by Horgtro

Freight rate increase

SHAFFE members remain concerned about increase in shipping rates

SHAFFE is concerned about the increased freight rates
freight.jpg

SHAFFE, the Southern Hemisphere Association of Fresh Fruit Exporters, which unites all significant southern hemisphere fruit-growing export countries, remains deeply concerned about the announcement by several shipping companies to increase freight rates as of 1 January 2013.

While acknowledging that commercial issues need to be negotiated and agreed on at company level, a collective perspective shows the impact the increased rates have on the fresh produce business. 

SHAFFE members are exporting on an annual basis around 8.7 million tonnes of fresh fruit overseas – the vast majority by sea freight. Considering the increase in shipping rates by up to US$1.500, or around 30% per container, would mean a total added cost for the southern hemisphere fresh produce industry up to ca. US$650 million.

Bringing it down to the individual level, this could mean as much as an US$1.5 increase per 18kg box of fruit delivered to destination. With an indicative value for fruit of ca. US$1.00 per kilogramme, this increase would mean an average 8.3% addition to the total product cost for the bulk of the shipped fresh produce.

This could lead to, for example, an 11% increase on total value per carton of apples, a 10% increase on total value per carton of citrus, or a 4.5% increase on total value per carton of grapes. 

This significant increase severely affects the sustainability and competitiveness of the fresh produce industry and is even more detrimental for smaller operators. The rate variation is abrupt and has far-reaching implications for the sector with limited time to react, adapt to these increases and have them absorbed at once by the supply chain down to consumers. 

The drastic price lift will have a serious impact on the international supply of fresh produce and in particular when it comes to off-season fresh produce originating in the southern hemisphere countries represented by SHAFFE. The association therefore calls on container shipping lines to reconsider their rate increases.

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