ST. JOHN’S, Nfld. — Soaring fuel prices have forced Marine Atlantic to drastically increase its fuel surcharge to 27.7%. The new rate comes into effect July 1, overshadowing the previous increase to 9.9% set April 1 by a considerable margin.
“Unfortunately, like so many transportation providers Marine Atlantic too has been faced with the difficult decision to set an increased fuel surcharge,” said Rob Crosbie, chair of the board of directors for Marine Atlantic in an announcement today. “However, Marine Atlantic reviews its surcharge quarterly and the next review will be for October 1. Should the cost of fuel decrease, then the Corporation will reflect that decrease through a reduction in the surcharge at that time.”
On an average day this summer, Marine Atlantic’s vessels will consume approximately 213,000 litres of fuel. Rising fuel prices in the last few years have caused the corporation’s fuel expense to increase 48% since 2004.
“Marine Atlantic utilizes significant volumes of fuel each day to operate its fleet of four vessels. Therefore, continued rising fuel prices have an enormous impact on the corporation’s operating costs,” Crosbie said. “I realize this is a significant increase to our customers. However, we are bound by the same pressures as every other transportation provider and must recover these escalating costs.”
That significant increase will likely hit the trucking industry pretty hard, says Peter Nelson, executive director of the Atlantic Provinces Trucking Association. Nelson noted that a round trip by truck will increase by slightly over $150 per trip from $947.26 ($473.63 one-way) to $1,100.78($550.39 one-way), not including driver charges. Nelson says APTA members are now adding a line on their invoices, specifically dedicated to the Marine Atlantic surcharge.
“The big picture here is the impact that a dozen or so nickel and dime increases since February 2007 followed up with a punch to the head today will change the face of freight and trade in Atlantic Canada,” Nelson told TruckNews.com. “What we are seeing is, as there are rate and surcharge increases at Marine Atlantic, the manufacturers, producers and shippers are looking at Newfoundland as a less and less viable market to ship to and sell in. The manufacturers, producers and shippers will start looking at more populous markets closer to home to ship to and sell their goods in.
“In short, a couple of years from now you will be able to buy any pair of shoes you want in Newfoundland as long as they are brown oxfords. The region-wide impact will be this: as manufacturers, producers and shippers pull back from Newfoundland, it then becomes very easy to stop shipping to other costly and less populated areas in Atlantic Canada like Cape Breton, southern Nova Scotia and northern New Brunswick,” adding that the day of the $10 head of lettuce in Atlantic Canada is not far away.
Marine Atlantic officials say the corporation is continuing to maximize efficiencies where possible with respect to fuel consumption. For instance, the company’s bulk storage facility enables Marine Atlantic to purchase large quantities of fuel, thereby lessening the impact of multiple fluctuations in the global oil market, officials said. Marine Atlantic also implemented the use of blended fuel in 2001 with the arrival of the MV Leif Ericson, and since that time, the corporation has realized $26.5 million in fuel savings – $5.7 million in 2007/2008 alone.
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