Domestic Air Cargo Industry in Australia - Bureau of Infrastructure ...

Chapter 7carried at the published rates and that discounts of up to 80 per centare provided by the two major airlines where substantial accounts areinvolved (Gawan-Taylor 1984a, 19; Shires 1985; Transport andDistribution Letter 1986b, 2). Similar discounts are provided toshippers by forwarders.The extent of discounting is illustrated by rates for movement fromSydney to Melbourne provided by one forwarder contacted during thestudy. In late 1986 the average basic charge paid by shippers was 51per cent below the company' scheduled charge and the average rate perkilogram was 60 per cent less than the rate in the forwarder'spublished schedule.Shippers with large amounts of cargo are able to negotiate discountswhere they require regular runs as a steady volume of base cargo has afavourable effect on carriers' cost structures. This is in contrastto irregular shipments where variability in traffic imposes some extracosts on carriers. Similarly, discounts are available where a shipperis prepared to accept longer delivery periods as this facilitates theuse of otherwise under-utilised capacity.Where there are significant imbalances in cargo flows, there may alsobe substantial variations in rates. Industry sources indicate that inlate 1986 the rate into Tasmania was around $1.20 per kilogram whereason the return leg where cargo was 1 imited the rate was only 30 centsper kilogram. Backhaul rates are generally 1 irniteci to lower ratedcomodities as carriers do not want to dilute their revenueunnecessarily by providing low rates for high value comnodities whichwould continue to travel at the higher rates. Where ground costs area high proportion of total costs, lower linehaul costs associated withexcess capacity may not be reflected fully in freight rates.There are still some links between rates and comnodity type. Forexample, perishables receive high priority and a low rate inrecognition of the fact that the trafficis economical for theairlines to carry but very price-sensitive. Officials from onecarrier contacted during the study indicated that they were trying tolink urgency and service requirements (for example, cold storagefacilities at.terminals) to price and eliminate the links to comnoditytype. However, it was recognised that the extent to which this couldbe achieved was limited by the constraints imposed by demandelasticities.Rates on particular routes may be reduced be1 ow attributable costswhere a large national shipper is involved. The most comnon case isservice to a centre such as Darwin which incurs high operating costs.57