LH Cargo and Swiss WorldCargo Change Price Structure

Both carriers announced today (5 August) a new rate scheme which will become effective on 25 October when the new winter schedule begins.  It consists of two components - a net rate and an air freight surcharge. By doing so, the duo decided against all-in rates as offered by the Gulf airlines and IAG Cargo since months.

Offer identical tariffs: LH Cargo…
Offer identical tariffs: LH Cargo…

The most important news for the market should be that the announced new price structure doesn’t make cargo transport by LH Cargo and its sister company Swiss WorldCargo any cheaper. This is confirmed by LH Cargo in a letter to their clients, obtained by CargoForwarder Global. “As the new air freight surcharge will be much lower than the total amount of the current surcharges, the net rates will be re-aligned so that overall prices of transportation will remain at current levels.”
It’s too early to obtain a thorough overview of client’s reactions but first comments are predominantly supporting the duo’s pricing step.

First agents applaud…
“The carrier’s move is a long awaited one in the right direction,” lauded Dieter Haltmayer, owner of forwarding agency Quick Cargo Service the decision taken by LH Cargo and Swiss WorldCargo. He adds to this that both airlines’ pricing structure becomes more transparent and far less complicated than it had been up to now. “The consequence is that their rates will go up, with the surcharges adjusted downwards,” noted Dieter. “This way we are gradually getting back to where we once had been in the air freight industry.”
He speaks of the end of distorted transport prices with airlines charging 0.10 euros per kilogram or even offering their customers “negative rates” for flying goods from Europe to China, making their money solely on fuel and security surcharges.

… while only very few would have preferred all-in prices
Michael Goentgens, Head of Communications at LH Cargo underlines that similar to QCS boss Haltmayer key clients of his airline have reacted positively when being informed about the new pricing model. “The feedback we got from most of our customers was very encouraging,” Michael states. However, a few would have preferred all-in prices, he admits. 

… and partner Swiss Cargo
… and partner Swiss Cargo

A surcharge level of €0.60 is being discussed
In a letter to customers obtained by CargoForwarder Global LH Cargo speaks of air freight surcharges amounting to €0.60 per kilogram for transports originating in Germany. This price can differ on routes from China to Europe or Latin America to Europe as a result of local cost components. LH Cargo and partner Swiss WorldCargo will inform their clients about the precise price level two weeks before the winter schedule starts, both carriers announced.

Elimination of rate distortions
Alexis von Hoensbroech, Lufthansa Cargo Board Member Product and Sales assures the new pricing structure to be uncomplicated, ensuring “that we are well-positioned for the future, given the changes that the markets have undergone.” The manager goes on to say: “We have listened to our customers. 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 air freight surcharge. That cuts down on complexity and makes us faster.”

Surcharge level depends on external cost situation
Swiss WorldCargo’s Chief Cargo Officer Oliver Evans stated: “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 announces that the air freight surcharge will be adjusted whenever one of these external cost factors changes significantly and thus will display necessary price adjustments in a transparent way. “This would not have been the case with an all-in rate, which both airlines reviewed in detail. An all-in rate would have been less transparent,” Oliver concludes.

Heiner Siegmund

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