Exporters of fresh produce and other commodities will soon pay more to ship refrigerated containers to Asia.
Ten member carriers in the Westbound Transpacific Stabilization Agreement are raising rates by $300 per 40-foot container effective Jan. 1.
Shipping costs vary through the year and by commodity, from Pacific Northwest apples and pears to California citrus and other fruits and vegetables. The new increase is across the board, and aims to offset the cost of sending containers back to the U.S. empty or with discounted cargo, said Niels Erich, WTSA spokesman.
“Raising the rate makes returning the container a more viable proposition,” Erich said. “One (refrigerated) container has about 10 times the cost of a regular dry container. Beyond some seafood and Asian specialty foods, there’s no significant return market.”
If refrigeration isn’t turned on, return cargo moves at lower cost.
By itself, $300 probably has just a modest impact on grower-shippers. But as part of a larger picture of rising freight or fuel rates, it could hurt the value of fresh produce, said Roger Pepperl, marketing director for Wenatchee, Wash.-based Stemilt Growers.
“At $300 you’re getting close to a penny-a-pound on a 40-pound box,” Pepperl said. “Our customers would decide what to do with that. But the more rates rise for delivery, the more pressure it puts on f.o.b. pricing. If you get too much of a cost increase, it pushes down the value of your goods.
“That’s a minimal charge, but increases do start having an effect.”
Stemilt Growers and others have already tasted rising shipping costs as 2011 winds down, but export remains a strong market.
“Asia’s purchasing power is strong because of the lower dollar,” Pepperl said. “It’s a bright time right now for export and I don’t see that letting up. We’re getting a lot of interest.”
Through 2011, Erich said, rate fluctuations often benefited exporters.
“There was a real attempt here to get some revenue just because the rates had fallen considerably in the last year,” he said. “There were a couple attempts to raise them and they had to be postponed. It’s a better situation now, a growing market. So there’s an effort to try to bring the floor up overall.”
Often containers return to the West Coast by a triangular route, stopping at a second Asian country, New Zealand or more distant regions along the way. Trade between such partners often uses more of refrigerated capacity, Erich said.
Member shipping lines include COSCO Container Lines, Ltd.; Hyundai Merchant Marine Co., Ltd.; Hanjin Shipping Co., Ltd.; Nippon Yusen Kaisha; Evergreen Line; Orient Overseas Container Line, Ltd.; and four others. WTSA is their voluntary discussion and research forum.
More information is at www.wtsacarriers.org.