Despite the impact of COVID-19 on the supply chain, the transportation of perishable goods is set to grow in 2020 as plant-based diets become popular, demand for high vitamin products increases and the Chinese meat market picks up.
Considering this, refrigerated (reefer) shipping could become one of the most important drivers of supply chain and maritime growth in the coming years.
Consequently, carriers see reefer containers as vital tools in their end-to-end offering. Their durability means perishable goods can travel across greater distances than before , where businesses can export perishable goods to a bigger customer base.
“We see continued rise in demand for Reefer containers due to increasing demand for goods (fresh produce, frozen proteins, etc) that require temperature-controlled supply chains,” said Bruce Marshall, Head of Reefer Solutions, A.P. Moeller-Maersk.
This optimism is shared by Ocean Network Express (ONE), which has one of the largest reefer fleets in the world having expanded it by 5,000 units in 2020, 200 of which are equipped with controlled atmosphere (CA) technology.
Reefer demand during COVID-19
ONE says the reefer industry has grown in 2020 and it will continue to do so. The COVID-19 pandemic has accelerated growth as consumers look for ways to strengthen immune systems, which means traffic of fresh fruit is increasing. A good example being South African exports of lemons, which in April 2020 were double what they were in 2019.
“The pandemic has also triggered a change in consumer behaviour which has led to many consumers to shop online for fresh produce and this trend has the potential to become more sustained in the long term,” according to ONE.
“All such factors are contributing to the growth of the reefer business during this year.”
Marshall said the emphasis on healthy products extends to how they are transported. “Global organic growth has been 360% since 2005. Consumers are wanting to know the origin of food stuffs that they purchase, increasing preference towards organic foodstuffs and are environmentally conscience seeking sustainable farming and transport.
“Although this is more prevalent in wealthier societies, it is a trend that is likely to continue as countries develop.”
The optimism is evident by carriers’ strategies. Maersk, through its subsidiary Maersk Container Industries (MCI) delivered 500 CA containers to ZIM Integrated Shipping (ZIM) to help it reach new markets.
In April 2020 it delivered a further 1,800 reefer containers to customers in South Africa to meet the boom in demand.
Additionally, in 2020 Maersk[opened a new cold store in St Petersburg, as part of its end-to-end supply chain services. The facility, the biggest of its kind in Russia, has refrigeration and freezing capabilities and was built to store perishable goods from emerging markets.
Reefer shipping and storage, also known as the cold chain, has become a vital part of carriers’ end-to-end strategies as they aim to give customers shorter overall lead times and more predictable costs.
It does so by allowing goods to be stored in the “right and consistent temperature throughout the complete end-to-end supply chain”, and this in turn is made easier for customers who only work with one logistics partner.
“While our immediate focus is on regions that need quality storage here and now, our long-term ambition is to have a global footprint that can meet customers’ need for high-quality capacity on a global scale,” Marshall said.
“The growth plan is being realised through a mix of acquisitions, greenfield investments and expansion of existing facilities.”
Land-side expansion in Ports
The effects of reefer shipping have also been felt on land as ports expand and diversify their operations to meet the needs of carriers.
One port aiming to become part of the cold chain the Port of Barcelona’s Hutchison Ports BEST. It announced in 2019 that it was increasing its connection capacity for reefer containers by 70% from 1,600 to 2,750 plugs, making it one of the most connected terminals in the Mediterranean.
An efficient end-to-end cold chain requires a seamless exchange of data between stakeholders. Earlier in 2020 the Digital Container Shipping Association (DCSA) unveiled the internet of things (IoT) connectivity interface standards for shipping containers, dry and reefer.
The goal is to make supply chain participants provide customers with an uninterrupted flow of relevant information regarding the whereabouts of containers and the status of their contents at any point.
“DCSA aims to solve the lack of interoperability between different multiple IoT container devices,” said ONE. “For reefers it will enable seamless transparency of reefer telematics data which could be useful for shippers.
With the DCSA IoT standard, shipping partners can view their container’s condition data without physical monitoring process by ship’s staff.
The benefits of reefer shipping and the importance of the cold chain has been exemplified throughout the COVID-19 pandemic, as the supply of essential goods such as food and medicines has remained unhindered.
As the world changes post-pandemic to meet new consumer demands, the cold chain will continue to be a vital part of the global economy.
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