Surcharges are a common way of increasing prices to consumers, passing on charges in a round about way. Here are 3 that might affect you for Promotional Products business with China…
- Airline fuel surcharges can apply to passengers, courier, air freight have been around for quite a while. The surcharges have been adjusted over time for fluctuating fuel costs and to take into account costs for various security measures.
- Cotton Crisis Surcharges: Last year spikes in the price of Cotton, due to bad harvests and high demand, have also lead suppliers to implement these. Surcharges on commodities work well when the market price of raw materials fluctuates wildly and where an up-to-date price index is available to all parties to track how this affects their business.
- Gulf of Aden Piracy surcharge is the most recent surcharge we were informed of is the. Suggest that a long term price adjustment is a more appropriate response given the long term nature of this piracy. See below….
“As a result of the attacks by Somali pirates in the Gulf of Aden, off the Somali coast, the Arabia Sea and the wider Indian Ocean, carriers are imposing a wider area of exclusion to avoid piracy. Increasing the area designated as high risk from piracy has lead to higher fuel consumption as vessels have to navigate a much longer distance. To reduce the impact of the increase in piracy activity in the Indian Ocean region security measures have increased to safeguard the crew, the vessel and cargo, all with cost implications to the carriers. CMA CGM has announced its intention to increase the Aden Gulf Surcharge to USD54/ teu from 01/04/11 on all cargo from Asia to North Europe routes, including cargo from Sri Lanka and Bangladesh. It is likely other carriers will follow suit until the risk from piracy risk is reduced.”
Businesses often hide costs in small print at the time of quotations and in their advertised pricing. This is very prevalent with some retailers and service industries – they advertise pricing which exclude Government sales taxes in some countries/cities.
Ask our buying office for details of any ongoing surcharges which might affect your order. If there is a chance of a surcharge we do flag this very early in the quotation process and keep this blog updated on latest news..