Fresh produce exporters affected by shipping rate increase
Maersk started the ball rolling back in September last year when CEO, Soren Skou announced that from January 2013 the cost of shipping a 40ft container would increase to $1500 and predicted a rise of 30% in shipping costs on a global scale.
In an interview with FreshPlaza last September, Thomas Eskesen, Global Head of Refrigerated Business at Maersk stated that, "growers worldwide will face increases so individual growers/exporters can go with confidence to supermarkets and ask for more."
According to one major South African fresh produce exporter, retailers are most certainly not accepting higher prices asked for by producers and growers/exporters say they are having to absorb the extra cost themselves. He goes on to say that increases such as this are not sustainable in the long term.
South African growers are, and have for a while been, looking hard at the domestic and African markets according to the exporter. They are also continuing to supply the Middle and Far Eastern markets, but the exporter explains that these routes, in particular to the Far East have been hit hard by the increases.
Companies are now looking into how to cope with this situation and are working with the receivers to limit the falling returns.
Meanwhile Belgian exporter Thomas Leterme of Barts Potato Company says that the situation depends on many things, for example destinations, shipper, routes and the availability of reefer containers. He said that exports to Africa have stopped at the moment. He puts this mainly down to the large volumes which were shipped in December before the increases came into place.
Exports to Australia, the Middle East, Australia and South America are continuing according to Leterme, "Africa will start again when they get used to the price. Some clients accept the price others don't, if they look themselves they can see the increase in shipping prices."
Thomas Eskesen, Maersk Line, explains the reasons for the price rise on Mearsk shipping lines, “We know the reefer rate increase will impact our customers, but most of them understand that we must do this and have been supportive. The reefer market is growing rapidly and demand is outstripping supply; meanwhile rates have not kept pace with major costs like fuel, or even inflation. That competitors have largely followed suit suggests it is a move other carriers agree is wise. Maersk Line is the best when it comes to reefer scale, scope and breadth of innovative services. We want to maintain that and to continue developing our products to ensure our customers can confidently build their supply chains around us. This is not a decision we’ve taken lightly, but it is the right one.”