China Cargo Carriers Jolted By Fuel Price Increases

As we know commerce from China to the rest of the world has increased significantly over the last decade. To meet the increased demand, China cargo carriers have had to increase freighter flights and also develop strategic relationships & joint ventures with international carriers.

However they have now been hit by rising aviation fuel prices, which were not completely unexpected. The magnitude of the increase and the timing though have still caught a few analysts off guard.

The price is expected to go up by 25 percent, as of June 20. This was announced by China’s National Development and Reform Commission. The fuel price will go up by US$218.62 per tonne, as a result - the largest price increase. Although China’s ex-factory jet fuel price is still $189.47 lower than the price on the international market, carriers were taken by surprise and are now rethinking their flight plans.

While several Asian countries have already bowed to the pressures of near US$145 oil by scaling back subsidies and raising fuel prices, most analysts had expected Beijing to hold out on the price increase until after the Olympics in August.

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