Seafreight has come a long way. Not too long ago perceived as slow and plodding compared to its glamorous airborne rival, recent technologies and innovations, coupled with concern about carbon footprints and food miles, have lifted the shipping sector to new highs.
Consumers are demanding better quality, fresher products on the shelves at a time when there is more awareness of the environmental impact of transportation, according to Maersk Line. “As transport companies we need to be both cost effective and environmentally responsible,” says Dirk Hoffman, area reefer manager.
NYKCool AB (formerly NYKLauritzenCool) agrees that both factors are having a big impact on seafreight. “In the fresh produce business, there are few commodities that you could justify transporting by air; with the debates about the ozone layer and carbon footprinting, sea transport offers a more than viable alternative,” says Lars Rutberg, chief operating officer of NYKCool.
Seatrade thinks that perishables (including flowers) will continue favouring sea transport. “During recent negotiations, it was quite clear that air miles were on the minds of producers, and at Seatrade we are very conscious of this issue,” says a spokeswoman.
Israeli producer Agrexco seafreights an impressive 7,000 pallets and 800 containers a week. According to Amos Orr, general manager of Agrexco UK, the company’s reliance on airfreight has dwindled considerably since the start of the decade.
“Agrexco transported 80,000 tonnes of fresh produce by air six to seven years ago; now, that figure stands at just 25-30,000t,” Orr tells FPJ. “Due to new technology and better maintenance of ships, there has been a definite move towards seafreighting fresh herbs and flowers. The cost benefits of seafreight are huge.”
Orr claims that temperature and humidity control is also better by sea. Agrexco’s newer vessels are equipped with 18 different chambers, so there is “always a right chamber for whatever product is being shipped”.
Fresh produce insiders, however, insist that it is important to have some perspective when comparing seafreight and airfreight. The Soil Association has come under fire after its standards board proposed that organic produce should only be airfreighted to the UK if it delivers genuine benefits for growers in developing countries.
According to Nigel Jenney, ceo of the Fresh Produce Consortium, the fresh produce industry as a whole accounts for no more than three per cent of the UK’s carbon footprint. “Most airfreighted produce is flown on passenger airlines, which would fly regardless of their cargo,” he adds.
Brian Madderson, md of George Hammond, points out that despite the controversy over food miles, there has not been much change in the way fresh produce is transported. “What goes by air tends to be very small quantities of fruit at the start and end of the season, or high-value perishable produce such as babycorn and beans from Kenya,” he says. “We haven’t noticed a change in our business.”
Although the shipping sector is optimistic about opportunities in the UK, Maersk says there is a concern that terminal capacity is “not coping” with the expected increase in quantity for both dry and reefer volumes. “The planning process for new port infrastructures is very slow in the UK, and this could lead to bottlenecks at current ports,” says Hoffman.
However, Simon Todd of freight forwarding company Blue Star Logistics says expansion plans to increase throughput at the Port of Felixstowe next year will help to improve the situation. He adds that the majority of the recent congestion has been down to seasonal traffic. “We are now seeing improvements; however, loading times are still two to three hours for reefers,” he tells FPJ.
As the logistics and fresh produce sectors continue working more closely together, Todd says consignees are looking at agents to help reduce their costs.
While the seafreight-airfreight debate rages on, shipping companies are predicting a bright future. NYKCool estimates demand from the perishable sector for seafreight is rising by four to five per cent annually. “We are seeing more markets outside of the traditional markets such as Russia and India, which are demanding better quality products,” he says.
Similar to other shipping companies, Maersk has adopted a number of green initiatives, and its newest PS-class vessels are equipped with environmentally friendly features. These include a waste heat recovery system (saving up to 10 per cent of main engine power) and inboard fuel tanks, which help prevent loss or spillage of fuel in the event of an accident.
The company says a PS-class vessel travels 66 kilometres using 1 kWh of energy per tonne of cargo, while a jumbo jet travels just half a kilometre using the same amount of energy.
“Environmental efficiency has long been part of our consciousness, and we have innovated previously with double-hulled vessels as standard and the introduction of energy-efficient, reefer container equipment,” Maersk explains.
Other initiatives include the introduction of a new train service for one of its retail clients last year, which replaces the road haulage leg of a particular journey. “This makes an annual carbon emission saving of 183t, and saves our client a considerable amount of money in the process,” says Hoffman.
The firm has also recently launched a carbon footprint calculator. Maersk explains: “For our clients involved in international sourcing, there are significant opportunities for reducing carbon emissions within the global supply chain. A prerequisite for reducing a client’s carbon footprint, however, is the ability to measure it. With the carbon footprint calculator we are now able to offer a calculation for any of our clients.”
In addition, Maersk Logistics is offering SupplyChain CarbonCheck™, a new consulting service aimed at identifying ways to reduce the carbon footprint. “Maersk Logistics simulates carbon emissions for alternative supply chain scenarios, evaluates reduction potentials in terms of ease of implementation and cost savings, and assists the client in putting the recommendations into practice,” explains the company. “We’re keen to work with all of our clients to ensure they are getting the best value from their supply chains.”
