Fruit Exporters Hit By Reefer Rise
As they stated they would in 2012, a number of container-shipping companies have introduced considerable rate increases on their reefer containers at the start of 2013. BMI notes that this is already being felt by shippers, with Pakistani fruit growers looking to the government for subsidies in order to cope with the extra cost. How long the rate hikes hold at this level is open to question given how recent rate increases in the container-shipping sector have fared. However, it seems likely that they will stabilise at a higher level than they had been in 2012 given capacity-curbing actions being taken by the firms.
In Q412, market-leading container shipping company Maersk Line came out and stated that it was planning on introducing a US$1,500 rate hike on its forty-foot refrigerated containers (reefers) from January 1 2013, an increase of 30%. Maersk Line CEO Søren Skou said in September that the rate hike was essential to fund investment as the sector has not kept pace with inflation and bunker costs. Over the past seven years, reefer rates have increased an average by 2% per annum, while inflation over this period has ticked up by 4% and bunker costs by 18%. Skou added: 'During the last seven years, our reefer rates have not even covered the rate of inflation.' As is often the case, Maersk Line was followed by a number of other leading shipping companies: the world's number two and number three, Mediterranean Shipping Company (MSC) and CMA CGM, have also introduced rate hikes of US$1,500 per reefer, as have COSCON and APL.
The effect of this is already being felt by shippers: in Pakistan, exporters of the kinnow fruit (a US$40mn to US$50mn business in the country) are appealing to the Pakistani government for aid as they feel the impact of the rate rises. Freight from Pakistan to Malaysia has risen to US$3,400 per forty-foot reefer with the US$1,500 increase; freight to Jeddah has risen to US$3,600. CEO of Pakistani fruit-exporting company Harvest Tradings, Ahmad Jawad, said: 'The Ministry of Commerce should grant a subsidy on exports of kinnow after shipping companies are to increase freight charges, keeping in view the abnormal growth in costs. The increase in freight charges will prove another suffering for kinnow exports.' The industry had already been hit by increased charges on exports to Russia and by a recent 11-day truckers' strike which disrupted supply lines.