedging now may generate positive revenue margins once fuel prices rise again, leading to higher all-in rates.
-But again, today's highly competitive environment will regulate the market behavior of carriers with a longer-term view, keeping rates within limits defined by laws of supply and demand, says Mr Nielsen.
In the Nordic cargo markets, Emirates SkyCargo has announced the introduction of all-in rates from February with SAS Cargo to follow as well.
-Since most carriers already calculate on the basis of chargeable weight, the abolition of specific fuel and security surcharges will not change the game, says Jesper Nielsen, BWS Business Development Manager, Airfreight Scandinavia.
-Also, most shipments are actually ad-hoc shipments, so a turn to all-in rates will mostly concern shipments under longer-term agreements with shippers, and this will of course require a risk calculation to cover the rate fluctuations involved over time. Which is the case in all business contracts.
-If the actual rate for a shipment to, say, Shanghai is 10 DKK it will not matter to the shipper how this is balanced between rate, fuel and security.
-For the airlines, all-in rates may of course provide a potential source of incremental revenue as no customer, shipper or forwarder, can know what the carrier actually pays for fuel.
-Carriers hedge fuel over longer periods, and given today's low fuel prices hedging now may generate positive revenue margins once fuel prices rise again, leading to higher all-in rates.
-But again, today's highly competitive environment will regulate the market behavior of carriers with a longer-term view, keeping rates within limits defined by laws of supply and demand, says Mr Nielsen.
In the Nordic cargo markets, Emirates SkyCargo has announced the introduction of all-in rates from February with SAS Cargo to follow as well.