Representatives of freight forwarders and shippers are challenging new cargo handling surcharges being imposed by air freight handlers, calling on air freight handlers to fully justify new fees and questioning their near-simultaneous introduction by several companies on competition grounds.

Lloyd’s Loading List understands that several air freight handlers have introduced new fees in the UK, including Swissport, Menzies and ASC Cargo Handling, with fees also being introduced by air cargo handlers in other European markets.

Robert Keen, director general of the British International Freight Association (BIFA), said the association’s freight forwarding and logistics company members are querying whether surcharges being introduced by air cargo ground handling service providers are justifiable in the current economic circumstances.

“Every participant in international supply chains is suffering from the same financial and operational issues that ground

handlers face, as they attempt to mitigate the effects of Covid-19,” Keen said. “Circumstances like shelter-in-place regulations are causing strain on all companies in those supply chains, which are all having to implement painful measures to cope with the pandemic, with a huge financial impact on their businesses.

“BIFA members are now faced with the task of explaining the surcharges to their customers, which are also struggling, without understanding, nor necessarily agreeing with, the rationale behind them. They deserve a full explanation of why and how the surcharges were  decided upon, and evidence that ground handlers are not just using the opportunities presented by the difficulties to increase charges for services already provided.

“As the ground handling companies made their announcements, which are  remarkably similar in content and value, around the same date, BIFA is left wondering whether the proposed surcharges might be of interest to the relevant competition authorities.”

Rogier Spoel, policy manager for air freight at the European Shippers’ Council, told Lloyd’s Loading List: “Although the Covid-19 crisis is an extraordinary situation, it doesn’t just simply justify a surcharge by the ground handlers. We have not seen any foundation yet which would make a surcharge by the ground handlers coherent.

“Also, the fact that almost all ground handlers simultaneously implement the surcharge is strange, because each ground handler has a unique operation and therefore a different level of vulnerability to the Covid-19 crisis.”

He continued: “ESC will monitor this situation closely and hope that ground handlers will abandon this surcharge or provide a solid case as why their specific operation needs to implement the surcharge. In this time of crisis, we would rather act together in dealing this crisis instead of taking any legal action. ESC will also reach out to Airport Services Association (ASA) related to this matter and hope the ground handlers will take the appropriate steps in this case.”

None of the cargo handlers mentioned was available to respond at the time of going to press.

As reported earlier this month, the freight forwarding arm of France’s leading logistics industry body, TLF, issued an ultimatum to the world’s largest air cargo handler Worldwide Flight Services (WFS) to withdraw a ‘continuity of service’ surcharge of €20 per air way bill it had introduced at the start of the this month or face having the matter brought before the state authorities, according to a report in the French media. Online freight publication Actu Transport Logistique said a letter sent by the air cargo handler to forwarders had justified the levy, effective 1 April, on the grounds that operating conditions have been made more difficult as a result of passenger aircraft being used on all-cargo mode, and also that it requires its staff to work more overtime.

TLF Overseas president Herbert de Saint-Simon had told Actu Transport Logistique France’s air cargo community “was up in arms over the move, which came when we are fighting a daily battle to limit the impact of the coronavirus on our activities”, adding: “We wrote (to WFS) demanding its swift suspension, failing which our reaction would go up a level” – an allusion to taking the matter up with the French authorities and even the national state agency for Competition Policy, Consumer Affairs and Fraud Control. De Saint-Simon said he was astonished that the surcharge was being levied on forwarders and not on airlines.

Increased operating costs

At the time, on 7 April WFS told Lloyd’s Loading List: “We have communicated with TLF and clarified this matter. We are experiencing significantly increased operating costs during this crisis, which have been exacerbated by the non-availability of labour and the unpredictability of cargo volumes, as these are now driven mainly by non-scheduled ad hoc charters.

“Clearly, we want to continue to provide the support and services our customers need from us, and uphold the highest standards of safety and security. We are playing an important role in helping to keep supply chains open but, as we are seeing across the logistics chain, maintaining operations in these unprecedented times comes at an unexpected cost for all businesses.”

WFS did not reply to further questions on the clarification with TLF and whether the surcharge had been implemented in countries other than France. WFS, which was founded and remains headquartered in Paris despite its growth worldwide, retains a strong presence in France and at Paris Roissy-CDG airport.

As reported earlier this month by Lloyd’s Loading List, social distancing and stricter rules aimed at preventing the further spread of coronavirus are reducing the efficiency of air cargo handling, adding time into supply chains and in effect limiting overall available capacity and meaning that the slew of passenger planes now being deployed as cargo-only options are having little impact in terms of lowering freight rates. 

One leading forwarder said long loading times of up to 10 hrs are being recorded while another, based in Asia, said crewing problems due to quarantine restrictions were also adding time in. Executives said the use of passenger planes had added to loading times and delays given the extra handling time required to strap cargo to seats.

Neel Jones Shah, global head of air freight at Flexport, said slower handling times were offsetting capacity gains. “One of the biggest impacts (of coronavirus) we’re seeing is in the ground handling industry,” he said. 

“It’s taking much longer to tender and recover freight because many ground handling agents and airlines are short staffed as workers abide by shelter-in-place orders.”

Brian Bourke, chief growth officer at Chicago-based SEKO Logistics, said the handling challenges in air cargo supply chains at present were many and varied. “We are dealing with a global pandemic so we are dealing with absenteeism, we are dealing with the health and safety requirements of frontline workers – there are multiple elements creating more friction,” he added.

Source: lloydsloadinglist

The opinions expressed herein are the author's and not necessarily those of The OLO News.