Interview: Julio Néstar – Reefer Manager, MSC Spain, talks about challenges and changes in the fruit industry.
HOW HAVE YOU SEEN COVID-19 AFFECTING THE FRUIT INDUSTRY?
The COVID-19 pandemic created a host of well-documented issues across the global supply chain. Bottlenecks at main ports because of the shortage of workers in container terminals and shortage of truck drivers further increased congestion, creating important schedule disruptions to services around the world and leading to longer transit times for door-to-door transport. MSC invested heavily to increase our vessel capacity and container fleet, to continue offering weekly services to and from key markets and developing new trade lanes wherever needed. This approach is essential to meet both existing and future global reefer demand, which is forecast to increase at a rate of 3.7% CAGR (Compound Annual Growth Rate) up to 2025, according to Drewry.
WHAT ARE THE MAIN CHALLENGES FOR IMPORTERS AND EXPORTERS IN THE FRUIT MARKET?
At the moment, importers and exporters in the fruit market are seeing several challenges. For example, the wide scope of origins and destinations required by fruit customers is making it difficult to obtain the required quantity of reefer units to cover the global demand due to repositioning imbalances. This is particularly intense in China, where there is currently a surplus of reefer containers, which need to be shipped empty to areas with a deficit, such as South America, Europe, South Africa. However vessels on these routes have very limited space due strong demand for dry cargo.
In addition, new environmental regulations coming into force in 2023 regarding emissions will present challenges for many existing fleets. With one of the largest and most advanced reefer container fleets in the world, MSC’s ambition is to achieve carbon neutrality across the entire Cargo Division by 2050, and we continue to improve our fleet’s efficiency using digital tools and new technologies, as well as engaging with energy providers to explore solutions and scale up the production of low- and zero-carbon fuels. Fruit and vegetable suppliers are doing a great job of making the right changes to keep up with those new trends.
For instance, in recent seasons, Asian customers began to buy fruit from Australia and Egypt rather than buying from Europe to mitigate against increasing freight rates and transit times.
HOW HAS THE FRUIT MARKET CHANGED IN THE PAST FEW YEARS?
The fresh fruit produce business is adapting to a new reality, as well as coming to terms with the longer-term impacts of this unprecedented global crisis. The global fruit market reached a value of 310 billion U.S. dollars in 2021 and is projected to reach to about 530 billion dollars by 2028. Fruit has become the most popular commodity carried in reefer containers, with over 72M tons per year, growing at 7.5% CAGR (Compound Annual Growth Rate).
This is a result of both global population increase – we now have a population of8 Billion people – and a growth in the middle class population around the Public world, mainly in Asia, who are increasingly health-conscious and have boosted demand for healthy food both generally and in order to strengthen the immune system as a result of the COVID pandemic.
HOW HAS MSC RESPONDED TO THIS?
MCS has been doing what it can to ease operational stress resulting from increased market demand and the challenges posed by COVID.
MSC has increased its ocean fleet capacity by 22% since 2019, as well as adding 11 new mainline trade services worldwide to improve reliability and resolve supply chain difficulties. In addition, we have invested in our terminal operations around the world to provide the steadiest possible operations, and added logistics capabilities such as depots, warehouses, and intermodal solutions to provide the facilities our customers require.
MSC has also expanded its reefer container fleet, currently the newest in the world, which enabled us to carry 2 million TEU of reefer cargo in 2021 – breaking our previous record of 1.9 million TEU in 2020. Finally, we have established dedicated teams of over 1,000 reefer experts, working very close to our customers to assess their needs and find out how we can adapt our services and solutions to fit their requirements. Our specialized reefer customer service is available 24/7, across the world.
Our dedicated teams are continuously trained to meet the growing reefer market demands and to ensure our customers’ cargo is in safe hands at every stage of its journey – enabling us to deliver global solutions, locally. In a nutshell, MSC is global leader transportation and logistics company with local experts, which allows us to build long-term relationships with all our customers and suppliers across the cold supply chain, working to minimize the impact of the industry challenges, and providing full support at every stage of their cargo’s journey.
HOW WILL MSC CONTINUE TO SUPPORT THE REFRIGERATED SUPPLY CHAIN IN THE FUTURE?
As mentioned, the experts are forecasting a continued rise in reefer container shipping for the foreseeable future, and MSC is committed to offering new opportunities for all participants in the refrigerated and frozen cargo supply chain, from producer to consumer. However, it’s not only about physical infrastructure; Technology could provide some of the answers to these new logistical challenges, with more sustainable and more traceable supply chains likely to be at a clear advantage in the new post-pandemic global market.
At MSC we are focused on the digital future of the supply chain. We have been invested in digital tools to make shipping safer, more efficient, and more sustainable, and we are taking steps to drive digitalization across our industry. MSC’s e-business platform, which is accessible vis msc.com allows customers to place bookings, track their shipments, view their order history, get online quotes, see draft Bills of Lading and more.
Last year, MSC launched its electronic Bill of Lading (e-BL) solution, replacing the traditional paper Bill of Lading with a digital version, enabling shippers and other key stakeholders of the supply chain to receive and transmit this key trade document electronically. The application is available for shippers, importers and traders of all industries and sizes worldwide and requires no additional IT infrastructure or operational change.
As the fruit supply chain evolves, we will continue to work with our customers and ensure that MSC has the services, equipment, and expertise to support them and their businesses now and in the future