If you’ve ever shipped anything big or time-sensitive via air freight—say, a medical device for a last-minute surgery, a seasonal sneaker drop that can’t wait for ocean freight, or a replacement part to keep a factory line from shutting down mid-production—you’ve probably glanced at your quote and thought, “Where does this price even come from?” For us, as an air freight supplier, that question hits especially hard when fuel prices swing like they did in 2022, when jet fuel jumped 60% in just three months after the Ukraine war kicked off. We didn’t just pull a new number out of thin air to cover costs, though. There’s a whole messy, logical system behind how we adjust prices based on fuel, and it’s way more connected to how airlines operate than most shippers realize. Air Freight
First, let’s start with the basics most people miss: airlines don’t make their money just from passenger tickets. A lot of folks act like air freight is an afterthought, but for many full-service carriers (and a lot of dedicated air freight lines like us), it’s a huge revenue driver. When a passenger books a flight, the plane’s cost to fly is mostly fixed—fuel, crew fees, landing charges, maintenance—regardless of how many cargo pallets are strapped to the belly. That belly cargo, though, is extra: it’s space we can sell to shippers, and it’s critical to offset rising fuel costs. If fuel jumps, we can’t just charge passengers more every time oil prices go up—demand for travel is too sensitive. But cargo is different; it’s often for time-sensitive or high-value goods, so shippers are usually more willing to adjust to avoid delays. That’s where the line gets drawn for us, too.
The first step in adjusting our prices is tracking jet fuel prices in real time, not just the headline oil prices everyone sees on the news. Jet fuel isn’t the same as the gas you put in your car; it’s refined specifically for aircraft, and its price moves independently sometimes. For example, in 2021, oil dropped sharply because of pandemic lockdowns, but jet fuel prices stayed high because refiners were focused on diesel for trucking, leaving less for planes. So we don’t just check Brent crude numbers—we use benchmarks like Jet A-1, the standard for most commercial flights, and add in small things like regional taxes or supply chain snags at refineries. We also have a team that checks these prices daily, not weekly, because even a one-day spike in fuel can shift how much we need to charge.
Next, there’s the fuel surcharge. If you’ve shipped via air freight before, you’ve probably seen a line item called “fuel surcharge” on your bill. That’s not a random fee we tack on—most airlines use a formula that’s tied directly to jet fuel benchmarks, and we have to publish those formulas so they’re transparent. For example, one common formula is: if Jet A-1 is above $150 per metric ton, the surcharge is $0.20 per kg of cargo; between $100 and $150, it’s $0.12 per kg; below $100, it’s $0.05 per kg. That’s a simplified version, but the idea is it’s a sliding scale, so we don’t overcharge when fuel is cheap or undercharge when it’s expensive. We also adjust this surcharge every 30 days, usually, because fuel prices can swing that fast. A lot of new shippers get frustrated when they see a surcharge change mid-contract, but that’s not a greedy move—it’s how we keep the lights on, so to speak. If fuel goes up $20 per barrel overnight, our cost to fly a pallet from Shanghai to LA jumps by a few hundred bucks, and we can’t absorb that without raising prices across all our other services.
But here’s the part most shippers don’t see: we don’t just pass 100% of fuel costs onto them. That would kill demand, especially when fuel prices are volatile. Instead, we split the burden between ourselves and our clients. For example, when jet fuel jumped 60% in 2022, we absorbed 20% of that increase in lower margins, and adjusted our surcharge for 80%. That meant shippers still saw a price hike, but not a sticker shock that would make them switch to slower ocean freight. Why do we do that? Because long-term, we want our clients to stick with us. If we raised prices to cover 100% of fuel costs in a month, half our clients would look for cheaper options, and we’d lose more money in the long run. It’s a balancing act, and it’s why we don’t just use a one-size-fits-all formula.
We also adjust prices based on the type of air freight service, not just fuel. For example, if you’re shipping a pallet with our express service (next-day or two-day delivery), fuel is a bigger part of the cost because we’re using smaller, faster planes that burn more fuel per hour. So when fuel is high, we adjust the surcharge for express services more than our standard air freight (which is 3-5 days). That makes sense: a small jet flying from London to New York burns way more fuel per pound of cargo than a big Boeing 777 that carries 10 tons of belly cargo, so the fuel cost per kg is higher. If we raised standard rates by the same amount as express, our standard clients would be paying way more than their fair share, and our express clients would only see a small increase. We’ve had regular shippers tell us that’s why they stick with us—we don’t make the fast stuff pay for the slow stuff, which is what a lot of big carriers do.
