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From
innovation to application The early 'premiere' of reefer shipping coincided with industrialisation. Technical innovation featured and machinery played the leading part. However, future success can be achieved only when starring roles are interpreted by application and ongoing modification to match the commercial environment. It was back in 1875 when in the USA commercial freezing of fish and meat commenced using salted ice and the go-ahead was given to refrigerated transport. Shortly after, Britain would start importing frozen meat from the USA and in 1881 Australia shipped the first major quantity of frozen meat to Britain. The year 1890 again marked a turning point in shipping history as both the USA and Europe introduced mechanical and other cooling media, including ammonia, sulphur dioxide and carbon acid. Before the Second World War freon was introduced, and simple compressors of the horizontal piston type were replaced by more advanced constructions. Rotating, turbo and screw compressors were to be a giant step forward in the technical development of refrigerated transport. At that time, ships (and shipowners) kept a high profile and ocean transport became prerequisite to international trading. Pioneers including Sven Salen and Ditlev Lauritzen were, in the 1930s, already conducting a refrigerated shipping business, which eventually would become a reliable and dedicated mode of transport, thanks to specialised ships plying the oceans. Technical evolution did not stand still. The development of reefer machinery and ventilation was followed by more sophisticated cargo handling systems. During the late 1960s, the last banana stem was transported, as from then on bananas would be put in cardboard boxes, which were soon - as with other fruit - to be loaded on pallets. More recently we have seen controlled atmosphere applications and above all the successful and cost-effective move towards containerisation, providing global coverage and catering for all perishables and frozen products. In the past, one could see the evolution mainly on the basis of the ship and its design, and of the tools and methods used to handle cargo - it was a technically orientated development, the focus being on ships and shipowners. Today, and in the foreseeable future, development seems likely to revolve around further application of existing techniques, often driven by trends of a commercial nature, which are undergoing substantial changes in an enhanced global economic environment. Furthermore, the constantly improving communication systems together with increased competition are contributing to shift the focus towards creating customer satisfaction. The customer mainly was and still is a producer, exporter, importer or trader, but one can see a steady shift towards the consumer - the end-customer - presently chiefly represented by retailers and supermarkets. This altered focus has an impact on the traditional reefer operator in the sense that if you are not servicing the end-customer directly, you are servicing someone who is. The supply chain stretching from farm-gate to dinner-table relies on a number of service providers and the once so proud ocean transporter who enabled international trading is now nothing but a supplier to someone who will deliver the product to a final consumer. I called my daughter on an island outside Stockholm, Sweden late one night from a farm in the Northern Territory of Australia. She was surprised how we instantly got in touch and could hear each other so clearly. I could not arouse her interest in the satellite, the underwater cable and the four phone companies involved, as the result was all that mattered to her. It seems that the integration of services, by creating a 'logistic service provider' is what is required. This will be further enhanced by IT-techniques to present a readily available and transparent cost structure as well as compatible transport alternatives. Reefer business of a port-to-port nature may well become obsolete and refrigerated vessels and containers come to be 'a cubic-feet commodity' unless the whole process is considered as a total transport concept. Traditional operators are now facing their biggest challenge ever - much more complicated than the freon or palletisation issues. They need to broaden their concept of transport to become active throughout the logistic chain and dare to play with different tools such as reefer containers in order to develop a new, multifunctional concept. Yesterday's shipoperator is about to go beyond oceans and has become involved in onshore transport, storage, quality control, packing and distribution, either directly or through a co-ordinated network of service providers. Tomorrow's shipoperator will be fully IT-integrated, able to give 'real-time' information about the condition and position of the product. Such a shipoperator will provide price structures and service information to enable customers to get the complete picture, make a comparison and take a decision with a minimum of research. Considering the nature of the container 'box', one might assume that container lines are one up when it comes to arranging total transport packages. Yet, it is precisely the operators of specialised vessels who provide that specialisation. Their hands-on approach and problem-solving mind, together with their market adaptation and scheduling flexibility, will continue adding value to the reefer industry. Their long-established culture and dedication will allow them to develop further as creative partners in the reefer business. By running an efficient organisation with a personalised touch they can easily adapt to the future, be it the commercial requirement or the rate developments in a very competitive world. A monopolistic situation of closely associated container lines will not provide the answer to maintaining a healthy and competitive environment while simultaneously proving capable of providing creative solutions. An example from the Australian trade gives food for thought. In the late 1970s, the Australian Meat and Livestock Corporation decided, for exports to the USA, to stop using specialised reeferships and to entrust their entire business to conference carriers, which ship in containers. Less than 10 years later, they again turned to specialised reefer operators, this time to solve the problem they were facing. The lack of competitive alternatives had created hidden costs and had moved the service away from the out-ports where the cargo was produced. In 1986 the problem was solved by introducing specialised reefer vessels of an open design with a tailor-made lifting device, enabling safe and fast cargo handling through pre-slung units. The new concept targeted the northern Queensland out-ports, starting a service which today has a 25% market share through a joint operation of Cool Carriers and Seatrade. A similar story in New Zealand led to a dedicated specialised service by Lauritzen and Kyokuyo. In conclusion, market improvements will help but not change the situation for the specialised reefer operator who needs to continue reducing costs, become even more efficient and better utilise the fleet. Any future imbalance between supply and demand that would support a major rate hike will swiftly be rectified by bringing more capacity into the market, by either specialised reeferships or reefer containers or both. Once the present wrestling for dominance among container operators tapers off, the true transportation cost will be revealed, to the advantage of the specialised operators, who will have restructured and enhanced their businesses for optimum utilisation. To serve the new emerging customer base, the specialised reefer operators will have to broaden their service and integrate it into a 'door-to-door' concept. They need to create alliances with forwarders, truckers and cold-storage providers and eventually even with selectively chosen competitors, whether specialised or containerised, thereby achieving 'co-opetition'. This will provide the service, the strength and the cost-efficiency required. These operators' built-in flexibility and the lean but hands-on operation will continue to provide a dynamic and creative alternative to the reefer industry and its customers. Through full use of Internet and other communication techniques, the advantages and possibilities of the specialised operators will become obvious. To get a clearer picture of how Seatrade is handling the future in the reefer world and how information and communications are provided, just visit our website: http://www.seatradereefer.com Lars Gunnar Larsson is a director of Seatrade Reefer Chartering |