SINGAPORE – A new four-cent fee that ground handling firm Sats plans to impose on every kilogram of inbound air cargo it processes in Singapore has been deferred for a second time until Aug 1.

Originally meant to kick in on April 15, the new charge had been delayed by a month to May 15 after industry players pushed back against the move, which they say will add to inflation and introduce inefficiency in the supply chain.

Sats announced the second deferral in a circular issued to the industry on April 26.

“We have considered your suggestions, and will agree to requests raised by the industry for more time to make the necessary arrangements to administer the new fee,” said Sats in the circular.

The ground handler also said it has renamed its new fee, which will now be called a “cargo terminal collection fee”, instead of an “import handling fee”, to better reflect the work required for handling, processing and securing inbound cargo.

The decision to delay the new fee by another 2½ months came after Sats held a two-hour, closed-door town hall meeting on April 19 at Downtown East with about 90 representatives from the air cargo industry to address their concerns.

Attendees told The Straits Times that the general mood was one of frustration and resignation. Those interviewed noted that the new fee will increase administrative expenses and bemoaned the higher cost, which they say may ultimately be passed on to consumers.

They also said that the higher costs could impact the competitiveness of Changi Airport as an air cargo hub and questioned why airlines – the direct customers of cargo terminal operators like Sats – are not being made to shoulder the burden.

In a statement to ST after the town hall, Sats pledged that it will not impose any other new charges or increase existing fees for freight forwarders in Singapore until March 31, 2025. It also reiterated an earlier promise to not raise the new four-cent fee for at least two years.

While it is common practice to charge terminal or processing fees on inbound air cargo, and such fees are levied at most major airports including those in Kuala Lumpur, Bangkok and Hong Kong, it is the first time that a ground handler in Singapore is introducing it.

Industry players said that given Sats’ dominant position in the ground handling sector here, they fear its only other competitor in Singapore – dnata – will follow suit and impose a similar fee in future.

When asked about this, dnata declined to comment.

One industry insider who was at the April 19 meeting noted the knock-on effects that the additional fee will have on some clients, such as those dealing in perishables. One example is the meat that is flown into Singapore for the annual Hari Raya Haji ritual of korban.

Another attendee, a logistics manager for an international company, said he understands why Sats needs to increase its rates, but felt it should be incorporated into the overall freight cost that airlines pay rather than charged as a separate fee.

He added: “As a shipper, the cost will eventually fall back to us. But I think it is not going to make the whole ecosystem efficient... What makes Singapore unique? What’s going to make us a competitive hub? We will be no different from Thailand and Malaysia.”

Both declined to be named as they were not authorised to speak to the media.

Sats told ST that the primary objective of the new fee is to partially cover its operating costs, which have risen significantly post-Covid-19 due to inflationary pressures. This is especially so for its manpower expenses, which Sats Gateway Services chief executive Bob Chi said are crucial for hiring and retaining workers in hard-to-recruit positions that require shift work.

“The financial sustainability of our cargo operations in Singapore is crucial to our ability to support air hub operations, as we process more cargo and are held to ever higher customer expectations amid global competition,” he added.

Sats said its business costs have gone up by as much as 30 per cent, and continue to rise. It noted, for example, that its manpower costs are up 25 per cent due to an acute labour shortage, while security costs have risen by as much as 50 per cent.

Mr Chi said Sats intentionally kept its new fee low to minimise the impact on the air cargo sector and the competitiveness of Singapore’s air hub. He also noted that the charge of four cents per kilogram is the lowest among regional airports.

He added that Sats is cognisant of the fact that inflationary pressures have driven up costs for all parties in the air cargo industry. Hence, the company’s approach is to get everyone, including airlines, to play a part in defraying the cost increases.

ST understands that for airlines, this will be done via contract negotiations, which are ongoing.

The Civil Aviation Authority of Singapore (CAAS) said in response to queries that Sats had shared with the regulator in January its plan to implement the new fee on inbound cargo.

Ms Angela Ng, CAAS director of aviation industry, said the various charges levied by cargo handling agents here are determined on a commercial basis. But CAAS has encouraged Sats to engage closely with stakeholders on the new fee and consider the relevant feedback, she added.

Even with the latest deferment, a representative from a German freight forwarder who was at the April 19 meeting said the industry sentiment is still quite pessimistic.

“Sats is not listening to us. They are just going to shove it down our throats... People feel like they have no recourse. Unfortunately, we have to just live with it,” he said.

“The environment we are in right now – everything is going up. So I think the public needs to know. Because your eggs that are imported from Poland, for example, those are going to be more expensive now.”

Mr Edwin Lim, commercial director of Pacific Logistics Group, was more sanguine. He said the deferment of the new charge until August will give the industry more time to react and speak to customers.

“For example, companies may consolidate more of their shipments together to spread the cost,” he added.

Mr Lim said he feels that the new four-cent fee that Sats plans to levy is reasonable, given the rising manpower costs and the need for the ground handler to invest in automation and new technology.

He added: “It is normal for people to push back against an increase in fees... It is the timing. Everybody is feeling the pinch.”