Why do air freight quotes for the same route vary so dramatically? Many shippers find themselves confused by the terms "All-In" and "Plus-Plus" rates when arranging international air cargo shipments. The complexity of air freight pricing extends beyond base rates, with fuel surcharges, security fees, and handling costs creating potential pricing pitfalls. This analysis examines the key components of air freight pricing to help shippers make informed decisions.
The Fundamentals of Air Freight Pricing
Air freight rates, commonly referred to as "Rate" in industry parlance, represent the transportation charges levied by carriers for moving cargo from origin to destination airports. Unlike ocean freight typically quoted in U.S. dollars, air freight rates are usually denominated in the origin country's currency.
Pricing calculations follow specific weight-based rules: shipments under 0.5 kilograms round up to 0.5 kg, while weights between 0.5 kg and 1 kg round up to the nearest full kilogram.
All-In vs. Plus-Plus: Critical Distinctions
The air freight industry operates with two primary pricing structures that significantly impact total costs:
All-In Rates
These comprehensive quotes include fuel surcharges and security fees (war risk insurance), with some providers also incorporating handling charges. For example, an "All-In 16" rate for PEK-FRA indicates a total price of 16 local currency units per kilogram covering all transportation fees from Beijing Capital International Airport to Frankfurt Airport, including fuel, security, and handling.
Plus-Plus (++) Rates
These base rates exclude mandatory surcharges. A "6++" quote for the same PEK-FRA route represents only the core transportation cost, with fuel surcharges, security fees, and handling costs calculated separately and added to this base figure.
Deciphering Surcharge Components
Fuel Surcharge (MYC)
Documented as MYC on air waybills, these carrier-imposed fees compensate for aviation fuel costs. The "MY" denotes the fuel surcharge component, while "C" identifies the airline as the collecting party. Fuel surcharges often constitute the largest variable cost in air freight, sometimes exceeding base rates during periods of high oil prices. These fees vary by airline, route, and IATA zone, with major carriers potentially charging up to 9 local currency units per kilogram on key routes.
Security Charge (SCC)
Marked as SCC on documentation, these fees cover war risk insurance and security measures. Typically stable at 0.5-1.0 local currency units per kilogram across most routes, these charges represent the airline's risk mitigation costs.
Handling Fees
Ground service charges for cargo processing generally range from 0.5 to 0.8 local currency units per kilogram, with palletized or special cargo potentially incurring higher rates. These fees encompass airport handling, storage, and related logistical services.
Strategic Pricing Considerations
To avoid unexpected costs and ensure competitive pricing, shippers should:
- Explicitly clarify whether quotes represent All-In or Plus-Plus rates during inquiries
- Verify inclusion of fuel surcharges, security fees, and handling costs
- Exercise caution with unusually low Plus-Plus rates, which may mask substantial surcharges
- Request detailed fee breakdowns for accurate cost comparisons
- Compare multiple carrier offerings, as surcharge structures vary significantly
Case Study: The 1++ Illusion
A PEK-FRA quote of "1++" per kilogram might appear attractive until adding typical surcharges: 5 for fuel, 1 for security, and 0.5 for handling brings the actual cost to 7.5 per kilogram. This demonstrates why comprehensive rate analysis proves essential.
Conclusion
Navigating air freight pricing requires understanding the fundamental distinction between All-In and Plus-Plus rates, along with thorough analysis of variable surcharges. By adopting these analytical practices, shippers can optimize transportation budgets while ensuring reliable cargo delivery.