Another big factor is the route. Fuel prices vary depending on where you’re flying, right? A flight from Miami to Cancun is short, so the fuel cost is a smaller part of the total price, so we adjust surcharges less. But a flight from Singapore to São Paulo is a 17-hour flight, and burns tens of thousands of gallons of fuel. For that route, if fuel jumps, our price hike is way bigger. Last year, when fuel went up 30%, our surcharge for Miami-Cancun air freight was $0.03 per kg, but for Singapore-São Paulo, it was $0.18 per kg. That’s not arbitrary—it’s because the fuel cost for the long-haul flight is way higher. We also have to consider things like air traffic control fees over oceans, which are tied to fuel, and weather delays that make planes burn extra fuel circling airports. If a storm forces a flight to divert to another city, we’ll often add a small temporary surcharge to cover that extra fuel, and notify the shipper ahead of time so they’re not caught off guard.
Then there’s the way we use fuel efficiency to offset costs, which means we don’t have to raise prices as much. This is a big one that people don’t talk about. For example, we’ve updated our fleet with newer planes that are 25% more fuel-efficient than the 10-year-old models we used to fly. When fuel prices go up, we use these newer planes more, so our overall fuel cost per flight is lower. We also optimize flight paths with tech that picks the shortest, most fuel-efficient route, instead of taking the route that’s been used for 20 years. Last quarter, we saved 12% on fuel costs by adjusting flight paths across our European network, and that meant we didn’t have to raise surcharges as much as we thought we would. We also group cargo shipments more efficiently—if we have three pallets going from Chicago to Berlin, we’ll put them all on the same plane instead of sending them two weeks apart, which cuts down on the number of flights we need, and thus the total fuel used. That savings gets passed on to shippers, too, because we don’t have to charge for extra fuel for separate flights.
We also have to consider long-term contracts vs. spot pricing. If a shipper has a 12-month contract with us, we’ll lock in a fuel surcharge for the duration of the contract, as long as fuel stays within a certain range. That way, our client knows their air freight costs won’t jump suddenly, and we don’t have to adjust prices every time fuel moves a small amount. But for spot shipments (last-minute orders, rush deliveries), we use the current fuel price to set the quote, because we can’t predict where fuel will be in a week. That’s fairer for both of us: if a client needs a last-minute shipment, they get a price that’s accurate for the current fuel market, and we don’t have to underprice a rush job that might use extra fuel.
I should also mention that fuel isn’t the only thing that affects our prices, but it’s the biggest variable. Crew wages, maintenance, airport fees, and even insurance go up too, but fuel is the most volatile. In 2008, jet fuel peaked at $147 per barrel, and we had to raise prices by 40% that year to stay in business. But we learned from that: we now use fuel hedging, which is a fancy way of saying we buy fuel in advance at a fixed price, so if fuel jumps suddenly, we have a buffer. Of course, hedging can backfire if fuel drops, but it’s helped us avoid passing on too much price volatility to our clients. For example, in 2020, when fuel dropped to $20 per barrel, we still locked in some hedged fuel at higher prices, so we didn’t lower our rates too much and risk running out of money during the pandemic.
A lot of shippers reach out to us confused, because they see different prices for the same route with different carriers. The difference almost always comes down to how each carrier handles fuel. Some big carriers just add a flat percentage surcharge, which might seem simple, but it’s not fair for small shipments or long routes. Others don’t hedge, so they have to raise prices way more when fuel is volatile. We’ve found that the sweet spot is transparency—telling our shippers exactly how we adjust prices, so they understand why a quote is higher or lower, and knowing that we’re not just making up numbers to pad our margins.
At the end of the day, air freight is a tight, fast business. Shippers need their goods to arrive on time, and we need to make sure we can operate our planes without going in the red. When fuel prices go up, we have to balance our costs with what our clients can afford, because if we price ourselves out, we lose good partners. That’s why we don’t just look at jet fuel benchmarks and flip a switch—we factor in route, service type, fleet efficiency, and long-term relationships, to make adjustments that work for everyone.
If you’re shipping via air freight, or looking for a reliable partner to handle your time-sensitive goods, we’re here to work with you to adjust prices fairly when fuel shifts, and to keep your shipments on track. Reach out to us to discuss your specific needs and get a transparent quote tailored to your business.
Air Freight Air Express References
- International Air Transport Association (IATA). "Jet Fuel Price Trends and Air Freight Cost Adjustments". 2023.
- Aviation Week Network. "Fuel Efficiency Strategies for Modern Air Freight Carriers". 2022.
- U.S. Energy Information Administration (EIA). "Jet Fuel Price Volatility and Its Impact on Commercial Airline Operations". 2024.
- FreightWaves. "Air Freight Pricing: How Fuel Surcharges Are Calculated and Applied". 2023.
- Federal Aviation Administration (FAA). "Airline Cost Structure and Fuel Cost Allocation for Cargo Operations". 2022.
Foshan Shijie International Logistics Co., Ltd.
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