newstodate.aero
Feb 10, 2016 (newstodate): With discontinuation of published fuel surcharges in favor of "all-in" cargo rates, the link between falling fuel prices and freight rates may seem even less transparent.
As one example, SAS Cargo implemented the all-in rate system from January 1, 2015, already, while jet fuel prices have since hit record-low levels.
-Actually, we have seen average cargo rates down by 10-15 percent through the year, and the trend is continuing its downward spiraling, says Leif Rasmussen, SAS Cargo CEO.
-This has had a strong impact on our business, and there is no doubt that the drop in fuel prices in addition to the weakening of market demands in many areas have contributed to the decline in cargo rates as well. Falling fuel prices are certainly not a lever for keeping rates up artificially. Besides, fuel is paid in US dollars which produces a counter-effect on the economic side.
-And there is of course no room for pilfering with cargo rates. We live in a strongly competitive market where customers are well-informed about day-to-day vacillations in market prices. To maintain a position in this environment, SAS Cargo will always be forced to follow the market in order not to be priced out.
-So, to sum it up: fuel prices, as just one parameter, do have an impact on cargo rates, and in a competitive market the "invisible hand" will always play its role, says Mr Rasmussen.
As one example, SAS Cargo implemented the all-in rate system from January 1, 2015, already, while jet fuel prices have since hit record-low levels.
-Actually, we have seen average cargo rates down by 10-15 percent through the year, and the trend is continuing its downward spiraling, says Leif Rasmussen, SAS Cargo CEO.
-This has had a strong impact on our business, and there is no doubt that the drop in fuel prices in addition to the weakening of market demands in many areas have contributed to the decline in cargo rates as well. Falling fuel prices are certainly not a lever for keeping rates up artificially. Besides, fuel is paid in US dollars which produces a counter-effect on the economic side.
-And there is of course no room for pilfering with cargo rates. We live in a strongly competitive market where customers are well-informed about day-to-day vacillations in market prices. To maintain a position in this environment, SAS Cargo will always be forced to follow the market in order not to be priced out.
-So, to sum it up: fuel prices, as just one parameter, do have an impact on cargo rates, and in a competitive market the "invisible hand" will always play its role, says Mr Rasmussen.