SA: citrus growers angry over Maersk container hikes
South African citrus growers have hit out at Maersk Lines' and sister company Safmarine’s decision to increase reefer container rates by 30% (US$1,500), branding the rises "unreasonable" and "opportunistic".
The Citrus Growers Association (CGA) issued a statement about the price hikes due on Jan. 1, saying the higher costs would make the future of the industry "difficult".
"There is no plausible explanation that warrants such an increase based on the current SAF-EU freight rates, which are considered to be sufficient to realize a return on investment in equipment needs and still generate a profit over and above this," the CGA said.
The trade body described Maersk Lines chief exectuive officer Soren Skou's call to renegotiate prices with customers prior to Jan. 1 as "unrealistic" as citrus sells on a 'price taking' rather than negotiation basis.
Lona Citrus logistics director Charles Milleskie, said he thought Maersk Line would lose business as a result of the price hike.
"I personally think it will kill the industry. This rise could make South Africa very uncompetitive. Can the market place absorb this cost? I don't think they can to this extent."
He attributed the rises to the fact Maersk needed to build new containers and invest in vessel maintenance.
Maersk Lines told CGA there has been a 5% year-on-year gobal demand for reefer equipment and capital requirements could not be met by current freight levels.
Cape Five Export managing director Wayne Mudge, said he thought the increase would have a big negative affect on the trade.
"The thing which worries me the most is others following suite and putting up their rates by a similar amount. Our rates to Europe are going to put us in a very uncompetitive position."
He added Argentine and Brazilian exporters were paying less to ship their fruit to Europe even though the distance was no shorter.
Mudge said increasing fuel costs were an unacceptable reason for the rises given shipping lines imposed hefty bunker adjustment surcharges.
He attributed the freight hike rise to the fact the reefer sector is less competitive than general cargo with only a handful of shipping lines - MSC, Mitsui O.K. S. Lines, Hapag-Lloyd and DAL - offering a service to Europe in addition to Maersk.
South African fruit producers, together with the CGA, are currently drafting an assessment of the full impact the rises will have on the industry.
Related stories: Price hikes for Maersk's Latin American shipments
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