Marine freight prices rise with fuel

Local businesses stay strong but prepare for hike in expenses

Posted: Tuesday, June 17, 2008

Fuel surcharges on freight to and from Southeast Alaska rose this week and have doubled from a year ago.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

"To survive, you have to price it in," said Tom Satre, manager for Northland Services, one of the two barge lines that operates in Juneau. He noted that crude oil prices hit a "scary" $140 per barrel this week.

Northland and Lynden Inc.'s Alaska Marine Lines, both based in Seattle, raised their fuel surcharges to 30 percent from 26 percent this week. A year ago their surcharges were 15 percent.

Transportation companies nationwide are charging new or higher surcharges to cover rising fuel prices. The national average price of diesel was $4.69 this week, $1.89 higher than a year ago, according to the U.S. Department of Energy.

Despite rising prices, local freight business has stayed strong because of various large state and city construction projects in Juneau, Satre said. That's despite a downturn in the market for new homes that has lowered the demand for building materials from outside Juneau.

Yet any business dealing in a commodity for which most of the cost is shipping would be hurt by the surcharge, he said.

"Fuel surcharges are going to continue to rise," Satre said. "I don't see any relief."

The potential effect of such surcharges is widespread, given that most goods arrive at or leave Juneau by barge. Moving companies were among those sensing an oncoming chill.

"Anybody that ships freight in or ships freight out, there's no question in my mind that it's beginning to hurt," said Phil Rolfe, general manager in Juneau of Anchorage-based AAA Moving & Storage.

He said people who might otherwise hire movers are opting to sell their things instead of shipping them, or they're just not moving.

Several weeks ago, AAA did away with the fuel surcharge it had tacked onto bills for the last year and rolled it into the regular price of moving.

"We decided that this is probably not going to be a temporary arrangement," Rolfe said. "I didn't want customers thinking we were taking advantage of the situation."

Roger Calloway, owner of Juneau-based Reliable Transport Corp., ships a million pounds of freight a year. He said he can't raise his prices quickly enough to keep up with the cost of fuel, and that's a problem.

"It's the most public, visible one right now. But from my perspective, everything that I have has gone up in pricing," he said.

Vhee Batac, general manager of the Alaskan & Proud supermarket in downtown Juneau, said he was waiting to hear whether the Ketchikan-based company's CEO would tell him to raise the price of Juneau groceries to account for the higher surcharge.

"We usually eat it," Batac said.



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