Harvesting the world: cold-chain logistics

Jeremy Nixon of Ocean Express Network

The first of two forums exploring supply-chain management & logistics at this year’s Asian Logistics and Maritime Conference 2018 (20-21 November) will gather a group of experts to explore the opportunities in cold-chain logistics.

For the maritime leg of the supply chain the carriage of refrigerated products is a bright spot in what has otherwise been yet another tough year for liner shipping. But it has its own unique challenges.

Globally the reefer market grew 8% in 2017, and has added an additional 6% growth in the first half of 2018. Liner shipping dominates the market by carrying 80% (some 8.5m teu) of the produce in containers. The remaining 20% is carried on conventional vessels but most of these ships are rapidly moving toward the end of their natural life with very few new vessels being built to the point that containerships are expected to carry closer to 90% of the total perishable goods within the next decade.

Fresh fruit and vegetables account for about 60% of the produce carried in reefers. This makes for a highly dynamic market dominated by variations in populations, harvests and climatic changes, and in the current geo-political environment, tariffs, too could have an impact. One challenging effect is that different trade lanes are growing at different speeds.

Jeremy Nixon, the chief executive of ONE, a merger of NYK, MOL and K Line’s container operations, which launched in April this year, said recently of the reefer trade: “Customers have high expectations about availability and quality…and they want 12 months a year consistency.

“As a carrier with a large fleet we have to see how we can optimise and deploy assets as efficiently as possible. We have to make sure that we have the right boxes in the right places in the right season.”

Achieving such a nimble operation is vital in ensuring a container line’s reefer operation is profitable. This was emphasised in a recent report by Drewry Maritime Research, which said:

“Managing a reefer box fleet is very much akin to running a fleet of specialist reefer trampers – you move the box on to the next market opportunity, wherever that may be in the world. That is very alien to the mentality of a traditional liner shipping company.” The analyst added: “But like any other asset, it is imperative to ensure that a reefer box is at sea with a full revenue-earning load for as many days of the year as possible.”

The business of carrying reefer boxes is highly capital-intensive and to date it is the largest carriers – Maersk, MSC and CMA CGM that dominate the supply side. Only Hong Kong’s Orient Overseas Container Line, currently fourth in the pecking order, comes close to matching the leaders in reefer container investment.

In its present form, ONE is a new player on the block but the company is keen to close the gap on the industry leaders with a massive investment in 14,000 additional reefer boxes at an average cost of US$15,000 per container.

To get the inside track on how liner companies, ports, international freight forwarders, 3PLs, 4PLs and 5PLs are discovering ways to harvest a profit along the cold supply chain, sign up to ALMC 2018 today and benefit from early bird rates until 28 September. www.almc.hk

ALMC 2018 will be held at the Hong Kong Convention and Exhibition Centre on 21-22 November 2018.

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