The shipping lines say they are not making money and the growers say they are losing money, so who is making money in the fresh produce sector?
This was the question which came up at tea on the first day of the Cool Logistics Africa congress being held in Cape Town this week. It followed submissions by a number of speakers, notably from the shipping industry, who stated clearly that freight rates will have to rise to more sustainable levels for them to survive.
Delegates also heard that the cost chain of shipping fruit from South Africa is too high, which also raises the question of sustainability at farm level.
Professor Malcolm Dodd, managing director of Cold Chain Solutions, threw some light on the issue when he quoted a 2010 study on the financial cut that everyone in the supply chain takes, from the tree to the consumer.
As so often in the past, the finger was pointed directly at retailers, who according to Dodd pocketed 26.11 per cent of the price that consumers pay. Importers (8 per cent), European freight logistics (7.4 per cent) and sea freight (16.7 per cent) were also taking a strong cut, while on the South African side, exporters commission (3.17 per cent), packing material (6.89 per cent), packing charges (7.05 per cent) and farm cost (10.23 per cent) gobbled up sizeable portions, leaving the grower and entrepreneur with only 9.26 per cent.
Dodd said that retailers' profits are on course to become 'increasingly unacceptable' in future and will continue to put the retail sector under the spotlight in the years ahead.
Meanwhile, Dole’s Andy Connell called on delegates to work together to achieve greater efficiencies: 'There are between 30 and 40 service providers who share in this value chain and if the chain fails, our own sustainability is at stake,' he explained.
A full report from the Cool Logistics Conference will be reported in the June issue of Eurofruit Magazine
