Madderson reflects on shipping career

What was the biggest challenge you faced when you first joined the industry?

When I joined George Hammond plc in May 1989, I had experience of neither the shipping and port industry, nor the fresh produce industry. Back then, fresh produce shipped to Dover largely came from the Mediterranean area. Such fruits and vegetables were transported in small, ventilated vessels suitable for the enclosed Western Docks, where Hammond had an exclusive stevedoring operation using cranes and ambient quayside sheds provided by the Dover Harbour Board.

My first challenge was to persuade the Dover Harbour Board to build a deep-water fruit terminal in the Eastern Docks, to attract the increasing volumes of fruit from the southern hemisphere coming into the UK. I had to gather evidence and put forward a report with input from key shipping operators to persuade them to make this investment. The area chosen was in the far eastern corner of the Eastern Docks and by the end of 1990, a new quay run of some 200m - known as the South Jetty - was available, together with ambient quayside sheds and two small but highly effective Gottwald mobile quay cranes.

Hammond invested in all the necessary handling equipment, which included, for the first time in the UK, purpose-designed four-pallet fruit cages that I had seen on visits to the much larger terminals in Antwerp and Rotterdam.

The attraction of the Dover Cargo Terminal is its geographical position. No port in the UK is closer to the main shipping routes through the Channel than Dover - for a ship going into the main seaports of Europe, Dover represents the minimum deviation.

Dover is also in Kent, the Garden of England, which when I joined Hammond already had an established infrastructure of importers, transport companies, coldstores and packing operations. The port was a natural conduit for fruit and still is.

The disadvantage is that the port is built on reclaimed land so there is not an abundance of space to continue development. At some stage, there will have to be a hard look at whether further land can be made available or reclaimed.

I have now moved into a consultancy role for George Hammond. James Ryeland is joint managing director with responsibility for George Hammond’s shipping service activities and John Ryeland is joint managing director for petrol retailing.

I will continue to help James on the shipping side. This is a very personalised industry and over many years of travelling I have built up a considerable global network of personal contacts, so I will be around to do the introductions for James.

This is a crucial time of year for Hammond as it is when everyone in the shipping industry is drawing up their contracts, so we have been doing a lot of travelling recently - Paris, Rotterdam, Antwerp, etc.

What have been the biggest changes to the shipping industry over your time in the business?

One huge change has been the growth of southern hemisphere fruit into the UK and the way the shipping industry has responded to that.

In the late 1990s, the market for seasonal fruit developed rapidly and Hammond obtained a reasonable share, especially from South America. At that stage, all five specialised reefer lines from Chile to northern Europe called at Dover over an extensive season running from mid-December to July.

In the late 1990s and early 2000s, it was estimated that 1.5 million pallets of fruit and a further 1m pallets of bananas were carried on these reefer vessels - the total market for specialised reefer vessels coming into the UK was close to 2.5m pallets.

Then the container lines started muscling into the seasonal fruit business. Previously, they didn’t have many reefer plug-in points, but container firms invested into them when they realised that fruit was such a big market. As a result of intense competition, not just with the reefer lines but among the container lines too, freight rates collapsed. Exporters and importers - who are always under price pressure - naturally followed the least cost option, which was container shipping.

At Dover, we could see the trend with seasonal fruit, so we re-invented ourselves as a banana port. Bananas are not well suited to containers and the multi-nationals such as Dole, Del Monte, Chiquita and Fyffes were wary of exposing themselves totally to container lines. We could see that the container lines were nibbling at the seasonal fruit market, especially from our heartland of South America, and as we already handled a few bananas we started to focus on that sector and organised appropriate port facilities.

In 2007, we spent more than £1m developing a new quayside store with a temperature range to +15°C. We now have 10 chambers ranging from a capacity of 500 pallets up to 1,250 and all of them are banana-friendly.

We have also increased the number of reefer plug-in points in the port. Specialised reefer companies including Star Reefers and Seatrade have built new vessels to cope with the ongoing banana trade and these new-build ships can carry more reefer containers on deck. For example, there are 12 Star Reefer vessels that can take up to 170 40ft reefer plug-in points on deck - that’s 3,400 pallets - plus 5,500 pallets underneath the deck, totalling nearly 9,000 pallets per vessel.

So the banana multi-nationals have remained with specialised reefers for bananas, pineapples and some seasonal fruit, such as melons and mangoes. Probably 90 per cent of the estimated 1m pallets of bananas discharged at UK ports has remained with specialised reefers, plus a maximum of 200,000 pallets of seasonal fruits.

