1 Apr 2005

Pacific shipping faces higher costs

3:20 pm on 1 April 2005

The Pacific region is facing a surge in the cost of shipping as the price of charters soar.

The rise has been driven by dramatic growth in freight shipping, especially on routes out of China, and it means there are not enough ships to meet demand.

The CEO of the Pacific Forum Line, John McLennan, says as their ships' charters come up for renewal, the prices are rising up to 85 percent.

He says this will mean freight charges increasing by around 15 percent.

Mr McLennan says he doubts it will mean the end of some routes but some exporters could think again about products that are already marginal.

"It might mean that they look cold and hard as to whether they can continue to supply some markets. One thing that springs to mind is the large volumes of salt we carry to the canneries in American Samoa from Dominion Salt (in New Zealand). Now that is very price sensitive and I'm led to believe the margins are very small. A company like that might suddenly find it has lost the contract to Asia or another part of the world where salt is produced."