Southern hemisphere counts oil costs

The fresh produce sector worldwide is holding its breath as the price of crude oil hits record highs having a knock on effect on the cost of bunker to fuel sea voyages.

“In many of our contracts, there is a bunker clause so that if the price fluctuates, the new costs are passed on to the exporters,” said Svante Hellberg of Lauritzen Cool. The problem is compounded by the lack of tonnage - forecast at the start of the year by the Journal. “The spot market in May is much higher than last year and we are seeing higher demand to the tune of 20-30 per cent,” said Hellberg.

Richard Dunlop of Star Reefers calculates that the increased fuel prices are adding roughly $0.17 to the cost of a carton of bananas shipped to Europe from Central America. “There will be an effect on the retail price of products unless the supermarkets can absorb the cost,” said Dunlop. Heavy demand for shipping of bananas as well as a crossover in the southern hemisphere deciduous and citrus seasons is also keeping demand high.

But some companies, such as Fresh New Zealand 2000, have fixed their bunker rates as part of the shipping negotiations prior to the season. “This has meant that FNZ is protected from the escalating costs of oil,” said FNZ’s John Thompson. “But it is still a concern as we believe that the prices will be strong for times ahead. The main problem for New Zealand is the lack of shipping space, and this looks to be an ongoing problem looking forward, compounded by the bunker problems.”

Chilean exporters are worried too. “Costs have increased by around 30 per cent and oil prices show no signs of coming down in the near future,” said head of Chilean promotional body ProChile, Hugo Lavados. “Exports are increasing and there has been no depreciation of the Chilean currency.”

The availability of tonnage is also affecting the sector and the number of ships visiting Chilean ports is decreasing. “We have to concentrate on enhancing efficiency throughout the chain, as it is the marginal producers that are likely to suffer first,” said Lavados.