As forwarders continue to clamor for more simplified and transparent “all-in” cargo price structures, Swiss WorldCargo and Lufthansa Cargo have come up with an unusual answer to the volatility of external cost factors that are out of their control. Effective Oct. 25, both airlines will switch to a new pricing model, consisting of a net rate, plus an “airfreight surcharge,” which will replace the separate surcharges currently in place for fuel and security.
The new surcharge will be “much lower” than the total amount of the current surcharges, the airlines said. Also, the net rate will be “re-aligned” – read: raised – so that overall prices of transportation will remain at current levels.
Alexis von Hoensbroech, Lufthansa Cargo Board member, product and sales, described the new rate system as “uncomplicated” and will be more adaptable to future market changes. “We have listened to our customers,” he said. “The net rate will be considerably more important, and we will be able to significantly reduce special processes, such as negative rates, with the lower airfreight surcharge. That cuts down on complexity and makes us faster.”
Oliver Evans, chief cargo officer for Swiss, said the new structure will be even more transparent than an all-in rate, which the carrier had reviewed extensively before coming up with the new system. “The new airfreight surcharge reflects the volatility of external cost factors beyond the airlines’ control, such as fuel, currency rates, airport charges and fees,” he explained. “The airfreight surcharge will be adjusted whenever one of these external cost factors changes significantly and thus will display necessary price adjustments in a transparent way.”
To accommodate customer requests for price stability for long-term contracts, it will be possible in the future to fix the overall price for the entire term of some contracts, but it will still be subject to a “risk add-on,” the carriers said. For legal reasons, the current surcharge structure will remain in place only in those countries where pricing is subject to government regulation, for example Japan and Hong Kong.