The Southern Hemisphere's fresh produce industry could incur up to US$650 million in additional costs due to increased freight rates, the Southern Hemisphere Association of Fresh Fruit Exporters (SHAFFE) warned Wednesday.

SHAFFE called on container shipping lines to reconsider rate increases that were put in effect Jan. 1, 2013.

According to the organization, its members export 8.7 million metric tons (MT) of fresh fruit annually, most of which goes out by sea freight. Proposed increases of up to US$1,500 per container would severely damage sustainability and competitiveness, explained deputy secretary general Sebastian Kruse.

"There might a rate increase given the economic circumstances of the shipping lines but in the end, there needs to be a rate which is manageable by the whole supply chain.  An increase by 30% is far too high," he said.

In the specific case of South Africa, Hortgro CEO Anton Rabe expressed concern that growers may not be able to keep up with continuously rising production costs.

"It’s virtually impossible for us to keep on absorbing these increases in costs. In South Africa, we just recently had the new minimum wage adjustment, which will have an impact on different industries at differing levels. Electricity prices are increasing by 16 to 17%. The last two to three years, fuel is up. Our exchange rate has weakened, so all of our imports on chemicals have increased," Rabe told www.freshfruitportal.com.

"Somewhere along the line this will have to be passed on to the consumer and we will have to see higher prices."

SHAFFE estimates that the burden of shipping costs could increase the average price per 18-kg. box of fruit by up to US$1.50. Broken down by commodity, the increase would equate to an 11% price jump per carton of apples, a 10% increase for citrus and a 4.5% rise for grapes.

"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 organization said in a press release.

"The Association therefore calls on container shipping lines to reconsider their rate increases which ultimately endanger the long-term sustainability of the Southern Hemisphere fresh produce industries."

SHAFFE represents significant exporting countries such as Argentina, Australia, Brazil, Chile, New Zealand, Peru, South Africa and Uruguay.

www.freshfruitportal.com