South African delivery companies have also been hit by the sharp increases in jet fuel prices.
- Delivery company The Courier Guy has said it will introduce a temporary surcharge for its air parcels for the first time.
- The news comes after an increase in ticket prices by SA airlines this week and sharp hikes in jet fuel costs.
- According to the South African Express Parcel Association, margins in e-commerce and delivery services are too thin to absorb such sharp increases in jet fuel prices.
- For more financial news, go to the News24 Business front page.
South African delivery company The Courier Guy will introduce a temporary fuel surcharge for customers shipping parcels by air after airlines raised their ticket prices this week.
The company said the surcharge is temporary and will be applied from Friday, 13 March. It said the ticket price increases imposed by airlines had also been applied to cargo operations.
READ | Fuel suppliers clamp down on extra orders to manage supply risks
“This surcharge is a direct cost recovery and will be adjusted in line with any changes made by the airlines. While we regret the need for this adjustment, it is necessary to maintain the reliable, high-quality service you expect from us. We continue to monitor the fuel price closely and will revise the relevant surcharge as market conditions normalise,” the company said in a notice.
International courier company DHL said in response to questions it already has “an established mechanism to apply and adjust fuel surcharges in line with changes in fuel prices in the market.
“The situation in the Middle East has led to increased complexity in global logistics operations, with longer routes, alternative gateways and additional operational measures required in some cases. Carriers are also starting to introduce fuel surcharge adjustments in response to increases in the oil price.
“We work transparently with customers to communicate any surcharge related changes and to identify the most appropriate transport solutions for individual shipments,” a DHL spokesperson said.
On Thursday, News24 reported that airlines, including South African Airways, Airlink and FlySafair, had hiked ticket prices after jet fuel costs rose by 70% week-on-week.
Sharp increases in jet fuel costs have been felt globally because of the Iran conflict and the closure of the Strait of Hormuz, which accounts for one-fifth of global oil supply. Oil alone has risen to more than $100 a barrel, while jet fuel has outpaced oil and doubled since the conflict began, according to Reuters.
READ | SAA also hikes ticket prices amid jet fuel cost pressures
According to Bloomberg, several international airlines – including Air India, Air New Zealand, Cathay Pacific, Qantas and Virgin Airlines – announced price increases this week, with the International Air Transport Association warning that ticket prices could rise by 9%.
Concerns have been raised globally about fuel supply, while local suppliers are starting to limit deliveries to contract volumes.
Airlines have said there is no immediate concern of jet fuel shortages in SA. However, Airlink said there were concerns about how much stock would be available beyond April.
Speaking to News24, CEO of South African Express Parcel Association (SAEPA), Garry Marshall, said it would be a rough ride for consumers for a while, amid rising fuel costs for both air and road freight and conflict in the region. He said that costs for road freight would also be hit hard by fuel increases in April.
For e-commerce, in particular, margins are so thin that the ability to manoeuvre and absorb fuel prices. The man in the street is going to hurt.
Garry Marshall
According to Marshall, fuel rates are usually a standard feature for air freight costs, and are adjusted monthly. However, sharp hikes in jet fuel costs meant that it was clear that The Courier Guy could not absorb the hike, and introduced the surcharge for the first time.
Marshall also said that the Iran conflict had a huge impact on air cargo volumes globally, with the Middle East considered a huge transit hub for cargo. Airlines, including Emirates and Qatar, have limited their flight schedule since the conflict began.
This is also set to impact high-value goods like technology and pharmaceuticals, which make up most of air freight cargo.
“About 4 000 flights have been cancelled. For SA, a lot of our cargo travels through Dubai. There is now a shortage in capacity for air cargo, which has also created a backlog. However, we do think airlines will be able to find alternative routes, and organise chartered flights when necessary,” said Marshall.
The article and headline was amended following additional comment by industry players.
