Boxship operators are busy building their reefer trade business buoyed by ever improving refrigerated technologies. Fruit being loaded onto an OOCL container.
Major container lines have been expanding their share of the global reefer trade in recent years, cutting deeply into a market once largely controlled by specialized reefer vessels. The proliferation of new box technologies has encouraged carriers like Maersk Line, Singapore’s APL, Hong Kong’s OOCL, Taiwan’s Evergreen and others to boost their reefer business. Reefer capacity is expected to increase by 22% over the next five years, according to research company Drewry. Reefer box capacity is expected to grow from 1.6 million 40ft slots in 2013 to 1.9 million slots in 2018.
Over the past decade, expansion of refrigerated container ocean services has underpinned growing world trade in an ever-widening range of perishable commodities, from super deep-frozen tuna to exotic fresh fruit. The refrigerated container is now by far the dominant transport mode for the complex movement of chilled and frozen cargoes across the globe.
For many producers, marketing perishable products abroad was largely infeasible or prohibitively expensive until new technologies were developed in the past 30 years. Packaging innovations, fruit and vegetable coatings, bioengineering, and other techniques that reduce deterioration of food products have helped shippers extend the marketing reach of perishable products.
In addition, new technologies in transport are gradually opening the ocean and overland trades to a host of perishable products. As a result, exports have horticultural and livestock products that can now travel greater distances than before.
The reefer box trade is a very complicated business with stringent quarantine rules so it’s not for the faint of heart. But the profit margins are good, for both shippers and container lines, and as a result business is booming.
In an exclusive interview recently with Ken Gangwani at the Asia Fruit Logistica expo in Hong Kong, Ng Kar Loke, Head of Special Cargo, APL (American President Lines), Singapore’s main container line, explained the complexities of the trade.
“The complexity of running perishables boxes is high,’’ said Ng. Lines must adopt new box technologies that not only offer extensive temperature ranges to extend the shelf life of the commodities but able to detect concentration of carbon dioxide and nitrogen, provide oxygen, and be able to control the respiration. The equipment must be able to extend the ripening process of produce such as fruits coming from places such as Latin America to Asia, he said.
In addition to temperature controls that can be precisely regulated during transport, the quality of many perishable commodities also depends on optimal airflow, ventilation and humidity. Airflow and ventilation are especially critical for fruits and vegetables that continue to respire during transportation, a process that produces heat and gases like ethylene and carbon dioxide. Too much carbon dioxide will suffocate and discolor produce, while ethylene gas speeds up the ripening process, thereby reducing practical shelf life. Ventilation removes the above-mentioned gasses, but the process must be carefully controlled to match a specific commodity’s production of and sensitivity to the gases.
Another key issue is the stringent quarantine rules by major importers of perishables like China and the US, said Ng.
For exporters planning to enter China’s import market they must fulfill three critical conditions: Sanitary and phytosanitary regulations, particularly control of contamination of refrigerated cargo by chemicals used for pest control and shelf life extension; successful application of reefer technological solutions that ensure cargo arrives in desired conditions; and a reliable importer/shipper contact pool.
“One of China’s protocols for long transit is that the food temperature be maintained at the same degree for around 15 days,’’ said Ng.
The problem is that many perishables shippers are not educated on the stringent requirements by the importers, said Ng, “This is where we come in. We have the experience and make the difference. By helping shippers understand the rules and even provide them contacts on importers we help them to bridge the gap. They get the business moving and we get the contracts.’’
Large quantities of “Class A” (best quality) fruit are shipped to China, bypassing other import markets, noted Ng.
The biggest fruit exporters into China are from Europe (Mediterranean), Latin America (Chile and Peru), US and Australia.
Key fruit imports include durians from Thailand (an area that APL is particularly strong at with the majority of the cargo moving through Hong Kong); cherries from Latin America, especially during Chinese Lunar New Year period; apples and oranges from the US; grapes from Australia and Latin America; kiwi from Mediterranean and New Zealand; and bananas from Ecuador and the Philippines.
Another difficulty APL’s Ng pointed out was that the requirement for one commodity was very different for another. There are different protocols for different fruits. It’s like comparing apples and oranges. “And in the transport of perishables you cannot even compare an apple with an apple. You cannot put apples from one orchard into the same box as apples from another orchard because the ripening process is different.’’
“We carry a variety of commodities because every country has different produce. But we definitely cannot consolidate products because of temperature requirements. The customer has to pay for the container whether he fills it up or not,’’ said Ng.
APL recommends to the shipper not to mix products. Different fish require different temperature as well as fruits. “In some instances, particularly short transit time, we can consolidate grapes and oranges but not bananas because the banana shelf life is different, temperatures are different, and respiration is different,’’ said Ng.
OOCL, Hong Kong’s top container line, which is also a major operator of reefer boxes, uses the latest equipment for transport of perishables, said Stephen Ng, Director of Trades.
“We have in place ‘Pre-Trip Inspections’ to ensure that the reefer containers are functioning properly and in the correct settings before they are shipped. We are also capable in meeting the requirements of relevant authorities to provide the necessary temperature monitoring records in a timely and effective manner when requested.
“For those who ship to the United States, OOCL is one of few companies in the market that is fully USDA (US Department of Agriculture) compliant. We provide USDA approved containers as well as USDA certified temperature sensors and microprocessor-based controllers, ensuring the most accurate recording of the container temperature on each shipment.”
OOCL moves perishables from the US to Asia, but not from Latin America. “Customers would typically use our Automated Fresh Air Management + (AFAM+) containers to ship their perishables, such as broccoli and lettuce, to reach Asian markets in the most desirable and freshest conditions. The technology monitors both oxygen and carbon dioxide levels in containers, using microprocessors to adjust the conditions when needed and help improve the shelf life of the perishables,’’ said Ng.
Asked about the challenges and prospects in China’s fruits market, Ng of OOCL, said: “We expect a lot of opportunities from China’s fruit import market as the country’s affluent middle class continues to grow and the living standard gradually improves where more people are interested in a much broader range of fruit products. Just recently, the US and China had finalized a trade agreement to resume citrus exports to the Chinese market, so favorable policy factors are also very important to the trade.
“Looking ahead, we believe Shanghai and Qingdao are important gateways to keep watch.’’
To meet a growing demand for the global transportation of raw and fresh goods, Taiwan’s Evergreen Marine Corp has employed new micro computer-controlled reefer containers to ensure a professional transportation service that guarantees the safe delivery of perishables for cargo owners. This service, for the past 10 years, has gone far inland throughout Asia, the Americas, Europe, the Mediterranean, Africa and Australia and has established a strong reputation.
Maersk Line, the biggest provider of refrigerated container services, foresees volumes of global refrigerated container shipments rising still further over the next few years on the back of world population growth, new demand from China, India, Russia, Middle East, Africa and other developing economies, and on-going conversion of reefer cargoes from other transport modes, including air.
With little sign of significant new investment in conventional reefer tonnage, refrigerated container shipping is clearly now the lynchpin for world perishables trade.
