THIS time of year may traditionally have been a quiet period for those involved in the transportation of fresh produce, but as growers look to increase the window of opportunity for their produce, slow times seem to be a distant memory.
Michael Orpin, produce manager at customs brokers and hauliers, GEO Logistics, is surprised how busy the company is, but is clearly pleased. “This time of year is normally a relatively quiet period but we haven't stopped yet which is good for business,” he says. “We have just finished a busy spell with UK apples and pears, Italian peaches, Greek grapes and Turkish citrus.”
Orpin believes that growth in business can also be attributed to the development of South American sources. “We are seeing an increase in grapes from Brazil and Peru,” he says. “This is a relatively new market for us, but it is expanding quickly.”
HPL is another company enjoying success, operating from 37 offices in 27 countries, there has been continued development of its sea-freight arm ñ HPL Sea Freight. The group's managing director David McLean feels the company has a bright future. “In the UK we operate from all the major UK ports. Approximately 55-60 per cent of all fresh produce via sea freight goes through us, which equates to 350,000 tonnes of produce each year,” he says.
McLean explains that a key area for the business is South Africa and following a settling-in period after de-regulation the company is reaping rewards for its quality service. “South Africa is a key country in our plans, with 50 per cent of all work coming from here. Since the business was de-regulated many fly-by-night merchants have come and gone ñ all looking for a quick buck,” he says. “I feel that now the cream of the industry is beginning to rise to the top.”
Henrik Madsen is executive vice president at reefer shipping company, Lauritzen Cool and is responsible for commercial activities. He maintains that the last 12 months have been much improved for the industry. “There has been a steady increase in demand for fresh produce, even in specialised reefers. The demand is increasing year-on-year. The short-term trends for the next two to three years are looking good,” he says.
Within sea freight, competition is fierce and Orpin says that it is by no means easy. “We've held our prices down for some time, and while prices are not increasing, unfortunately costs continue to rise,” he says. “There has also been a rise in haulage costs, so it is difficult to maintain our position. The only way we can do this is with a great deal of hard work.”
Madsen agrees that competition is tough. “We are continually fighting for a share of the market with ongoing consolidation within the industry,” he says.
Retailers have also placed demands upon the industry. McLean says that the role of the supermarkets has increased the pressure across the board. “Most companies have to go along with the retailers' demands and it is not easy as they increasingly want more for less,” he says. “At HPL Sea Freight our dealings are with the importers, which does make our job easier.”
Orpin agrees that supermarkets often make the job difficult but they need to work together. He says: “Immense pressure is often felt from the supermarkets, their demands are high while they expect outlays to be low.”
There is often a fluctuation in demand of the preferred method of transportation whether break-bulk or containerisation. The power shifts between the two and containerisation appears to have a slight advantage. Orpin says: “The industry seems to be pushing forward containerisation. There is a growing number of 40ft reefer ships and the 20ft ships are becoming more conspicuous by their absence. The obvious preference is that once the container is packed and sealed, it won't be opened again until it reaches its final destination ñ so the cold-chain remains unbroken.”
Orpin, would like to see a shift in power towards break-bulk as GEO Logistics has an office at Sheerness where break-bulk produce is unloaded. However, with a strong focus on an unbroken cold-chain this puts break-bulk at a slight disadvantage but Orpin believes the balance of power may shift again soon. He says: “With the popularity of containerisation increasing, the likelihood is that prices of break-bulk will come down and although the two are fairly matched, we will see further competition between the two methods.”
McLean also feels that containers have the upper hand at the moment but believes that the method of shipping chosen is often dependent on the type of produce involved. He says: “Containerisation is often favoured for the shipping of soft products such as grapes. Having the containers unopened for the duration of the journey is a distinct advantage.”
New EU directives such as the introduction of a certificate of conformity have placed added pressures on the business and importers have to have the correct documentation. Newly introduced, it is likely to mean a lot of red tape for those involved and will cause plenty of headaches. McLean explains: “If a country is not registered, when we receive produce from it we have to apply for a certificate on its behalf. Defra then has the opportunity to inspect the produce. However, I believe that Defra will not have the manpower to cope. For example, the US has not made any move, and is not likely to, for certification. Therefore, every single US shipment will be liable for inspection.”
Orpin says the certificate is only at an early stage but it concerns him already. “Apples and pears are the first fruits which the certificate applies to, and then the next group is citrus. Also, this added work will raise the pressure on Defra to inspect a higher percentage of goods and this in turn, will raise the pressures on the market.”
And with investment in technology, sea freight is encroaching on air-freight territory. McLean says: “Investment is required with air freight. Controlled atmosphere packaging has made a big impact on sea freight.”
Madsen agrees that the development of controlled atmosphere packaging is a boost to the industry. He says: “We can now monitor and control temperatures en route and with satellite communication on units, we can monitor fruit from start to finish of the voyage. This development could place a further strain on air freight.”
Air freight, although in need of investment, plays a key role during early season. Graham Bulley, managing director at HPL's air-freight arm, HPL Kensington, believes it is a crucial time. “With the start of a new season here, business is hotting up. The air-freight division continues to pick up business all the time. One growing area is the demand for orchids from the Far East and this is important business to us,” he says.
Geo Logistics is also looking at becoming more involved in air freight. “Good cold storage facilities are needed at the airport. We have signed a contract with a company who can offer good facilities at Heathrow,” he says. “The relationship, albeit a new one, is going well and we're looking to grow this niche market. Air freight is often preferred at this time of year and sometimes growers use it to forge ahead of their competitors.”
Bulley says that working close with customers is important to developing good long-term relationships. He says: “HPL is a growing organisation, and we are looking at improving relationships with retailers and importers. We are looking at providing an added-value service ñ anybody can buy cargo space but we are looking at providing a specialised service. But air freight needs to react to the technological developments being made within sea freight. This is key to its future success.”
With many countries looking to extend their growing seasons wherever possible by trialing new varieties and looking for new business, Orpin feels there is room for growth within sea freight. He says: “One South African grower produces a grape that until last year was available from around December 23. This was too late for the Christmas market, so the producer managed to get it available by December 7. Changes like this are taking place all the time and we need to be ready for them.”
Madsen says there have also been developments in recent years in previously untapped markets. He says: “Imports to Russia have grown considerably. Large quantities of bananas are sent there using our specialised reefers, which could never have happened in the past.”
McLean feels it is important to keep pushing ahead into new markets. HPL Sea Freight won the 2002 Gold Award at the British International Freight Association in the category for service excellence. The company has wasted no time in moving into new areas to pursue further success. McLean says: “We are looking to expand further across Europe and we feel that the [former] eastern Bloc is an area which is attractive for future growth.”
Orpin agrees that exploring new markets and expanding existing ones is necessary for success. “Chile is a growing source of business and new trade agreements mean that this market will grow even more,” he says. “China is also beginning to enter the frame. We have been looking at shipments of Nashi pears recently, and hopefully these volumes will increase in the future.”
No comments yet