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SA fruit growers oppose Maersk reefer box price rises

SA fruit growers oppose Maersk reefer box price rises

South African citrous fruit shippers oppose the planned rate hike by AP Møller Maersk Group-controlled liner companies Maersk Line and Safmarine.

The Citrus Growers Association of Southern Africa said its carrying out an impact assessment on the planned increases. The association’s chief executive, Justin Chadwick said there was “no plausible explanation that warranted such an increase”, calling it “overzealous” and “somewhat flawed”.

In a keynote speech to the Cool Logistics conference in Antwerp, Maersk Line CEO Søren Skou this week told delegates the hike represented a 30% increase in prices globally and that the carrier might rethink its participation in the reefer trades if it did not see better returns.

Skou said that over the past seven years reefer rates had not been able to cover the increases in inflation or bunker costs, and between now and 2015 the industry would need to invest US$3.5bn new equipment, which also would not be covered by current rates.

Chadwick said: “On the South Africa-Europe tradelane, freight rates are considered sufficient to both realise a return on investment on equipment and generate a profit.” He says other shipping lines would follow Maersk’s line on price hikes. He said logistics costs were already a heavy overburden on the citrus industry and with inflationary costs in 2013 and the “opportunistic” freight increase, the future of the citrus industry looked difficult – especially in terms of returns back to farmers.

Chadwick said he was also disappointed at Maersk’s calls for renegotiations on cargo being moved before the planned January 2013 increase, and on the unfair way in which bunker levies were being implemented.

Maersk and Safmarine say that without the $1,500 general rate increase, there will be no investment in new equipment.