What is happening in the shipping environment?

The one certainty we have in the fruit export industry in South Africa this season is uncertainty. The fruit is there of course and it must move, but where will it move to and, more importantly, how will it move? What all the role players in South Africa need to bear in mind is that not only are South African exporters competing against one another, of more significance is that the South African fruit industry is competing with the South American fruit industry. This is especially so with regard to the UK / NWC markets, and the reality is that whoever can land the fruit at the best price will secure the contract.

What is most alarming is that whilst rates for 40’ hc reefer containers from South America to Europe have dropped by 50%, in South Africa, the container shipping lines have hiked rates with up to 20% on 2008 rates. How can this be justifiable? The South African fruit industry which, by comparison, is still standing relatively strong, can definitely not be used to recoup the losses sustained by other trades. Another important factor to bear in mind is that, in 2008, conventional shipping was a last resort due to cost. This season is a whole different ball game. Bunker prices are in some instances less than a third of what they were a year ago, conventional vessel charter rates are very competitive and, with the astronomically high container freight rates, the market is wide open for conventional shipping to make a comeback and be competitive.

At GoReefers we have always, when it has been necessary to ensure our clients have sufficient shipping opportunities, been able to take advantage of opportunities in the charter market. In order to do so, we remain constantly up to date and in touch with what is happening with vessel schedules, capacity in the stores, freight rate comparisons and our clients’ unique needs. I would suggest the container lines take all factors into account and not become either arrogant or complacent. For many years, they struggled to capture the high volume citrus market from the conventional lines. Now, they run the risk of shutting the very same door they struggled so hard to open.