‘Higher prices of goods in the offing’

Rising fuel prices is having a spillover effect on the operational costs of local companies, as rising freight costs further push up the cost of doing business in the CNMI.

Matson Navigation Company announced last week that it would raise its fuel surcharge from 11.5 to 13 percent in its services between Hawaii and the Marianas effective Oct. 2. Another ocean freight company, Horizon Lines, disclosed last week that it would increase fuel surcharge by 2.5-percent beginning this Thursday.

Local wholesalers and forwarders see nothing in these but increased operational costs, which would inevitably impact on the prices of basic commodities in the CNMI.

CTSI Logistics, Inc. general manager Rene Magalong said the impact of increasing freight charges would be passed on to consumers. He said ocean freight costs are not the only ones increasing, but also airfreight costs.

“We are still maintaining our hauling rates at $60 to $70,” Magalong said. But he said the company would study the possibility of increasing rates with the continuing rise in fuel prices. In the United States, he said, hauling services cost around $150 to $200.

Carmen Safeway Enterprises Inc., which operates as a wholesaler and retailer of general merchandise, said the impending increase in ocean freight costs would result in high prices of their commodities.

“We also bring in goods via Matson and Horizon,” said Carmen Safeway general manager Eli Maravilla. “We don’t want to [increase the prices of commodities], but we can’t help it.”

“With the situation of the economy right now, it’s sad that we have to increase prices at this time,” Maravilla said.

He said past increases in fuel prices and the implementation of fuel surcharge by the Commonwealth Utilities Corp. have forced Carmen Safeway to increase prices of commodities.

Another wholesaler, Micronesian Brokers (CNMI), Inc., said higher freight costs would affect its business.

Its assistant general manager, Gerald Borromeo, said the company could either absorb the impact or pass it on to customers. He said the company would still study which option it would implement, adding that the company could not just simply pass on the cost to consumers, because the move might result in lower sales.

Many local businesses import goods and equipment from the United States. An Associated Press reported quoted Matson vice president for ocean services Dave Hoppes as saying that rising fuel costs prompted his company to implement the fuel surcharge hike. Matson becomes the second U.S. cargo shipper to announce the rate hike after Horizon Lines, citing soaring fuel costs brought on by Hurricane Katrina.

“For transportation companies, fuel consumption is an unavoidable and significant component of operating costs. While we continue to invest in modern, fuel-efficient vessels that help reduce our overall fuel consumption, the impact of fuel prices on Matson’s business remains a cost factor we cannot simply absorb. In the past three months, bunker fuel prices have risen over 10 percent, necessitating this new adjustment,” Hoppes told AP.

Saipan’s pump prices remain as one of the highest among other states across the nation. Sometime last week, Saipan’s average diesel price ranked second highest across the nation. Local gas retailers now sell pump prices by as much as $3.459 a gallon.