Friday, May 28th 2004 - 21:00 UTC

Magallanes businessmen concerned with freight costs

The rising price of fuel and freight costs are causing concern among Punta Arenas business community which is highly dependent on long distance transport for supplies.

"Freight is a very important price component of any good brought to Magallanes Region given the distance from the main distribution centres", indicated Ramon Jacob, manager of Abu-Gosch supermarkets.

"We're expecting international oil prices to stabilize in the coming weeks and so delaying the anticipated increase in freight costs to Punta Arenas", added Mr. Jacob, who emphasized that if that is the situation, "all supplies will experience an increase in prices, particularly those which occupy much space".

Mr. Jacob revealed that for "voluminous" supplies freight represents 12% of the total cost.

Juan Ursic from Marisol Supermarkets said that all supplies in Punta Arenas have a significant freight cost, "whether they are transported by sea, air or land".

"Regional ferries have already increased fares but it won't have an immediate impact for consumers since when the variations are big, retailers tend to prudently absorb part of the new cost", indicated Mr. Ursic.

"The final cost will finally be entirely absorbed by the consumer but wholesalers and retailers act with flexibility", said Mr. Justo Vera Distribuidora Magallanes CEO.

"We simply can't be raising prices every day".

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