COOL LOGISTICS\\\ Fruit and veg go global


If any industry has embraced globalism, it is food. Fruit, veg, fish, meat, not to mention fresh flowers and pharmaceuticals, are all moved around the world in ever-increasing quantities – all made made possible by the sophisticated cold chain transportation. Chris Lewis reports from the recent Cool Logistics conference in Rotterdam on the latest trends and developments.


An industry that knows no boundaries


The food and fresh produce industry is going global, says Port of Rotterdam chief Emile Hoogsteden. “Flowers are grown overseas


and shipped to the Netherlands from places like Africa or Ecuador,” the vice-president for containers, break-bulk and logistics told the Cool Logistics forum in Rotterdam on 24 September. “We’ve seen very fast growth in containers of fruit from overseas.” Countries like Peru have come


from nowhere to being in the top ten of world exporters of fresh produce and even Africa, until recently virtually written off as an


economic disaster zone, is looking attractive as a source of land and labour for export food production. China is also buying up hundreds of thousands of hectares of productive land in countries like Ukraine to feed its massive and growing population, pointed out Eurasian Connection managing director, Willem Kokkel later in the conference. As well as changes in


production, there are shiſts in consumption too. Europe and North America are no longer necessarily the market of choice for growers in the developing world. Middle classes are growing


in Asia, particularly China and India. The shipping lines are also


moving into new perishables markets, ones that would have been considered as closed off until very recently. Fresh flowers and soſt fruit – the type of commodities that would have automatically been airfreighted a decade ago – are now being moved very successfully by sea. Dry box global container


volume has swooped up and down since the start of the recession in 2008, but the reefer trade has been relatively stable, explained Hamburg Sud executive board


member, Peter Frederiksen. The German-owned line has added considerably to its reefer fleet although, as Frederiksen warns, margins even in this trade are tight and good equipment turn round is needed for profitability. There are also a lot more reefer plugs on Hamburg Sud’s ships; 2,100 on the latest 9,600teu Cap San class. Despite the growth in new


crosstrades, the North-South routes still dominate the trade, Frederiksen adds – South America to the US and North Europe, Australia and New Zealand to Europe and South Africa to Europe.


City folk spark a Chinese cold chain revolution


What’s driving the increased demand for food transport, and the cold chain in particular? The answer lies in Asia, and especially China, says Willem Kokkel, managing director of leading berry grower, Eurasia Connection. China’s population is huge, but the rate of growth has slowed sharply – in fact, experts expect India to catch up with it in the not too distant future. So that isn’t the only reason for the “staggering increase in demand”. One of the main drivers


is increased urbanisation, coupled with


the emergence


of an affluent middle class. These people are not only demanding items like fruit as part of a healthier diet, but they are willing to pay for relatively expensive imported products as part of that. It can also be very expensive


to produce food in China itself, says Kokkel: “I grow blueberries


in Chengdu, where it is very hard to get land.” Much of it is in the hands of individual owners, thanks to previous government policies. Agricultural labour is also getting harder to come by, as workers migrate to the cities to take less arduous, better paid jobs in offices and factories. Cold chain logistics is also


currently very underdeveloped in China, he adds, though as with so much else in China, this is likely to change in the short to medium term. Even domestic fridges are currently a rarity, let alone anything further back up the supply chain. China has shiſted from self-


sufficiency in food to increasing reliance on imports, confirms Alfred Cheung, founder of the Green Society Association. Take pork, for example: “China started to import significantly from 2007,” Cheung explains. Food safety concerns over locally- produced meat, fluctuating


prices and the high cost of agricultural land all conspired to increase demand for imports, he says. Imports of pork fluctuate depending on festivals and Chinese New Year, but Germany


has replaced the US as the largest exporter to China since late 2012. Cheung confirms that with the


Chinese cold chain in its infancy, now is the time for companies to get involved.


Shipping fruit? Bring your own juice


Why cannot rail operators in Europe invest in rail wagons capable of supplying power to reefer boxes, asks CoolBoxx general manager, Sjaak Melissant. The freight industry has invested in expensive boxes with electric refrigeration systems that can be plugged into power supplies on board ships and when waiting in port. But when they are loaded onto rail wagons, the only solution to maintaining the temperature is to use ‘clip-on’ diesel generator sets “which is a bit like bringing


your own food to a restaurant,” Melissant points out. Moreover, the clip-on sets


present a logistics management problem and they are also very


susceptible to damage,


so they can be an expensive solution to the problem which could easily be solved if only the rail operators would invest. Aſter all, they spend most of their time travelling under a 25kV


overhead wire which


supplies the power for the train’s locomotive.


logistics


Changes in sourcing, eating habits and food safety are all having an effect on the global trade in fruit and veg, says Francis Kint, CEO of Univeg’s fresh produce division. Despite government campaigns in the West urging us to eat more fruit, consumption in many of these markets has actually fallen somewhat, but it continues to soar in the emerging markets as people eat more varied and healthier diets. He sees a rise in ‘South-South’


trades whereby developing countries’ needs are increasingly satisfied by exporters from other developing nations. There could be less emphasis on long haul


trades and, at the same time, more competition for available produce. The other emerging trend are


more variegated and sophisticated supply chains, ones which actually give customers what they want rather than pushing fruit through the system. Instead of everything being shipped immediately aſter harvesting, supply chains could instead ensure that the consumer has the choice of many more varieties than at present. Reducing


the current high


levels of waste in the food supply chain is also a priority, either through new technology to remove unwanted gases or improved packaging.


Quality is vital but it costs, says Maersk


Maersk Line’s stated intention


last year of driving up reefer rates by around $1,500 a box has led to improved results in 2013, but there is a long way to go before full profitability is restored. Yield on reefer boxes is up considerably, says global head of refrigerated business, Thomas Estesen, but volume has also gone down; at the same time costs have been contained, most notably fuel, consumption of which has been cut 16%. Later in the conference, Andrew


Lorimer, managing director of maritime data company Datamar, confirmed that Maersk’s share of the East Coast of South America to Europe reefer trade had declined from 35% to 25%, while CMA CGM had gained, though Maersk had improved its share of the smaller but growing westbound trade.


Maersk is also keen to sign longer partnerships with


its


customers, Estesen adds. Three months used to be the norm, but five year contracts are becoming common. This will make it possible to invest in highly desirable service improvements, most notably in improving transparency in the supply chain. “A lot of people are tired of haggling over $50 or $100 per box,” he told the Rotterdam Cool Logistics conference. “We want to engage with customers more. And while there has been a lot of distrust in this industry, that is changing.” Investment is going into new


terminals in Costa Rica, Santos in Brazil, Chile and Russia. In an interview with FBJ,


Estesen said that more rate increases were needed to get the trade back into profit.


Issue 7 2013 - FBJ


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