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TEMPERATURE CONTROLLED CARGO\\\ Chill winds in the reefer market

Temperature-controlled shipping is at a crossroads. There have been widespread improvements in the quality of the reefer supply chain and the range of products moved around the world is greater than ever before. But can the investment that has made that improvement possible continue in the current economic climate? Major players in the reefer trades like Maersk Line are warning that investment from the banking and leasing industries that made so much of this possible is effectively being turned off. The only way the gains can be sustained will be by shippers paying considerably more than they have lately been accustomed to. In very round terms, increases of around $1,500 per box will be the order of the day – if the frequency and quality of services is to be maintained.

Reefer rates must rise, warns Maersk chief

Shipping lines urgently need to raise prices to their reefer customers, the head of the world’s biggest carrier of such traffic, Maersk Line, told the Cool Logistics conference in Antwerp on 25 September. Chief executive officer Soren Skou said: “When I came into this job in January 2009, we had increased customer satisfaction and market share (Maersk now has about a quarter of the the world reefer box market) but we were losing $9m a day, which clearly wasn’t sustainable.” Average

of earnings of only around 1-3% a year were “destroying shareholder value – as evidenced by parent company AP Moller’s share price which is about the same today as 2004, despite the massive investments that the company had made in new ships and terminals. Returns on the reefer business were a little stronger than container shipping overall but still “well south of 5%”. The industry as a whole had

invested $22 billion more than it had generated and had, in effect, been

unable to fund itself since 2008. Until now, the container and ship leasing companies had been willing to make up the shortfall but with the banking crisis, this was no longer possible. The other big squeeze on shipping

was the remorseless rise in bunker costs. The net result, said Skou, was

that “during the past seven years reefer prices haven’t covered inflation or the increase in bunker prices.” The line had not passed the increase in bunkers on to

its customers, but instead had reduced its headcount by 8,000, introduced

bigger ships, slow

steamed and “beaten up every supplier we could.” Up till now, the industry had

also invested heavily in the reefer business but this was now no longer sustainable, Skou warned. “Investing in the future is costly,” he insisted. “And it will mean higher rates. Our product is priced too low – we need to be paid what it is worth.”

Keeping waste under control

Food waste is an emotive subject these days, but what about the food that never makes it out of port and into the shops? Jeroen de Haas, managing director of Netherlands- based marine survey company BMT de Beer reckons that around 1-2% of cargo transported across the oceans runs into problems because of problems during, or prior to transport. That could equate to 1-3,000 containers, or 60 million kilos of fruit for a major container line. Furthermore, he estimates that around half his company’s work involves refrigerated cargoes. BMT de Beer investigates

the cause of the damage and so determines where the liability lies, and also discusses with the receivers the extent of the damage. The company works for all the big container lines, P&I clubs and

insurers. It has also set up a free website,, the world’s largest database on transportation of cargoes in the marine industry. It aims to share the best knowledge available on cargo transportation, thereby contributing to awareness and prevention of loss, with information on over 750 commodities and with the emphasis on overseas transportation. For refrigerated cargo, the website gives all the correct temperature settings for reefer units. “A lot of people don’t have the

right information or knowledge of hazards,” explains Jeroen de Haas. “Here in Rotterdam we see how much cargo has to be disposed of, and it’s an incredible amount.” Sometimes

the causes of

Airfreight ‘needs to be more joined up’

It would be wrong to suggest that every perishables airfreight shipment ended in disaster – otherwise, retailers wouldn’t spend good money flying fruit and veg thousands of miles – but poor communications and a disjointed supply chain create many problems, a leading grower’s representative told the Cool Logistics conference in Antwerp on 25 September. Philip Symons, European sales

director at grower’s co-operative North Bay Produce, which flies produce all over the world from North and South America, said though, that the large number of players involved in the process and the complexity of


did lead to many unnecessary problems. He said: “It’s oſten an

accumulation of different things, and it’s also oſten the result of poor communication.” Some products should simply

damage to cargo can be hard to track down. For example, this year there were a lot of problems with grapes imported from Brazil in poor condition, despite the use of refrigerated trucks and trailers throughout the

journey. “We

investigated and found that the refrigeration wasn’t being used during the road transport leg. Drivers were turning it off to save fuel, which we found out when we downloaded the temperature records.”

never have been selected for airfreight, the packaging may be inadequate and oſten products were not brought down to the correct temperature before being placed in the cargo hold. Many producers – oſten seasonal and relying on unskilled, temporary labour - lacked the facilities and knowledge to successfully export by air, Mr Symons suggested. Produce was oſten transported

in unsuitable packaging, such as plastic bags which tended to create condensation when the product was cooled down or in cheap cardboard boxes which fell apart

and then oſten fell over inside airfreight containers. Logistics companies and

forwarders, likewise, lacked proper vehicles and storage, and on many of the most popular routes for airfreight, there could be a lack of capacity and, in many cases, no direct services to Europe. Keeping perishables at the correct temperature throughout an air journey was acknowledged to be difficult. While expensive, life-saving pharmaceuticals and even higher end food like meat and fish might justify controlled atmosphere containers, this was rarely possible in the fruit and veg trade, said Mr Symons. At destination, it was a similar

story of delays in picking up cargo and a lack of facilities to bring it to the correct temperature for onward transport. The speaker suggested that

retailers needed to look beyond the age of the product and consider how many ‘heat hours’ it had been subjected to before deciding on stock rotation and shelf life. But retailers were reluctant to vary their stated shelf lives to take into account all these factors. As it is, around 20% of all

airfreighted produce fails ends up being thrown away. Symons urged the industry to

take a more holistic view of the supply chain and draw up clear guidelines on procedures such as how to measure the temperature of consignments. Participants should also be encouraged to share more data and information.

Issue 6 2012


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