Forwarders complain over Covid handling surcharge

4/16/2020

The freight forwarding arm of France’s leading logistics industry body, TLF, this week 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 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

WFS told Lloyd’s Loading List: “We have communicated with TLF today (7 April) 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.

TLF said it would not be commenting on the matter at this stage.

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 yesterday 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. I expect this to get worse over the next 30 days as the virus spreads and peaks in the US and EU.”

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.