International cargo fuel surcharges was shown to have declined far more than passenger fuel surcharges. With tensions easing in the Middle East after a cease-fire agreement between the United States and Iran, global oil prices have fallen. However, compared with before the war, fuel surcharges remain high, so freight costs are expected to keep weighing on industries that export products by air, such as cosmetics.
According to the airline industry on the 2nd, Korean Air Lines set the fuel surcharge taking effect on the 16th of this month at 1,360–1,520 won per kilogram. That is about 33% lower than the surcharge applied during the same period last month. Korean Air Lines set the passenger fuel surcharge applied to tickets issued this month at 61,500–451,400 won, lowering it by an average of 18.5%, and cut the air cargo fuel surcharge by a larger margin than that.
AIRZETA Co., which operates dedicated freighters, also set the air cargo fuel surcharge taking effect on the 16th of this month at 1,340–1,500 won per kilogram, about 33% lower than the previous period. Asiana Airlines likewise priced its air cargo fuel surcharge at 1,360–1,520 won per kilogram starting on the 16th of this month, down 33% from the previous period.
Air cargo fuel surcharges are assessed by distance zone based on the average of the Singapore jet fuel spot market price (MOPS). Rates taking effect on the 16th are set based on last month's MOPS average. Last month's MOPS was 3.6127 cents per gallon, down 24.3% from the previous month. The MOPS monthly average declined for the first time in two months since the war between the United States/Israel and Iran broke out in late February.
However, despite the recent cuts, the fuel surcharge currently applied to air cargo remains high compared with three months ago, so exporters are still struggling. On Mar. 16, major airlines applied a fuel surcharge of 450–510 won to air cargo, about one-third of the current level.
Although jet fuel prices have been falling recently as Middle East tensions ease, it is uncertain whether they will return to the transfer level given how sharply they had risen. In February, MOPS was $2.1197 per gallon.
By weight, basic cosmetics account for the largest share of air cargo exports. They are followed by engine parts, plastic boxes, and printed circuit boards (PCB). According to the Korea International Trade Association (KITA), total air cargo export volume last year was 537.58 million kilograms, of which basic cosmetics accounted for 50.12 million kilograms, or 9.3% of the total.
In particular, for basic cosmetics, 6.46 million kilograms were exported by air in April this year, up 59% from the same period a year earlier. Considering that the fuel surcharge was 390–440 won during the same period last year and 1,960–2,190 won in April this year, the surcharge burden has increased by about eightfold.
Memory semiconductors, which have the largest share by value, also saw export volume in April rise 12% from a year earlier to 310,000 kilograms, increasing freight costs.