The results of a $7,300 study the borough commissioned in October to take a closer look at the cost of shipping goods by barge to Wrangell shows the average annual increase in marine freight costs from Seattle to Southeast Alaska from 2006 to 2021 was 4.5%, based on published rate tariffs.
The global cost of marine freight has increased at an average rate of 5.7% annually, excluding 2021, while the Consumer Price Index has increased at 2.3% annually.
The 12 Wrangell businesses that Rain Coast Data surveyed for the report, representing some of Wrangell’s largest freight customers, said freight accounts for 18% of their total annual business costs. A third of businesses surveyed said the percentage is stable, as they plan for increased freight costs over time and raise their own prices accordingly; while two-thirds said the percentage of their overall business costs has increased significantly over the years as freight costs have gone up.
An “apples-to-apples” comparison of a 500-pound pallet of groceries transported from Seattle on Alaska Marine Lines costs $147.21 to ship to Wrangell, the study stated, versus $171 to send it to Juneau, and $302.63 to ship to Thorne Bay.
By weight, the top goods shipped into Wrangell include fuel, heavy machinery (often barged into the community for construction projects) and groceries. Top exports by weight include fish and garbage. The borough sends its trash by barge to Seattle, for transfer to a dump site in Washington state.
Maintaining current barge services, frequency and quality of cargo handling are the top freight priorities of the business community, according to the Rain Coast Data report, which was presented to the assembly at its Dec. 14 meeting.
Fuel surcharges represent a cost in addition to other charges for freight, and are applied to all customers, even those with annual contracts.
Since 2015, the fuel surcharge has been as low as 2.5% in March of 2016, to a high of 12.5% in October of 2021. The surcharge is directly tied to the changing price of fuel.
Port Director Steve Miller weighed in on the assembly-commissioned study. He said the survey didn’t really reveal anything new, because everyone has been paying higher and higher bills — other than that increases in rates to Wrangell are less than global shipping freight rates, and hopefully that doesn’t encourage freight companies to think they aren’t charging Wrangell enough.
The assembly’s decision to commission the study was prompted, in part, after Sen. Lisa Murkowski raised “the very serious issue of shipping rates as a concern” when she was in town in September.
“The senator asked if the borough had documentation of the increases. The answer is no,” borough officials in October reported to the assembly for its approval of the rate-history contract.