As the global economy recovers from a two-year case of the trade flu, carriers and shippers alike are seeking more from their relationships.
Carriers who collectively lost billions of dollars during the time span are eager to raise rates, keep their vessels full and gain market share — especially in lucrative markets such as reefer trade. To attract customers, some carriers are touting value-added services that give reefer shippers longer shelf-life for their products or a greener supply chain.
Those options are certainly attractive to exporters, but some shippers say what they need most is simply better service. “It certainly isn’t across the board, but, in general, the level of service we get today as opposed to past years has been reduced dramatically,” said Lee Doud, senior vice president of Paramount Export, which trades in fresh fruit and vegetables. “I think it’s just a part of the modern world and what carriers can afford to pay.”
Carriers point to expensive investments they have made in vessels, equipment, and research and development to add value to ocean transportation. For example, some especially fragile commodities that previously had to be shipped by air can now go by ocean — something that is less expensive and also has a lower carbon footprint.
“In Europe, more than here, the carbon footprint of a product matters,” according to William C. Duggan, vice president of refrigerated services for Maersk Line, North America.
European supermarkets regularly display cards that indicate the environmental impact of transporting goods to market. “Whenever you can get commodities out of the air and onto vessels, it is good for the environment and European consumers notice,” Duggan said.
The questions around perishables shipping are more important to Maersk as the company has scaled up its services to the market. Maersk has started shipping live seafood from the east coast of Canada to Europe and worked with Danish firm Aqualife Logistics to develop saltwater tanks that are carried in containers. The plastic tank allows water to be exchanged, filtered and aerated so the seafood can be held and kept in optimal condition for long periods.
“Each container can hold 20 55-gallon drums of live shellfish,” Duggan said. “We have a whole aqua system built into a 40-foot container.”
Duggan said because the lobsters, crabs, mussels and clams are shipped live, the quality when they reach European supermarkets after the Atlantic voyage is better than if shipped by air. “This service is the core of a huge marketing campaign in European supermarkets. They have signs that give the carbon footprint by air and by ocean.”
Duggan said the carrier plans to expand the system into other trade lanes.
Some retailers are routinely requesting carbon footprint and other environmental data from carriers in all modes.
That prompted Hamburg Sud to add a “Quality and Environment” section to its redesigned Web site, www.hamburgsud-line.com. The carrier details steps it is “taking to reduce the environmental impact caused by shipping. The section also features, for the first time, a CO2 calculator that — in line with the methodology established by the Clean Cargo Working Group — can be used to compute a container’s carbon footprint from port to port.”
Several carriers, working with reefer box manufacturers Carrier Transicold and ThermoKing, are testing transport of flowers and highly perishable produce by ocean container instead of via air freight. Controlled-atmosphere and modified-atmosphere containers have been used in the trade for years now, but they still are allowing some products to make inroads in markets previously unavailable.
The Chilean Blueberry Committee expects to ship about 70,000 metric tons into U.S. markets this year.
“Very recently we were a very expensive, specialty-items-only, available at a few places in New York,” said Tom Tjerandsen, managing director of the Chilean Fruit Association. “Blueberries had to be shipped by air — it was almost as if each box had a seat in first class. We couldn’t expand our market when the transportation was that expensive.”
Some 85 percent of Chilean blueberries now are exported by ocean. “The technology has really helped our industry, and we’re also shipping some raspberries and strawberries by ocean to some markets,” Tjerandsen said.
Paramount also makes extensive use of the specialized produce containers, but Doud said it can be a painful process. “As far as controlled-atmosphere or modified-atmosphere containers go, we have issues right now with the maintenance of the boxes,” he said.
Doud said claims have risen recently because controls are improperly set. “We’ve seen the number of claims go up and bizarre claim situations have really gone up. We had a container that caught fire during a voyage. In the past, once in a while temperature gauges malfunctioned. Now we’re seeing situations where the equipment isn’t even properly set in the beginning.”
Doud said the economic downturn probably plays a role, because the carriers had to lay off experienced workers.
“It certainly isn’t every carrier, but with some carriers, it is to the point where they don’t understand vent settings, or pre-tripping or humidity controls or air exchange,” he said. “I think some of the carriers don’t understand their own equipment.”
Bob Weiss, head of the Food Shippers Association, said he doesn’t hear from his members that they need new specialized services.