The SupplyChain CarbonCheck follows Maersk’s SupplyChain HealthCheck, which it performed for a large fruit producer.
Maersk is looking towards the future, although it acknowledges it has faced well-publicised challenges over the last couple of years. “This was notably during 2006, where the integration with P&O Nedlloyd, coupled with the roll-out of new systems, resulted in a difficult period for the business,” says Hoffman. “However, we have resolved most of the service delivery problems and have become a stronger organisation as a result.”
The company hit the headlines for the right reasons earlier this year with its Central America Reefer Express (CRX) service. This service, which has boosted Maersk’s activity in the UK, was introduced in January and connects ports in Puerto Rico, Costa Rica, Panama and the Dominican Republic with northern Europe. Transit times to the UK are between nine and 19 days.
The aim of CRX is to convert the conventional shipping of bananas to reefer containers. “Bananas are one of the largest segments of the global reefer trade, but they are also the last reefer area where the traditional conventional vessels still dominate,” says Hoffman.
According to Maersk, reefer containers have many advantages over conventional ships. With reefer containers, bananas can be loaded onto pallets in their cartons, which can then be loaded straight into the container, ensuring less handling of the product.
“The service is still in its early stages but so far it has been very successful,” says Hoffman. “As we evaluate its progress in the next couple of months, it is hoped that we will have a whole new service in the pipeline.”
The company adds that pineapple producers can also take advantage of the service. In terms of growth this year, Hoffman says it has seen strong volumes from the southern hemisphere and China.
According to the company, bunker prices have increased sharply in 2007, and this will certainly have an impact on rates for 2008.
NYKCool also anticipates a continued rise in reefer rates over the next two years. However, Rutberg is keen to point out that the sector is working hard to increase efficiencies to ensure money is not being wasted. He feels that customers also need to take a more pro-active approach.
“I recently went to South Africa and there’s so much that can be done on the logistics side, whether it’s making ports more efficient, delivering cargo or changes on the trucking side,” he says. “The whole supply chain needs to work together and certainly areas could definitely improve.”
NYKCool has implemented a number of changes this year. In August, NYK Reefers announced it had acquired the remaining 50 per cent share of NYKLauritzenCool from J Lauritzen, which decided to quit the reefer business.
“Lauritzen sold its last reefer ship in 2006, and although it was still a shareholder and had equity in the company, everyone knew its long-term strategy was to focus on the bulk and tank side of their business,” Rutberg says.
In the same month, NYKCool also announced that it would close its branch offices in London and Santiago as of December 31 and centralise headquarters into its Stockholm base. Although there will be some redundancies, most employees have already found jobs, says Rutberg. In addition, some staff will also relocate to the firm’s Stockholm headquarters.
“The centralisation will ensure that we increase efficiency and reduce costs,” Rutberg tells FPJ.
Although the company has not expanded its fleet in recent years, it has been busy working to make its existing ships more efficient. When questioned about newbuildings, Rutberg responds: “Yard prices are very strong at the moment and are too high due to strong bulk and container activities. We believe that they will come down in the medium term, and we will look to place new buildings when yard prices are at a competitive cost level.
“It is up to the industry to ensure that viable investment is there. No one can expect us to build ships if we don’t see reasonable returns.”
Rutberg says the reefer sector is always striving to create a better and more efficient service, and the introduction of 360 Quality is the industry’s approach to raising standards and safeguarding quality in specialised reefers.
360 Quality was designed to unite all of the supply chain in its common goal to achieve a uniform way of establishing the extent of any damage, by creating an unbroken information chain and assuring accountability.
This initiative now extends to more than 300 specialised reefer vessels and refrigerated terminals in Europe, North and South America and Africa. The association aims to uphold the 360 Quality Code - a set of guidelines to raise the quality of cargo handling - which it hopes will become the industry standard for reefer shipping.
“All specialised reefer companies are working together to offer the best quality we can,” Rutberg tells FPJ. “Reefer services involve more handling of produce compared to containers but even so, if done correctly, we can manage to deliver an even better product.”
BPC EYES SPANISH POTENTIAL
Bristol Port Company (BPC) is looking at Spain for seafreight opportunities. According to the company, fuel costs and regulations are placing increasing pressure on Spain’s road haulage industry, which could see prices increasing steeply, or haulage companies closing down as they are unable to pass on these increased costs.
“We believe that there is a substantial opportunity for a large amount of fresh produce to be moved by container, either from Bilbao or from the southern Spanish ports,” says a BPC spokesman. “This last area also presents the opportunity of picking up exports from Morocco.”
According to BPC, there has been a ‘dramatic swing’ from conventional reefers to containers across the fresh produce sector, with Chile in particular striding towards the container route.
However, BPC still sees huge advantages for the conventional reefer. “When the cargo is in store, receivers have a greater ability to react to quality issues, fluctuations in demand, and handling of problem fruit,” a spokesman says.
Future plans include working with shipping lines to try and attract new services into Bristol Port, especially from South Africa.
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