Cool Logistics Global exclusive interview: we interview Ruben Huber, founder and director of OceanX about developments in the container supply chain and their likely impact on reefer container operations
OceanX is a non – exclusive global network of leading ocean freight providers and NVOCCs dedicated to delivering bespoke innovative solutions, in particular on FCL services, LCL consolidation, dangerous goods and chemical logistics, temperature control, fashion logistics, as well as project cargo handling. The network aspires to go beyond bilateral facilitation and constitute more of a think tank for members, supporting industry re-invention and innovation.
Alex von Stempel: Dry box and reefer box operations are closely linked. Are dry box and reefer box supply chains now firmly ‘tied at the hip’ and what are the risks of looking at one without the other?
Ruben Huber: The dry and the reefer box are not Siamese twins or two sides of the same coin but intertwined in the way that they rely on the same infrastructure and move on the same ships. Which to some degree is a large opportunity, having added much flexibility and cost efficiency to the perishable supply chain over the past decades, while on the other hand also creating essentially two classes of cargo on containerships and an internal competition that is not always free of friction.
Alex von Stempel: Have supply chains become ‘too lean’ to remain profitable in exceptional times?
Ruben Huber: I would more say that containerization has been a key catalyst for international, yes for global trade. It has facilitated the focus on efficiency, producing every product in the most cost-efficient method. This has on the one hand helped many developing areas of the world to advance, pulled millions out of poverty, allowed many people to increase their living standards and brought exotic produce to the mainstream. Nevertheless, risk management concerns have been neglected. This focus on efficiency has made many markets and countries very interdependent, which has been an advantage in many ways but certainly shows its challenges during the current crisis.
Alex von Stempel: Given that we are now in the ‘Age of the Corona’ could you imagine certain cold supply chains being treated in isolation from the main product flows?
Ruben Huber: Over recent years a certain harmony has been established between the flow of different products. When major cargo categories like automotive, apparel and retail suffer significantly and as has been the case in recent weeks have at least temporarily ground to a halt, human consumption of foodstuffs continues and perishables are less effected. Lastly, the 3.2 million reefer fleet is only a small share of the overall 42.2 Million TEU fleet thus the symbiosis of dry and reefer, in the ridesharing on container vessels, is no doubt seeing an impact from reduced sailings or longer transit times.
Alex von Stempel: How can one achieve the best possible supply and demand balance despite massive planning insecurity?
Ruben Huber: Planning insecurity is an interesting subject. What is certainty? None of us knows the future, neither now, nor did we before. However, things might have been easier in recent history, based on past experience. Now we are faced with disruption, which has seen some things change and others things not. Certain product categories, for example luxury seafood, move less freely as restaurants are closed and not many people cook this at home. On the other hand, vegetable consumption is going up in several countries as people return to simpler meals, but still want their avocados and blueberries, perhaps even more than before. Extended transit times rule out certain commodities on certain lanes. Lack of air transport capacity, with likely transitions from fresh produce moving by air to frozen shipments by sea. It’s a game of adaptation and flexibility. However there have been better crops and less good ones, there is a move in supply chains continuously, the world has never been static, albeit we like to think so.
Alex von Stempel: Are there any lessons the cold chain can learn from the ‘dry chain’?
Ruben Huber: I would believe there is much more to learn the other way around. The cold chain has and needs a much better understanding of the product, to be effective and efficient, so specialist departments have developed within all carriers over the past decades and the deeper focus on understanding customer needs, cargo and the optimization of the asset is certainly a lot further developed in the reefer sector than in the dry segment today.
Alex von Stempel: Are the days of the global cold supply chain numbered or is not the continuing existence of perishable chill chains in fact ‘living proof’ that global food commerce supply chains are thriving?
Ruben Huber: Even before the current crisis we saw a shift in trends to more local and more organic demand from a very conscious next generation of consumers. We will, no doubt, see this trend continue, maybe even accelerating given increased supply chain risk concerns in the future. Yet certain commodities will continue to come from certain places of origin (e.g. bananas). Exotic fruits, specialty seafood and high-quality meats again are more luxury items and their consumption and demand are linked to consumer confidence and economic fundamentals in key consumer markets. The closing of China over the extended Chinese New Year, has shown how fast demand can drop in these sectors, when restaurants close and people cook simpler meals at home, being more cautious about the future. While this will no doubt rebound, vulnerabilities have become visible.
Alex von Stempel: What are the indications that LCL models could be extended to include perishables on both a regional and possibly a global basis, particularly since the bottom has fallen out of the airfreight market?
Ruben Huber: This is an interesting field of opportunity for the ocean freight players but combining perishable shipments in refrigerated containers as Cool LCL is not an easy endeavor. Some ‘live’ or highly perishable products cannot withstand long transit times and will remain out of bounds for ocean freight, others only in frozen form, for which then price and demand at destination might differ. One should not forget, that even with airfreight capacity available, cargo always looks for the most efficient mode of transportation. A lot of what could be converted to a less costly transport mode has in fact already been converted.
Alex von Stempel: How can transport and logistics providers help develop regional cold chains from scratch?
Ruben Huber: I do not believe we have to reinvent the wheel. Shorter supply chains, dry or cold, are also an opportunity for existing players in the overseas market to make use of existing storage and distribution capabilities in their markets. In many commodities (e.g. avocadoes, blueberries, citrus), they have been handling the same produce from many different origins before and bringing them to the consumers.
Alex von Stempel: As the demands for virtual reality are becoming more tangible by necessity of the global lockdown, what technologies do you believe could help both the dry chain and (perhaps even more) the cold chain?
Ruben Huber: Much of the technology that is being introduced into shipping these days, on the software and hardware side, focuses on visibility. One area where there are still more questions is: where is the cargo and/or what state is it in? However, despite the attractiveness of dashboards and maps with a lot of bling-bling, if we look at it in more detail, it is hard to see a value in visibility only for visibility’s sake. Visibility adds value at that moment, in that it helps to make better decisions, e.g. knowing early on that my cargo is experiencing a temperature issue and is most likely damaged, allows me to initiate a replacement shipment earlier and maybe ship it, instead of flying it and thus create a cost saving.
In these instances then, visibility competes with other methods of risk management, like self-insurance (for example a “problem budget”). In fact, if the visibility minimises a certain kind of risk, which normally is associated with a kind of cost and the cost for the visibility solution itself overall is lower than the cost of that risk itself, it starts generating added value.
The 12th Cool Logistics Global Conference and Exhibition takes place from 13–15 October 2020 on-board the SS Rotterdam, the Netherlands. Cool Logistics Global is the leading global event and networking forum for logistics, shipping and supply chain professionals focused on perishable cargoes. For more information and to register your place at Cool Logistics Global 2020, visit https://coollogisticsresources.com/global/
