Rate hike offsets rising costs on US route

JOY ORLEK
APRIL 1 saw the implementation of a $200 per TEU rate increase on the SA – US route, the first southbound increase since 2004. Northbound rates were last increased in April 2005. It’s part of a drive by the lines to offset the rising costs of providing a premium service, New York-based president of Safmarine Inc, John Boudreau, told FTW. “Getting priority berthing windows at SA ports comes at a price, as does deploying additional vessels to maintain schedule integrity. “Speeding up vessels to make up for time lost to congestion delays is an additional burden, all the more onerous against the background of bunker increases.” Safmarine has addressed these additional costs in part by freight rate increases, and in part by incentivising customers to use its assets expeditiously. “If customers are not making efficient use of our assets they need to know that there are costs involved. “We have, for example, reduced the amount of free time we allow shippers on the terminal. By increasing the charges per day they are incentivised to take containers promptly, so reducing downtime. “We have also reduced the number of days that they can keep those containers out of the terminal so that they are more quickly returned to our fleet. "This is very much in the control of the customer – if he doesn’t want to pay those costs on or off the terminal he can influence that, and that’s the perfect world. You reward the efficient customer, the carrier becomes more efficient, and if you require more days or equipment then you pay for it. We believe it’s very democratic, allowing the customer to avoid additional charges based on behaviour.”