Since 2023 rolled onto the calendar, there has been a return to the fresh produce shipping normalcy of 2019. It’s no secret that in 2020, the Covid pandemic rocked produce ocean cargo, reports Fresh Fruits Portal.
Containers and chassis are no longer in shortage
“The primary shortage now is in volumes. The lines increased capacity to cash in on the exorbitant rates and I think the world inflation showed overall demand for products and the volume dropped. The backlogs cleared. And on-time deliveries, which are defined as within one day of schedule, are mostly back,” said Treacy.
Treacy notes that before Covid, the shipping lines were on time 75% of the time. In the worst of times during Covid, there were timely deliveries about 10% of the time, depending on the shipping line and shipping lane. “Since the new year, things have improved” to about 60-65% on time. Shipping lines admit they need to up that number to 90%.”
In Long Beach Feb. 27-March 2, Treacy was a panelist at the TPM 22 – the Trans-Pacific Maritime Conference.
He says the shipping lines have learned a lot in recent years. They are keeping better practices in place and not letting past failures happen again. Figuratively, Treacy notes the shipping lines “were trying to pour 25 pounds of fruit through a 15-pound funnel. They couldn’t handle the volume.”
Significant in the shortfall were ports shutting down and ships sitting in a harbor for days waiting to discharge. That took fruit and container volumes out of circulation and reduced shipping capacity.
Late this winter, shipping lines facing short freight volumes were canceling routes with as little as three or four weeks’ notice to exporters.
Treacy explains that the shipping lines made $150 billion during the two-year period of high rates. Investors are pressuring the lines to maintain such levels of profitability. Decreasing container capacity will boost rates and profits. “I hope this doesn’t continue,” Treacy notes.
Treacy believes that the overall shipping volume will begin to pick up again this September “everyone wants to do what they can to stick to schedule.”
Creating produce ‘fast lanes’
Produce is the most perishable freight handled by the ocean lines. At the TPM conference, Treacy encouraged the shipping lines to create “fast lanes” for produce, expediting getting outbound reefer containers off the dock and then discharging them first at the receiving end for customers who need to be getting the fruit to market.
“We have had a lot of shipments that ended as insurance claims as the delays were too long and the produce was not saleable.” In those cases, well-insured shippers or carriers covered most of the immediate losses.
With the problems, the produce industry began shying away from exporting. Certainly, U.S. exports are down. While figures may show a two percent sales increase in produce exports, if 10% to 15% inflation is considered, the produce industry may actually be facing up to a 10 percent decrease in exported volume. Rather than face transportation problems, some growers left fruits and vegetables unharvested in the field or on trees to minimize their losses.
“It will take a while to get our confidence back” to export. And exporters of citrus and apples, have largely remained in the export game. Those providing cherries and vegetables couldn’t afford the risks of shipping delays.
Treacy encourages IFPA’s produce industry members to select their shipping lines based on more than price. In times of shortages, those good partners bring fewer challenges than those working in the spot markets.
We are hopeful the stability remains, and service gets back to, or above, what it was before.
The reefer niche allows shipping lines to charge a profitable premium. “I can’t see them walking away from this business, although one or two did walk away in the last year or so because they were getting more for dry containers.”
Produce and future reefer shipping
Treacy indicates that six or seven percent of all marine containers are refrigerated. Fresh produce is a subset of that reefer volume. Produce is charged premium rates because those containers cost more and there are insurance expenditures to help cover the risks.
“I think the shipping lines are not going to ignore produce in the future. It is a profitable item, but Covid taught us what should be done in handling produce.” At the same time, there is greater innovation by seaports and ships to accommodate fresh produce. He notes that in Dubai, extensive container racking has been made to serve reefer customers, to streamline access to the containers in greatest need of expeditious movement. The alternative, of course, is to stack reefers in large blocks, which is a big challenge, involving up to a two-day wait to retrieve a container, when it is time to move produce to the market.
The use of refrigerated break bulk ships increased over about 18 months around Covid ocean transportation disruptions. In some of these cases, fruit that had been shipped in reefer containers found itself on pallets in refrigerated ship holds. The old standard technique requires more touches of a perishable product. The advantage of break bulk ship is that less volume is needed to make an efficient shipment.
Treacy believes reefer break bulk will always be a small percent of the trade, but he does not see recent increased usage marking a trend.
Some efforts are underway to align logistics data requirements across the supply chain, regardless of the shipping line or freight forwarder, they will work with the same data set.
Covid highlighted the fact that everyone in the business had different data to move freight. If a shipment moved from one carrier to another, all the data on the shipment needed to be input a second time.
“We need to get beyond that,” Treacy says.
Global produce transportation
Treacy has an almost 40-year background, primarily in retail logistics. He has worked since 2010 for the Produce Marketing Association, which merged to create IFPA. He says refrigerated ocean freight is the second, or third, most common shipping method for perishables. If floral products are counted, that air freight moves produce ocean cargo to third, behind truck and floral transportation volume.
Shipping produce by sea, of course, takes place “every day, all around the world.”
Treacy works with all IFPA members, who are located in 56 countries. Thus shipping routes of his concern not only involve North America, but also routes such as Mexico, Chile, and South Africa shipping to Europe. Ocean-encircled Australia and New Zealand are also important parts of IFPA’s strong membership.
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Source: Fresh Fruit Portal