When I joined Hammond, the following ports handled potatoes and fruit: Heysham, Liverpool, Bristol, Pembroke Docks, Newport, Barry, Cardiff, Southampton, Portsmouth, Newhaven, Dover, Sheerness, Tilbury and a little later both Immingham and even Hartlepool in the North East. Today, most of these are no longer involved with this trade. The specialised reefer vessels carrying southern hemisphere fruit were becoming larger, faster and increasingly offered deck-stowed reefer container capacity. These vessels became too large generally to carry full cargoes of fruit just for the UK and as their ultimate destination were the large fruit ports on the continent, most had to traverse the English Channel. Thus, many of the former UK fruit ports were marginalised and very quickly activity was focused on Dover, Portsmouth, Bristol and Sheerness, which are the only active reefer ports left in the UK.

What trends have you noticed across the whole fresh produce industry?

The rise and rise of the big four supermarkets has been phenomenal. Today, they account for up to 90 per cent of retail sales on certain fresh produce lines and with that muscle, I think a significant number of importers have struggled and gone out of business. As a result, there has been a lot of rationalisation in the industry.

Now, in order to protect and grow their margins, a lot of supermarkets have started to source directly. International Produce sourcing for Asda was the forerunner of this. Tesco’s own produce sourcing group will also rock the boat and Morrisons is buying more directly and has its own packing operations. Sainsbury’s is the only one of the big four focusing on retailing, as opposed to integrated logistics buying chains. One fears somewhat for the importers.

I also feel the supermarkets’ relentless search for low cost and uniformity of colour and shape on fresh produce has driven out some of the consumer excitement and satisfaction. In France, for example, the supermarkets still put taste and flavour ahead of absolute price and uniformity.

Looking back, one of the main influences was the promotional work undertaken by the UK Banana Group - an organisation funded by all the major importers that highlighted the outstanding health attributes of bananas, with such sporting stars as Linford Christie and Tim Henman backing the advertising. But when retailers pulled down the price of bananas to below cost and put pressure on the supply chain all the way back to the growers, it seems the group had to disband and the whole health message was lost.

Time and again, it has been demonstrated that bananas are not a price-sensitive fruit and the supermarkets fail to understand that. But cynically, they understand that their two main value purchases are fuel and bananas and they use both to drive home their low-cost message and generate millions of pounds of free media coverage. That has had a negative impact on the supply chain. The supermarkets have not done UK consumers a service in this - but they have done themselves a service by using bananas as a loss leader.

People will eat more fruit if they like the taste and understand its health benefits, as long as it is a reasonable price. Healthy eating promotions will boost sales, not just price-slashing tactics. Supermarkets will also have an improved image of social responsibility if they don’t keep pushing down the price of bananas as, whatever they say to the contrary, the consumer believes that ultimately the farm workers pay.

What steps has George Hammond taken to adapt to the changing needs of the fresh produce industry?

We have just been accredited to the 360 Quality Code. This was set up by the specialised reefer industry to demonstrate to customers that we do handle their fruit with extreme care.

Container lines do not handle the fruit once it is in the container. But with specialised reefers, you do handle the pallets - taking them on and off the trucks, putting them in store, on the vessels, etc. There is a lot more handling so we all felt committed to working on and devising a quality standard for the industry. This has been very useful and shown where there are improvements, albeit small, to be made to pallets and packaging.

We are also looking at the cost of inland transport. There must be increasing public and government concern at the high number of empty miles running by trucks with containers in this country. Fruit arriving from the southern hemisphere, either by specialised reefer or by container line, should be destuffed at the discharge port and reefer trucks used, as these can always get a return load, thus minimising the number of empty miles on our motorways. This is a carbon footprint “must do”.

I am hopeful that the Port of Dover and George Hammond have got an optimistic future as banana specialists.

What will your new role as chairman of the Retail Motor Industry’s Petrol Retailers’ Association (PRA) involve?

Hammond has been involved in petrol retailing ever since I joined the company and operates eight forecourt sites in Kent and Sussex - five of which have Spar convenience stores. We are one of the top 50 independent petrol retailers in the UK, according to Forecourt Trader.

We were previously members of the PRA, which represents independent forecourt retailers, and there are 6,000 across the UK - most using an oil company brand. For example, we use BP. We left the PRA because it became a bit moribund. In the meantime, some independent operators formed their own groups, and we were a member of Lakeside, in the South East, for 10 years.

The PRA sits under the umbrella of the RMI, which in February was taken over by an enterprising new chief executive. He decided to shake up the organisation and restructure it. I was put forward for the role of chairman of the PRA. I had tremendous peer group support and it wasn’t a role I was thinking of doing, but it is a really interesting challenge.

I am the chairman of the main members’ committee, which meets quarterly, and lobbying is a key part of the role - I spearhead contact with the relevant government departments. I also aim to improve our relationship with the other industry associations and to drive membership forward. On top of this, I handle all the media work, which includes live TV and radio interviews - so far, five in the first couple of weeks.