The move by Maersk Line – the world’s largest container carrier – to increase its reefer rates by US$1 500 (R12 870) per 40-foot container (FEU) from January 1 has been followed by most of the other major lines around the world and on the SA trade. This after the line putting a complete stop to further investment in its reefer division. Thomas Eskesen, senior director of reefer management for the AP Moller Maersk Group, told FTW last year that the return on reefer investment was no longer sufficient. At the same time CEO Søren Skou announced a US$1 500 increase in base rates for reefers. He said that the 30% global increase would fund necessary investment: “During the last seven years our reefer rates have not even covered the rate of inflation,” he added. This was soon followed by world number two – Mediterranean Shipping Company (MSC) – telling customers it also planned to impose a global US$1 500 per FEU increase, as did the large Singapore carrier APL. Also significant was members of the westbound Transpacific Stabilisation Agreement pushing up prices on the US-Asia route this month. On the SA front, FTW concentrated on the lines which serve what is by far the country’s largest fruit export market, the UK, the European continent, and the Western Mediterranean. Maersk Line/Safmarine – members of the SA Europe Container Service (Saecs) – were the first to talk. “We have increased reefer rates significantly as of January 2013 in order to better account for capital investment associated with reefers,” Matthew J. Conroy, A.P. Moller group trade manager for southern Africa, told FTW. “In some instances the rate increase does vary from the US$1 500 amount previously announced, as our rate increase has been adjusted to be competitive in the market. However, the increase has been significant.” Others were equally cagey about admitting to a full US$1 500 increase across the board. As one independent freight specialist hinted to FTW, it was likely that all the lines were busy calculating just how much under US$1 500 they could go to have a competitive price advantage, while still getting a significant increase in reefer rates. Glen Delve, national commercial director of MSC, also serving the Europe/West Med/Gulf trade – which he defines as the major reefer trade for SA – confirmed that the line in SA would be following the global increase announced by the Genevabased parent company. “We will though be negotiating customer to customer for the period January 16 to July 31 – the remains of the peak fruit export season,” he said. Delve was also adamant that almost all of the other lines would follow suit – or find their reefer trades collapsing about their ears. “The level of trade has been so depressed over the last few years, with the cost of logistics just going up and up,” he added. “If the other lines don’t do some sort of reefer rates restoration, they’ll find it an unsustainable business.” Ron Frick, MD of Dal Agency, also told FTW that his line – Deutsche Afrika Linien, also a Saecs member – was pushing up its reefer rates. This, he added, would be done as part of its normal commercial arrangements. “We’ll deal with this on a one-on-one basis with each of our clients, as part of each of the annual contracts.” The increases, he therefore noted, would vary client to client. A similar stance was taken by Iain McIntosh, regional sales manager for the remaining member of the Saecs grouping, the Japanese-based Mitsui OSK Line (MOL). “Our reefer rates have gone up,” he said. “We announced a global increase of US$1 500/ FEU, but this will obviously vary depending on the customer and the market.” The loudest voice of complaint so far has been that of Justin Chadwick, CEO of the Citrus Growers’ Association (CGA) – which oversees what is by far SA’s largest fruit export sector. These US$1 500/FEU increases could have a devastating effect on the fruit industry, he said. “Transport is 70% of our costs,” he added, “so an increase of that magnitude (some 30%) will be disastrous. “It will even see some companies going out of business.” INSERT ‘Transport is 70% of our costs, so an increase of that magnitude (some 30%) will be disastrous.’
