Citrus growers feel squeezed by Maersk
The chief executive officer of the Citrus Growers Association of South Africa said the plan announced last week
by Maersk and sister company Safmarine to raise reefer rates $1,500 per 40-foot container is "overzealous and somewhat flawed in the context of the South African citrus trade."
posted on the group's Website, Justin Chadwick said his group is drafting an assessment of the plan based on the following points:
- "There is no plausible explanation that warrants such an increase" based on the current freight rates between South Africa and the European Union, which he said "are considered to be sufficient to realize a return on investment in equipment needs and still generate a profit over and above this."
- "Production and logistics costs are already a heavy overburden on the citrus industry. Inflationary costs estimated for 2013 and considering the Maersk Lines and Safmarine’s opportunistic freight increase (others will follow), the future of the citrus industry looks difficult in terms of returns back to the farmers."
- "The call by Maersk Line's CEO for producers and suppliers to renegotiate prices that they receive for their produce ahead of the 2013 increase is seen to be unreasonable (and unrealistic) in that citrus
sells predominantly on the principle of ‘price taking’ rather than
- Offsetting freight hikes against eliminating rate rebates and seasonal rate levels towards a flat rate.
- Container rate increases causing a significant demand for bulk reefer vessels that are in short supply but will provide adequate tonnage on key routes.
- Container lines deemed to be profiting on bunker levies by omitting a weighted average policy across loading and discharge ports. - Chris Dupin
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