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            october 21, 2019

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European shippers tell forwarders to win discounts for them after oil prices fall


Shippers are complaining that a 25 per cent decline in oil prices since July has still not resulted in rate or surcharge reductions, and air cargo shippers want forwarders to make their case to carriers, according to Shipping Gazette.
"All airlines say that the fuel surcharge is related to oil prices," said European Shippers' Council air manager Joost van Doesburg. "But right now the fuel surcharge has not decreased, or if it has, only by a very small amount.
"Shippers are claiming that airlines are making money on the FSCs. And the numbers speak for themselves," said Mr van Doesburg.
But London's Loadstar reports that many airlines have reduced surcharges, some, such as Cargolux and Polar, more than once in the last two months.
China Airlines and Silkway have bucked the trend by increasing their FSCs on some routes, but the average reduction is US$0.05 per kilogramme, taking most airlines to around the $0.80/ kilogramme mark, down six per cent fall.
Mr van Doesburg said that last year the price of fuel fell 10 per cent, yet surcharges stayed the same. When fuel then increased, so did the surcharge, effectively changing the base rate.
Two large shippers have called for a change in the way the mechanism works. They want to work with forwarders on changing the baseline, and to add part of the current FSC into the standard air freight rate.
"My question is, what are forwarders doing for the shippers'" Mr van Doesburg said. They are the shippers representatives to the airlines, so they should understand that this is not how shippers want to be represented."
He said FSCs should be transparent and fair and this was not the case.
Forwarders have been slow to involve themselves because they are able to make a margin on surcharges, said one source.
But British International Freight Association (BIFA) chief Robert Keen said: "Yes, it's the role of the forwarder to get the best rate for their customers. But ultimately it's down to the buyer of the service to make sure they are getting value for money."
Mr Keen cautioned that a call for an industry-wide change to mechanisms would fall afoul of antitrust law.
"It's a serious issue which could result in fines or even prison. These issues are down to individual companies to negotiate with individual suppliers."

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