Truck shipping

Price normalization will return to freight transport sector – eventually – according to shipping giant

Amid global pressures from the COVID-19 pandemic, the Geneva, Switzerland-based global shipping and logistics solutions provider Mediterranean Shipping Company has moved a record number of refrigerated containers over the past year and recorded sustained growth in seafood shipments, according to MSC Netherlands. Reefer Manager Dennis Alibux.

In an interview with SeafoodSource, Alibux said that due to unprecedented pressures and demand for surface transportation solutions, exporters are expected to see reefer rates remain high for the time being, but investments are underway. which should improve the situation in time.

Seafood Source: How much merchandise does MSC currently ship via reefer containers, and how does that compare to five years ago?

Alibux: In 2020, MSC delivered a record 1.9 million 20 foot equivalent units (TEUs) of refrigerated freight and over 28,000 TEUs of cold process shipments. These numbers beat the records of the previous year and maintain the steady growth we have seen in our refrigeration business as we expand to meet demand. Global demand for fresh fruit shipped by reefer containers has increased by 40 percent over the past decade. Since 2016, we have also seen the demand for seafood steadily increase, with the total volume of seafood shipped with MSC almost doubling from 2016 to 2020.

In order to meet growing demand for our refrigerated freight service for the wide range of products we ship to existing and new destinations around the world, we have expanded our refrigerated fleet for temperature sensitive cargoes, including adding 15,000 Star Cool units (reefers) in 2020. Further developments of our services can be found in our Gülsün class container ships. Thanks to their improved design and larger size, these giant ocean-going vessels can carry over 2,000 refrigerated containers. The increased capacity helped service the high volumes of trade activity between Europe and Asia, boosting trade in chilled and frozen products.

Seafood Source: What proportion of the current volume is made up of fish and seafood?

Alibux: In 2020, seafood accounted for almost 10% of all reefer cargo that was moved during the year. Of these, frozen fish is the most popular product, accounting for 41 percent of the seafood that has been transported.

The transport routes are varied. The top five loading ports are mainly located in South America, with Europe also represented. The top five destination ports are each on a different continent, with one in North America, South America, Europe, Africa and Asia, respectively. No port represents more than 15% of the volume, which highlights the diversity of goods and routes for which our customers use our services.

Seafood Source: What significant technological changes have been made recently in the reefer industry and what have been their main benefits?

Alibux: MSC’s advanced refrigerated technology is used to transport all perishable goods. Reefer containers are continuously fed, temperature-controlled containers that keep perishables and temperature-sensitive goods cool throughout the journey – from truck to train, barge, ship and every step in between. It is thanks to them that we keep food healthy and in optimal condition over long distances.

Since most of the seafood we transport is frozen, there is less need for technological advancements on the container itself. We explore how digital innovation can help improve operational efficiency and deliver a better customer experience. We strive to ensure transparency throughout our process with our clients and build strong relationships. A key example of this is our willingness to use electronic bills of lading (eBL), which allows all parties involved in a freight shipment reservation to issue, transfer, endorse and manage the bill of lading document. electronically via an independent blockchain platform. , without any interruption of business operations. The app is available to shippers, importers and traders of all sizes and industries around the world, including seafood, and does not require any additional IT infrastructure or operational changes. MSC’s eBL brings key benefits such as speed, simplicity, cost savings, security and sustainability. Existing customers around the world have described the MSC eBL as easy to use and convenient, especially during the COVID-19 pandemic, where the eBL is filling a very current need. It enables senders to overcome border restrictions, postal service disruptions and other pandemic-related disruptions. Maintaining the flow of goods is essential and by dematerializing the BL we are giving shippers the ability to allow employees to work remotely.

Seafood Source: Refrigerated freight rates have skyrocketed over the past year. What are the main reasons for this and what solutions will MSC implement to remedy the situation?

