Forwarders Welcome Cathay Cargo’s New Medium-Haul Fuel Surcharge

Why It Matters

The new surcharge tier offers limited relief while the steep overall increases pressure freight costs, eroding Hong Kong’s edge as a global cargo hub and prompting calls for regulatory reform.

Key Takeaways

• Medium‑haul surcharge set at HK$9.3/kg (~$1.19) for South Asia.
• Long‑haul surcharge jumped to HK$18.6/kg (~$2.38), eight‑fold rise.
• Short‑haul surcharge now HK$5.1/kg (~$0.65), up 364%.
• HAFFA praised new category but warned surcharges remain unsustainable.
• Liberalised 2025 CFS market lets airlines set own fees, raising competition concerns.

Pulse Analysis

The recent escalation of fuel surcharges across the air‑cargo sector is a direct fallout of the Middle East conflict, which has driven jet fuel prices to multi‑year highs. In Hong Kong, the 2025 liberalisation of the cargo fuel surcharge (CFS) regime shifted pricing power from the government to individual airlines, exposing freight forwarders to volatile cost structures. HAFFA’s members, who handle the bulk of regional imports and exports, have felt the pinch as surcharges climbed sharply, prompting industry groups to lobby for a return to regulated benchmarks.

Cathay Cargo’s latest pricing move splits its surcharge framework into three bands: short‑haul, medium‑haul and long‑haul. The medium‑haul tier, now at HK$9.3 per kilogram (about $1.19), targets South Asian destinations previously lumped with long‑haul routes. While this provides a modest discount compared with the HK$18.6/kg long‑haul rate, the overall uplift—short‑haul up 364% and long‑haul eight‑fold since February—means forwarders must renegotiate contracts and potentially pass costs to shippers. The tiered approach also signals airlines’ willingness to fine‑tune pricing to market segments, a practice that could become standard as carriers seek to recoup fuel‑related losses.

For Hong Kong’s logistics ecosystem, the surge underscores a tension between market freedom and hub competitiveness. HAFFA’s call for reinstating a regulated CFS mechanism reflects fears that unchecked price hikes could divert cargo to rival airports with more predictable cost structures. As freight volumes fluctuate, the balance between airline profitability and forwarder sustainability will shape policy debates. Stakeholders will watch closely whether the government intervenes or allows the liberalised model to evolve, a decision that will influence Hong Kong’s standing in the global supply chain for years to come.