“For all parties concerned, it is economically viable and beneficial to ship fresh produce around Europe by sea in a reefer container, rather than overland via trailers,” claims Mark Copsey, Iberian Trade Manager of MacAndrews & Co.
Mr Copsey made his comments at this year’s Intermodal exhibition and conference in Bilbao where he was addressing the economics of shipping fresh produce from Spain to the UK and Ireland by sea using 45ft high cube containers.
MacAndrews has carried fresh produce from Spain for over 200 years, but the business migrated - initially to rail in the 1980s and later, to reefer trucks approximately 10-15 years ago as reefer truck availability and reliability developed.
Over the last 15 years, customer requirements in regards to transit time, product quality, shelf life and price have dictated that the transport system used to support fresh produce shipments is based on the use of trucks and trailers.
As a result, in almost all the intra-European fresh produce trade lanes, the vast majority of cargo movement is managed by operators of reefer trucking fleets which have captured the market and enjoy long-standing relationships with the producers and buyers.
Adds Mr Copsey: “Breaking that stranglehold is the challenge that faces the short-sea container operators such as MacAndrews. We have been working on the economic fundamentals which underpin that challenge for some time and now we think we are able to meet them.
“It helps that circumstances seem to be conspiring against reefer trailer operators. Their variable operating costs, including the price of fuel are spiralling. Legislation on driver’s hours restrictions is likely to have significant cost and operational implications in the long term. With any luck, they may even be asked to address the full environmental impact of their activities. The less scrupulous may be forced to comply with the letter of the law concerning their operations! We believe that there will be a shortage of reefer vehicle operators in the next five years.
“The economics are starting to swing in favour of the shipping companies, especially with the advent of new reefer containers capable of loading 26 pallets. This enables containers to compete with the loading capacity of trailers.
“The time is ripe for a seaborne alternative at a pallet rate equivalent or below that offered by the overland alternative. But, to make the economics work, we need long term partnerships with volume commitments from the major supermarkets.”
During his presentation, Mr Copsey explained that every year, the fresh produce sector accounts for more than 80,000 reefer trucks moving between Spain and the UK / Ireland – each vehicle covering distances of 2500km or more.
Under perfect circumstances, the overland operators guarantee a transit time of 3.5 days to the major supermarkets.
Over 80% of the fresh produce that is sourced from Spain to supermarkets in the UK and Ireland comes from Valencia, Alicante, Murcia, Almeria and Granada, with Murcia alone representing almost 50% in its own right.
The estimated truck rate between Spain and the UK is about Euro2700, which equates to Euro104 per pallet.
The estimated truck rate between Spain and Ireland is about Euro3200 or Euro123 per pallet.
“We have set up alternative short sea solutions and believe that they can compete on cost and efficiency. Moreover, we feel that they are greener and more environmentally friendly.
“One ambitious proposal would be to offer four direct sailings each week involving a six vessel fleet from the main growing areas in Southern Spain to Bristol, the ideal gateway for serving the majority of the UK supermarket RDCs.
“This would offer a 4.5 day transit time door to door via Bristol using 40ft and 45ft pallet wide reefer equipment. This would be achieved by keeping local collection to three hours, allowing 12 hours at the quay in Spain, 87 hours for the voyage to Bristol, at an average speed of 16 knots. Delivery to the RDC would then achieved within six hours.
“However, to make this work economically, and justify our investment, we have calculated that we would need the UK supermarkets to commit approximately 25% of the current fresh produce moved today by road.
“A slightly less ambitious option, but one that is more achievable in the short term, is to transport the cargo to Bilbao and cross dock via the Bilbao cold store. This provides customers with a four-day transit door to door from Murcia to the RDC in the UK and a five-day transit to the Dublin RDC. Of course this also offers both 40ft and 45ft pallet wide reefer equipment.
“Using this system, we have already successfully completed the first phase trials in the carriage of fresh produce in 45’ hcpw reefer containers, concentrating on product outturn quality and transit time.
“The trials concentrated on door-to-door movements by road to Bilbao, then onward shipment by sea through our service network, which already offers competitive delivery times.
“These trials, which included shipments of lettuce, broccoli, citrus, apples, pears, and onions, have confirmed the successful outturn quality of the products moving via our system compared to overland reefer trucks.
“These trials have proved the economic viability of moving these units at a Euro rate that will compete with road transport – and in terms of cost we may now have the competitive edge.
“In fact, so successful were the trials that a major supermarket group in the UK is seriously studying the transfer of a significant proportion of its shipments between Spain and the UK from road to ship.
“Now, of course, we need more European growers and buyers of temperature-controlled commodities to take a leap of faith and switch to this alternative solution to road transport.”
Mr Copsey continued and explained that long term commitments from category managers to transfer a proportion of their truck movements to MacAndrews’ alternative seaborne services, would allow the line to go ahead with a significant investment in a dedicated pool of 45ft pallet-wide reefers, as well as dedicated tonnage to operate the services.
Concluding, Mr Copsey suggested: “To see the future, we must look to the past when fresh produce from Spain reached the UK via sea. We lost that business first to the railways and then to the trucking industry – both of which have been supported by unrepresentative economic models.
“Now, with so many issues conspiring to make the trucking industry face up to the true economic costs of providing a service, I suggest that the wheel is about to turn full circle in favour of the short sea operators. I invite anyone that is involved in shipping fresh produce to take that journey with MacAndrews.”