Alibux: It is true that market freight rates are now at a level that we have not seen for many years due to the dynamics of supply and demand and the continued impact of the pandemic, worsened. by the disruption of Suez in April, congestion in southern China in May and June and the shutdown of operations in Ningbo, the third busiest port box in the world, in August.

MSC continually invests in vessels (new and chartered) and containers to maintain as much capacity as possible to meet market demands. Obviously, no one could have predicted the kind of surges that are currently stressing the container transport network. The system will eventually return to a healthier balance, with more stable volumes, but it is important that we all collectively do a better job of managing the time of crisis. We all look forward to the market normalization, but it is not yet clear when that will happen.

Seafood Source: In what ways has the COVID-19 pandemic affected MSC’s business and how has MSC responded to obstacles that have presented themselves to it over the past year?

Alibux: The main concern of COVID-19 for MSC has been the impact on the health of our personnel, both on land and at sea. MSC is campaigning for greater recognition of the role of seafarers in sustaining global trade and has issued various appeals to governments to facilitate crew changes during the pandemic after hundreds of thousands of sailors became stranded at sea. We continue to advocate for these key workers to be prioritized for travel and for COVID vaccinations .

In terms of market impact, we saw a sudden drop in demand in Q1 2020 with the shutdown of China, followed by an incredible pickup in demand in Q3 and beyond. Abrupt fluctuations in demand have overwhelmed supply chains in some regions and have had an unprecedented impact on the systems in which we and our customers operate. Port congestion, equipment shortages and other factors have led to a systemic overload of freight and logistics demands.

Seafood Source: How do you anticipate future demand for your services?

Alibux: Even in mid-late 2021, we still face the impact of fluctuations in demand throughout the pandemic, despite the carrier industry injecting capacity and changing service networks. We’re hoping for a return to a more normalized market soon, but we can see these effects continue for a bit longer until more governments get a better handle on COVID.

Seafood Source: What are your longer term forecasts for the reefer industry?

Alibux: The boom in reefer container shipping is expected to continue long into the future and MSC will continue to play its role in unlocking new opportunities for producers, exporters, importers, retailers and end consumers. We continue to see significant demand for our services, and we continue to invest in refrigerated container equipment and technology to meet this demand. Overall, the year-over-year trend in seafood TEUs shipped with MSC has increased steadily since 2016. Total TEUs in 2021 to date have already exceeded all of 2016, and despite the continued impact of COVID-19, shows signs of continued growth. The continued economic growth around the world has led to an ever growing and expanding middle class. This growth is boosting consumer spending, especially on food, and we see fish and seafood as a priority purchase for this group. As the middle class continues to grow, the demand for seafood (and other refrigerated products such as fruits and vegetables) will continue to grow.

Due to IMO 2020 [a rule requiring cuts to sulfur oxide emissions], we expect conventional reefer vessels to slowly disappear from the market as it is expected that the costs will be too high for them to maintain their services. As the bunker shrank in 2020, these ships were still on the market, but now the bunker is growing again. Although the split is currently around 85% containerized and 15% conventional, this could evolve into an even wider split towards refrigerated container shipments in the coming years.

Seafood Source: What other services does MSC provide to the seafood industry besides shipping?

Alibux: At MSC, we are fully aware that it is not just about transporting goods by sea. The ability to store goods and containers is crucial to our customers’ supply chains. That is why we constantly focus on storage and distribution. We pride ourselves on providing door-to-door logistics services to our customers with a global network of warehouses and storage facilities, enabling them to transport their cargo anywhere in the world.

MSC’s cold storage capabilities allow us to offer our customers increased speed, efficiency and flexibility in their supply chains when transporting frozen or temperature controlled goods. Our warehousing network – spanning millions of square meters – means we offer broad door-to-door service integrity. Many of our warehouses also offer full picking / packing, palletizing, bulk handling and warehousing services. As a result, MSC will not only transport goods quickly and safely, but will also play an important coordinating role in the distribution network.

Photo courtesy of Mediterranean Shipping Company

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