Importers face surcharges
Shippers cite rising fuel costs
By Thomas Russell -- Furniture Today, December 16, 2007
High Point — Furniture importers will soon face new fuel surcharges on container shipments to compensate for the rising costs shippers are paying for crude oil.
By Jan. 1, shipping companies will charge a bunker or fuel surcharge of up to $950 per 40-foot container, up from $455 in January 2007.
Importers already pay much of that through previously negotiated rates for the 2007–08 calendar year which runs from May through April. Because those rates vary from company to company, it's unclear how much extra importers will pay. But sources familiar with the increase say it could be in the $300 range per 40-foot container.
On average, the total cost now for shipping a container, including the current surcharge, is about $1,600, sources said.
The surcharge is on top of the fuel charges already negotiated into contracts, said David Bennett, a vice president of sales at Charlotte, N.C.-based Globe Express. He said this is the first time in about six years that shippers have instituted such a charge outside the normal contract negotiations.
"It's a very serious situation," said Bennett, adding that his company is negotiating rates on behalf of its clients. "If carriers aren't able to recover some form of this cost increase, there is a risk they will further reduce capacity in the trade."
Carriers could move their business to more profitable routes, such as between Asia and Europe.
According to the Transpacific Stabilization Agreement, a research and discussion forum representing 15 major carriers that ship goods across the Pacific, ship fuel has risen from $295 per ton in early 2007 to $500 per ton today.
For 2008, new service contracts will be subject to floating bunker surcharges. It's unknown how often those surcharges will occur, but it could be every month — the Jan. 1 surcharge is only in effect through Jan. 31.
The issue will undoubtedly cause some concern for importers as they try to budget for the year ahead. But one company official declined to panic at this early stage.
"That's a marginal increase," said Alex Sarratt III, a partner in high-end case goods importer Sarreid Ltd. "We can absorb that. It's no big deal."
The 15 carriers in the TSA are:
-
APL Ltd. CMA-CGM
-
China Shipping Container Lines
-
COSCO Container Lines Ltd.
-
Evergreen Line
-
Hanjin Shipping Co. Ltd.
-
Hapag Lloyd AG
-
Hyundai Merchant Marine Co. Ltd.
-
Kawasaki Kisen Kaisha Ltd. (K Line) Mediterranean Shipping
-
Mitsui O.S.K. Lines Ltd. Nippon Yusen Kaisha (N.Y.K. Line) Orient Overseas Container Line, Inc. Yangming Marine Transport
-
Zim Integrated Shipping Services
-
Importers face shipping surcharge
Dec 10, 2007
Specialty retailer LoveSac introduces new store design
Belfort Furniture, Lawrance Furniture are NHFA Retailers of Year
Kincaid Furniture honors Jimmy and Rosalynn Carter for Habitat work
Singapore furniture show expecting increased turnout
Furniture, mattress sales boost Conn's sales 37.6% in recent quarter
Featured Company
-
FurnitureCore.com
FurnitureCore.com is a dynamic web application aimed at the furniture industry. Retailers and manufacturers alike will find our deep reserve of tools to be exactly what their furniture business needs.www.furniturecore.com... more
VIEW ALL GALLERIES