“I hear from my members a lot, and they just need the basics,” Weiss said. “They need reliable equipment, reliable space on a vessel and reliable documentation. Except for a few carriers, getting what used to be minimum level of normal service is like pulling teeth.”
Some association members are major apple exporters, and they have had trouble getting equipment this year.
“You’d think after 30 or 40 years of apple exports, carriers would know when the apple season is,” Weiss said. “Some carriers brought boxes in too early and then moved them out. Some were real late.”
Weiss said some of the problems began when carriers went to centralized booking centers. “When they eliminated local offices, some of the experienced people didn’t want to move. And I think there was inadequate training of new people. It’s difficult to find knowledgeable people to deal with.”
Stronger air cargo security regulations have been compounded by frustration with ocean service, according to Jim Stewart, export coordinator for NorPac Foods in Lake Oswego, Ore. He said his company is always aggressively searching for new markets and new customers overseas, and air restrictions on the use of dry ice have complicated marketing efforts.
“It used to be you could take a container to a forwarder and have it packed with dry ice,” Stewart said. “It was a fairly efficient method to get a foothold with a new customer, but because of (Transportation Security Administration) rules, we can’t do that anymore.”
For NorPac, expedited shipping only makes sense for small sample boxes. “Air freight is just not in the cards anymore, and it’s made life a lot more miserable.”
He said a major frustration throughout his 30-plus years in Pacific Rim trading has been the logistics end of trying to get business started. “Once they’ve approved your samples, a customer wants a small shipment to test with their customers. How do you ship 50 or 100 cases?”
He said more less-than-containerload service is something that would benefit shippers.
Weiss also says LCL service would be a plus. “When we get a request for LCL, I send them over to OOCL, since they started their service, but it isn’t widely available in the industry,” he said.
Meantime, beleaguered ocean carriers looking for ways to cut costs have gone slow-steaming, which slows vessel speed and burns 30 percent to 40 percent less fuel but also adds time and headaches for shippers that seek a balance between temperature sensitivity and time sensitivity.
“For us as a fresh produce shipper, slow-steaming is an issue,” Doud said. “Taking days longer to reach a market means there are fewer days the product can be on a shelf.”
He said Paramount must carefully scrutinize sailing schedules to see the quickest ways to reach certain markets. “When there is a noticeable difference on scheduling, we go out of our way to get product to the right port even when we have to pay more trucking,” Doud said.
Rich Burden, director of transportation for Naturipe Farms, said port and terminal schedules make his job more difficult.
“We have perishable imports coming in, and sometimes it is hard to get the container out of the port and on to our customers,” Burden said. “We have to deal with port closures, weather and the quirks of individual ports or terminals.”
He points to Miami as an example. “Miami is closed on Saturday and Sunday, and we have cargo on a vessel that arrives on Friday. That means our produce sits there an extra two days unless we pay overtime. Other ports have gates open 8:00 a.m. to 4:00 p.m. Some ports you have to pick up at night or pay extra.”
He said that since he is acting as a receiver, it’s difficult to get carriers to help with the situation.
Shippers needing help getting products through the supply chain could seek the assistance of freight forwarders and supply chain management companies, according to Mauro Suazo, Damco’s head of the reefer logistics division in North America.
“Damco is able to sell ocean reefer solutions,” Suazo said. The logistics division of A.P. Moller-Maersk can help a customer map out the best and fastest way to get products from one part of the world to another.
One new service is Damco Fresh Produce Direct — the supply chain management company not only arranges transportation but also matches buyers and sellers. “The idea is by no means to cut anyone out of the picture, but size of some growers and retailers dictates that they get together. We introduce the Wal-Marts to the grower/packer/shipper.”
Damco also offers cross-docking services in Ecuador, an air-ocean delivery service to get fresh flowers from South America to U.S. cities.
Doud said innovations are welcome in the market, but said Paramount’s wish list for service tends to be more about the basics.
“If I could get two things from carriers, it would be for them to pick a few strategic export lanes and offer fast-steaming. The second wish is for a few more experienced people available on the other end of the phone.”
Weiss said his members’ wish list is even more succinct: “When they book equipment and space, they would like the equipment and the space. They want basic service.”
Contact Stephanie Nall at email@example.com.