Fuel price drop sparks reefer 'renaissance', says Cool Carriers
Baltic Reefers could not have chosen a more apt time than it did back in August to buy Stockholm-based NYK Cool, which under the name Cool Carriers is steaming ahead with new produce trade contracts. CEO Boris Gersling says the specialized reefer trade had lost competitiveness with container lines in recent years due to high bunker costs, but a steady fall in fuel prices has put the category on a more level pegging.
Gersling says bunker prices have practically dropped by half in the last six months, which has had a "huge impact" on his business.
"For the specialized reefers the bunker expenses are a higher proportion of the total cost because we don’t have the same scale as the container lines do, so when the bunker price comes down it makes the specialized reefers more competitive," he tells www.freshfruitportal.com during a visit to Chile.
"For example in our banana trade from Central America to Europe, what we see is we have a larger number of clients than what we had in the past, so in some markets there's a little bit of a renaissance."
Another program that has come back on the scene is a Christmas-oriented South African table grape deal, which Cool Carriers took on for the first time in many years last month.
"We did a program there for four shipments last year after not having done that for a number of years, and we repeated that this year," he says.
The high oil prices of months past were pushing some large shipping lines to go slower, ultimately affecting the shelf life of perishables.
"We haven’t really been practicing slow steaming because part of our volume proposition is we go directly and we arrive quickly," Gersling emphasizes.
"We have a 12-month liner trade in bananas and pines from Central America to Europe, and there you can say on the return leg from Europe to Central America we have been able to slow down. But in general slow steaming is not something the specialized reefer industry practices," he adds, mentioning that very often the southwest-bound ships go back empty to maintain flexibility, or carry breakbulk goods like ammonium nitrate or general cargo like cars and trucks.
While the company is now under Russian ownership, the executive who has maintained his spot despite the change says it is all "business as usual" with the company.
"We have our office in Stockholm that is unchanged, we have our people there and that's unchanged, and we have exactly the same fleet of 24 ships as before," he says.
When it comes to Russia, while the country has banned food imports from the EU, Norway, the U.S., Australia and Canada, some growers from non-sanctioning countries are also losing interest due to the low value of the ruble and its impact on the trade.
"When we're talking to the exporters here in Chile they don't see a big demand for the coming season to Russia," he says, adding that in general he believes the South American country is set for a good year.
"I would still expect that something is going to be moving [into Russia] but it's going to be less volume; local prices are going to go up and that will create less demand.
"I'm not sure if that’s going to be the case in Northern Europe but I think it could be the case in Russia," he clarifies when asked about the fall in the euro's value.
Gersling says staple commodities like bananas, citrus and apples will still be shipped from around the world into Russia, but in lesser volumes.
"Probably what is going to be harder hit is going to be more exotic or higher value fruits like grapes," he says.
"But they keep importing and if you look at the banana volumes, they are down a bit but not dramatically down."
Even though Cool Carriers has experienced a revival of late, Gersling still believes that the specialized container business will be much more of a niche area in a couple of decades' time.
"There’s no doubt that the specialized reefer fleet is going to be smaller than it is today," he says.
"It is going to be very niche-oriented and it's going to be operating only in the markets that are prepared to pay a premium for service, in the sense of direct services and quick transit times.
"I think the other important thing is that because we only deal with perishables we are very responsive to clients and it's very easy if there is a problem to be very easily contactable or responsive, which might be difficult when dealing with huge conglomerates."