Major growers believe it is only a matter of time before logistics companies, which offer door-to-door services from farmgate to UK depots, begin targeting retailers.
But while that is a fairly widespread opinion, some shipping giants believe that time has already come. According to LCL UK & Eire Ltd, UK retailers are becoming increasingly involved in the supply chain with more logistics companies offering door-to-door services that are meeting their demands.
According to the company’s managing director Adrian Moss, the supply chain is scrutinised on a regular basis. “More of the larger growers are realising that they can control the destination of their fruit, while a growing number of retailers, acting with their larger customers, can have more control on the logistics side,” he says.
Brian Madderson, managing director of George Hammond plc agrees. “Retailers are always looking to minimise costs and the logistics chain involves a fairly high degree of cost,” he says. “They’re taking an interest in that although this varies from retailer to retailer. It’s important that logistics firms can offer a wide degree of flexibility.”
Fresh produce is seen as an important and growing market segment which receives special focus, says Eugene Hurley, general manager, reefer trade for OOCL (Europe).
“OOCL realised long ago that one of the key priorities for the fresh produce sector was to minimise the number of parties involved in the supply chain in order to enhance quality control,” he notes.
“Our reefer equipment is state-of-the-art and the AFAM+ (Advanced Fresh Air Management) units have been brought in with the fresh produce sector specifically in mind.”
As more shipping companies begin to see the growing benefits of offering door-to-door services, some believe changes will inevitably occur.
“We see retailers moving closer to us in terms of managing the collection, transportation and delivery of produce,” says Hurley. “We believe we can combine our collective expertise to put top-grade product to the shelves.
“One only has to walk into any of the UK retailers today to see the quality of product on offer. Overall, it is superb and has improved dramatically both in quality and variety in the past few years. UK companies are receptive to new concepts and are willing to change. Indeed, some of the major UK retailers set a very high standard for others to follow which is good for all involved.”
OOCL believes the involvement of the specialist container shipping lines will add to the diversification of product on offer and enhance shelf life as shippers and retailers work together to further develop the fresh produce business.
Technological advances in supply-chain management has enabled importers and exporters to enjoy greater control over the supply chain, says Maersk Logistics. With some producers also wanting to have greater control over their products, this has resulted in noticeable changes in buying terms.
A spokesman for Maersk says: “Importers taking greater control have the opportunity to streamline deliveries into their national or regional distribution centres by consolidating similar cargo in the country of origin or enroute to the destination market.”
“At all times the most important factor is that the cargo arrives at its destination in an ideal condition and it’s vital that there’s a flow of information around the product.”
The balance of power may be shifting but it is imperative logistics companies and their customers work closely together.
While LCL UK acknowledges that it is important to act on retailers’ needs, it’s also confident that smaller and medium growers will be happy to let them take control of their logistical requirements.
LCL’s Moss says: “The ethos of the door-to-door service is to address both the suppliers and importers’ needs. Harmonisation needs to exist throughout the entire supply chain.”
Simon Korkie, who has completed his secondment from LCL Grindrod in South Africa and will return to LCL’s Cape Town head office, agrees. “We take each customer’s needs on an individual basis and offer them a tailor-made solution,” he says. “Not all customers require the same service and it’s our role to make the supply chain as efficient as possible.”
Efficiency is of utmost importance to LCL UK and its parent company LCL AB has offices dotted around the globe. Responding to market demands, LCL AB has expanded its coverage in both the northern and southern hemispheres over the last two years.
The company believes that one of the biggest advantages it possesses for serving the fresh produce industry is that it is able to provide a UK importer with fruit from any destination in the world.
“We pride ourselves on offering the best service possible at the most competitive rates,” Moss says. “There’s a large focus on the cost element and obviously costs are very important but it’s also important to see the efficiencies.”
Moss believes LCL UK’s acquisition of Meridian Shipping Services Ltd, which occurred the end of June, will benefit both firms significantly.
“We share the same ethos on the door-to-door service and LCL UK’s acquisition will give us certain keys to unlock certain doors,” he says. “We can provide full reassurances to the receiver that we can control the whole supply chain.”
Korkie notes that LCL UK & Eire and Meridien have been working together for the past 18 months. He says: “Both companies have found natural partners to complement each other’s services. The synergy between the two companies is fantastic and two great companies are going to become an even better company.”
