Fruit exporters squeezed by large shipping cost increase

Audrey D’Angelo

Fruit exporters in South Africa, faced with higher labour costs, are also being hit by a rise in shipping costs of about 30 percent per container that came into force at the beginning of this year, according to the Southern Hemisphere Association of Fresh Fruit Exporters, the umbrella body representing fruit growers in South Africa, Australia, Argentina, Brazil, Chile, New Zealand and Peru.

But Thomas Eskesen, the global head of refrigerated containers, or reefers, for the AP Moller-Maersk shipping group, which includes Safmarine, said the shipping industry in general was generating far less profit than the cost of capital. “While it continues to look at ways to lower costs it needs to get paid more for the services provided today and not least when looking ahead.”

A statement issued by the association said the rise in shipping rates meant “an added cost for the southern hemisphere fresh produce industry of up to $650 million (R5.9 billion)”.

“Bringing it down to the individual level, this could mean as much as an increase of $1.50 per 18kg of fruit delivered to its destination – or an average 8.3 percent to the total cost for the bulk of the shipped fresh produce.

“This significant increase severely affects the sustainability and competitiveness of the fresh produce industry, particularly smaller operators.”

Anton Kruger, the chief executive of the Fresh Produce Exporters Forum, said growers in the southern hemisphere were already facing a cost squeeze and profit margins were very small. On top of that, growers in South Africa also faced annual increases of 8 percent a year in the cost of electricity, needed in the packing sheds and for cooling facilities.

He said the only answer to that, if fruit were to remain available in the present quantities, was either for consumers to pay more or retailers to reduce their profit margins.

Marc Rooms, the global head of reefers for Safmarine, said the reefer shipping industry required a far bigger investment than for dry cargo. The containers were four times more costly to build and associated expenses such as plugs, bunker costs and research and development added to the costs of shipping refrigerated goods around the world.