South African fresh produce exporters are paying more for seafreight than their counterparts in other major Southern Hemisphere supply countries, according to a new benchmark study published this week by the country’s Fresh Produce Exporters’ Forum (FPEF).
The study, which is part of a comprehensive programme to encourage innovation in the fresh fruit and vegetable industry, looked closely at logistics and cold chain management, technology and infrastructure within the sector, concluding that the high cost of ocean transport put South African companies at a disadvantage compared with exporters in Chile and New Zealand.
“South African fruit exporters are generally paying too much for ocean freight because of the fragmented nature of the export sector in relation to the dominance of a few major container and conventional shipping lines,” said the report, which also recommended that as new markets develop, and where shipping systems are less well entrenched, it will be vital for the correct relationship to be established between fruit exporters and ocean transport providers.
Outlining the report’s key findings, FPEF spokeswoman Sandra Baetsen said immediate action was required to achieve electronic management and processing of all documents in the export chain, with phytosanitary certificates and the development of a single-window IT system key priorities.
She also confirmed the need for a more innovative approach to packaging, including better pallets, as well as greater use of rail in order to counter road congestion.
The report also found that the cost structures and productivity of South African reefer ports were not competitive, highlighting the need to establish remote logistic zones to reduce congestion.
The topic of high freight rates has also featured in a war of words over comments made by Justin Chadwick, chief executive of the South African Citrus Growers Association, advising those who negotiate shipping rates in 2009 to take the impact of the global slowdown on the shipping industry into account when doing so.
In particular, Mr Chadwick’s suggestion that the climate was currently right for negotiating better rates was labelled as “irresponsible” by a freight industry journalist.
However, Mr Chadwick further qualified his statement by saying that the downturn in demand for dry cargo shipping space was a symptom of what is happening in world trade. “International trade is contracting, trade credit is hard to come by and demand has eased with a downturn in consumers spending power,” he observed. “Why should this not be true for reefer shipping?”
He added: “There was a shortage of reefer space before the first wobbles in the banking sector, but now that the wobbles have resulted in wheels falling off surely international trade in these commodities will also reduce – bringing supply and demand for this category of shipping space closer together.”
