Food companies are set to face additional freighting costs following civil unrest in Libya.
Violence in the country, which is responsible for an estimated 2% of the world's oil reserves, has hit shipping companies hard as they offset the rise in oil prices against food transport costs.
Chef Middle East, which ships in much of its product from Europe, said food companies importing and exporting from Europe would have to be prepared for the additional costs they would incur from freighting companies.
| Advertisement |
"Yes things will be bad," explained Chef Middle East commercial and development manager Bruce Woolner.
"Freight prices already increased this week. That is a direct consequence, I assume, of Libya because Libya provides a lot of oil for Europe, and obviously the majority of products come out of Europe, so that has had a knock on effect already.”
80%of Libya's oilfields are now under the control of the insurrectionists, according to the European Union, and oil prices have risen steeply over the past two weeks.
“It is very difficult [to keep our costs down] because increasing freighting costs is also affecting the cost of raw materials, and raw material prices are going up as it is, clubbed with the freight costs it is a struggle to maintain margins,” said Truebell Marketing and Trading divisional manager retail and food service, Bhushant J Gandhi.
However, revolutionary leaders have resumed oil exports this week — a light at the end of the tunnel for F&B companies slammed with additional shipping costs.
“It is a short term problem and we just have to handle it,” concluded International Foodstuffs head of sales and marketing Subbooh Moid, “I think it will go back to normal.”
Search our database of more than 2,700 industry companies
