Airfreighting out-of-season vegetables and exotic fruit from sources such as Africa and South America could be at risk through spiralling fuel costs and increased service charges.
Oil prices have risen 80 per cent in a year to reach $53 a barrel. Adam Wakeley, sales and marketing director at UK importer Wellpak UK, told the Journal costs have bitten into profitability so deeply that after a period when companies had been absorbing rising prices, margins are no longer sustainable.
“We are all very concerned,” he said. “The question is how will the industry respond if oil prices continue to increase at such a rate?
“Static pricing to customers over the last three years despite more normal inflationary increases has had an overall devaluation effect which has been absorbed by the industry.”
Wellpak imports fruit and vegetables from sources which include Kenya, Zambia, Mozambique, Egypt and Guatemala.
“A significant percentage of our produce arrives via air through Amsterdam and London,” said Wakeley. “And with rates calculated per kilo plus a fuel surcharge directly related to oil prices, airlines are now demanding a surcharge of around $0.375 a kilo, up from $0.10 a kilo; a rise of 275 per cent.
“The overall effect on freight for a kilo of produce is 20- 25 per cent, and as freight makes up about 60-65 per cent of the total cost, this equates to a final increase of some 15-20 per cent.
Wakeley wants the multiples to help come up with a solution to ensure continuity of supply. One suggestion is an increase in pack sizes beyond the 99p mark to help increase volume consumption. Some retailers appear to be taking this on board already.
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