LCL UK aims to handle more than 100,000 pallets of perishable products for the UK market this year.
Meanwhile, OOCL has extended its services by continually working with manufacturers to provide a wider range of options for shippers and consignees. By expanding its commodity range, the shipping giant believes it is offering a top-quality and complete service.
Temperature controlled services are also becoming more important and OOCL is working to offer this service, not only at the distribution point, but also to growers.
“OOCL offers specialist reefer teams in North America, Europe, Australia and New Zealand and Asia,” Hurley says. “We are leaders in technological advances and what we can also offer is continuity, modern equipment and close relationships with manufacturers. The concentration of effort on providing a first-class service with our reefer equipment, coupled with the constant awareness of customer requirements, puts us in a leading position.”
The UK is well known for being a stringent market demanding the very best. While most may think shipping companies simply handle logistics, OOCL is keen to stress that it works closely with suppliers, particularly in China, to educate them on the requirements of the UK market. This involves advising on product packaging, size and grading in order to meet UK requirements.
The firm has developed a software package aimed at putting together suppliers and retailers. This provides suppliers with the means to target certain markets for their produce.
OOCL transports fruits from the US west coast, south-east Asia and China, and Hurley believes that the development of the AFAM+ unit has not only increased the quality of what has been carried traditionally, but also extended the range.
With its headquarters in Hong Kong, OOCL is one of the world’s largest container shipping lines and has invested heavily in its operations in recent years, ploughing funds into new ships, and equipment, reefer container technology and IT.
“Our aim in the fruit and vegetable sector is to provide customers with the best means of door-to-door delivery, and we will continue to offer our service and support it with continuous research and the introduction of new concepts to the market,” Hurley says.
Offering a high level of service is also a key priority for Maersk Logistics, which provides customised and integrated solutions for supply-chain management, warehousing and distribution, landside services, ocean freight and airfreight.
The company has been involved in the import-export side of supply chain management for retailers over the last decade. And since 2004, Maersk Logistics has turned its attention to the perishable market.
“With more dedicated capacity for refrigerated containers and the ability to manage stock from purchase order through to delivery, we are able to help our customers and offer sophisticated services globally,” says the spokesman. “The key for Maersk Logistics is to work closely with our customers, understand their requirements and offer the best possible service.”
Maersk Logistics believes that the transport industry is changing constantly and there’s no reason to doubt that the pace of change will slow down in the near future. The spokesman notes there are a number of companies who are either expanding into other sectors or forming joint ventures to serve their customers with expanded products.
Logistics firms face a number of issues when transporting to the UK. Maersk Logistics notes the most pressing concerns involve congestion in distribution centres and on the roads leading to the centres.
The company believes further investment in infrastructure for both ports and terminals, road and rail, will be needed as global trade continues to expand over the coming years.
When questioned about shipping rates, OOCL believes that the market will hold stable in the short term. However, Hurley acknowledges that in order to continue investment in market research and technology, a reasonable rate level needs to be in place for the sector to move forward.
GROWING SUPPORT FOR 360 QUALITY CODE
Some 15 loading and discharging port terminals around the world are in the process of endorsing the 360 Quality Code, a quality assurance programme which members of Specialised Reefer Shipping Association (SRSA) have collaborated on.
The association hopes that a number of major reefer shipping lines and reefer shipping operators will climb on board in the near future.
The 360 Quality Code acts to eliminate handling damages to reefer cargo, all the way from the loading of goods (including cold storage and sea transportation) to discharge at the port terminal, says Birger Lindberg Skov, SRSA’s secretary general.
SRSA believes all those actively involved in the supply chain are interested in delivering high-quality perishables to consumers. In order to do so, they realise that they have to work together.
Ensuring the right equipment and storage - including the loading and discharging operations, secure storage in the holds of the vessel and the quality of pallets and packaging material - is a key priority of the Code.
It already has some powerful supporters. “The implementation of the Code in NYKLauritzenCool and Seatrade in port terminals has shown that it is possible to reduce the damages to reefer cargo,” says Lindberg Skov, adding that there is growing interest from growers, shippers and receivers to sign up.
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