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Rate increase to affect shipping

Source: Shipping Services
Wednesday, December 12, 2012

The largest shipping line in the world, Maersk Line has announced rate increase to refrigerated container (reefer). The significant freight rate rise will be felt worldwide and Fiji by January 1, 2013.

The increase will be added to the freight component of the cost of shipping a container, and will be US$750 (F$1327) per 20 foot reefer and US$1500 (F$2654) per 40 foot reefer container.

Maersk Line carry significant volumes of Fiji exports; frozen fish to Asia, Europe, the United States, as well as dalo and manufactured foodstuff to Australia and New Zealand and other Pacific Islands. The line is also a large player in the importation of refrigerated foodstuff, meat, fruits and vegetables to Fiji. Maersk Line's Fiji agent, Barbara Wong-Nasara of Shipping Services Fiji Limited said that falling freight rates prior to the global financial crisis in 2009, combined with the increased operational costs has meant that freight rates have eroded to an extent whereby many shipping lines are barely containing the cost of moving refrigerated cargo worldwide.

"Maersk Line has conducted quite a few studies that show the demand for protein packed foods like meats and seafood has increased exponentially worldwide, and people increasingly expect to see imported foreign food at their local supermarket and think nothing of the logistic cost of actually getting it there. Maersk Line recognises this and have put billions of dollars worth of investment into research, development and production of thousands of refrigerated containers each year, far more than any other shipping line in the market.

"However, the return on investments have been far from satisfactory". Maersk Line envisages that if this action is not taken now, there will be an acute worldwide shortage of reefer containers within the next five years.

"We are very cognisant of the fact that this is a big call and we expect to sustain some loss in market share, but this is a strategic move from a global perspective that is necessary" said Jeffrey Lin Chief Operating Officer of Shipping Services.

When asked how other shipping lines will react to this, Mr Lin said, "That is entirely their call.

"We can't do too much about that but I dare say that they are also facing similar issues and it would not surprise me in the least that they are also reviewing revenue and cost structures."

Maersk Line via their Fiji agent Shipping Services operates two services that serve Suva and Lautoka ports.





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