GSSAs lose out as fuel surcharges exceed freight rates

Commission related to base rate only JOY ORLEK DESPITE industry-wide pressure on export cargo volumes, Express Air Services has recorded some healthy growth figures on regional and international routes for the airlines it represents. “Sales figures are up,” says managing director Francois Wolmarans. “Qatar experienced healthy load factors. Regional volumes have also reflected encouraging growth with Windhoek up 65% over the same period 2005-2006. The company’s Lusaka service, which started in March 2006, recorded exceptionally high load factors in April and this route will, as in the past, prove itself based on service delivery. Strong rand “But this growth seems to be contrary to general market conditions. Apart from the impact of the strong rand on exports, South Africa is considered a first world country. This means import duties at destination are therefore imposed on local perishable export products which are competing with third world countries deemed import duty free, like Kenya,” says Wolmarans. “Perishable exporters are always on the look-out for reduced freight rates to remain competitive. And while freight rates are made up of three components - base rate, fuel surcharge and security levy – the GSSA’s commission is paid on the base rate only, which means any reduction impacts on their income.” Fuel surcharges in some cases in fact exceed the base rate, he added, “which has been the subject of debate worldwide amongst GSSAs and airlines over the past couple of years.” Perishable cargo and automotive products to Europe and the UK make up the bulk of the company’s exports while imports comprise mainly electronic goods from the Far East. “And due to the current rates of exchange inbound flights are full,” says Wolmarans. In addition to its national network in South Africa, EAS has dedicated offices in Namibia, Zambia and Zimbabwe and currently sells cargo capacity for more than 500 flights a week on domestic, regional and international flights. The company is AA rated by BEE rating agency, Empowerdex.