Exporters refocus for survival

FTW: What trends have you identified in the perishable sector? John Mac Donald, southern Africa reefer executive, Safmarine: Northern Europe, South Africa’s ‘traditional market’, has once again shown strong growth in 2012-2013 after the market declined, significantly, between 2008 and 2010 and was f lat between 2011-2012. When the northern European market declined after 2009, South African growers and exporters diversified into other markets which offered better returns. Volumes are now back to 2009 levels, thanks to, amongst others, a favourable exchange rate and an excellent season. Volumes into Africa are significantly higher than before and are likely to continue growing, especially to West Africa, while the Middle East region also continues to show steady growth. Fruit is now moving directly into the mainland Chinese ports. We’ve seen a dramatic shift in volumes away from Hong Kong in favour of moving grapes and citrus directly into the other Chinese ports such as Nansha, Yantian and Shanghai. We are currently looking at ways to improve our shipping product into the China market to support this trend. More cargo is moving into the Eastern bloc countries such as Russia. One of the reasons is these countries have, unlike Europe, continued to accept fruit with black spot. The containerised share of seaborne reefer shipments continues to grow as the conventional reefer market continues to decline. Last year alone support for the conventional export market out of South Africa dropped by 19%. Kum Naicker, cargo manager southern Africa, Emirates SkyCargo: Looking at our perishable customer base over the past 12 months, it is becoming increasingly evident that the ability to “force sell” an extra 15-20% of product onto a customer via a discount has all but disappeared. Consignees are ordering more and more conservatively, preferring rather to be slightly short of products than to be caught with too much product that they cannot sell. However, there are certain things that have remained unchanged. Consistent volumes of excellent quality, good value for money and timeous delivery within the specified time given by the consignee have remained important as ever. Thys Lombard, managing director, Quoin Rock Winery: Developing new markets is an ongoing trend with a major focus on the Far East. China has been one area where the wine industry in particular has been seeing some major successes. This has definitely not been a lucky break but has been due to ongoing and persistent hard work in introducing the country’s products to these markets not just by exporters themselves but also through various government initiatives. FTW: What has been happening to volumes – is there an air to sea shift maybe? JMD: While we do not have the figures for perishables volumes moving via airfreight, all indications are that there has been a shift away from air because of cost. Northern Europe is once again the strongest performing market, volume-wise, for South African fruit exporters. The strength of the market after years of decline caught many by surprise and demand for container capacity and equipment has been strong. In the first five months of the year, volumes to Europe were 25% up on the same period last year. It is good to see South African growers and exporters being rewarded this season after many years of diligently supplying the market, with minimal returns at times. KN: In South Africa the shift from air to sea transport occurred around 10 years ago. We have not seen a further shift in this regard. Any drop in volumes in the airfreight sector can be attributed more to depressed markets than loss of volume to sea freight. The final decision on the mode of transport that a shipper uses is in most cases inf luenced by weather patterns. For instance, when poor weather in Brazil results in their grapes finishing early, causing an unusual demand for early grapes from South Africa, then airfreight is preferred rather than traditional seafreight to ensure shelf availability within three days rather than three weeks. TL: There has definitely been an increase in volumes in the past season. This could be due to markets recovering but also because there is an ongoing focus on developing new markets, which would call for more goods to be exported as we are serving the traditional markets as well. The move to sea happened a long time ago and it remains the preferred method of moving large volumes of goods, as it is the most cost-effective way. FTW: What are the biggest challenges facing the perishable sector from your perspective? JMD: Wind delays continue to be a challenge for South African fruit exporters, particularly between November and March when equipment stoppages can result in a 50% utilisation of port equipment. This challenge is being addressed in order to reduce the number of stoppages. Navis outages have been a further challenge for the industry and one that is receiving the necessary attention. KM: The biggest challenge is to be able to contain increasing costs. Labour, handling, energy and fuel, for instance, all increase annually but destination markets do not want to pay any increases in C&F product costs. This is the biggest challenge currently facing the perishables sector. TL: The high cost of logistics is without doubt something that continues to impact on exporters who are already faced with high transportation costs – being far from markets. We have to find ways of moving our goods more competitively. With more and more buyers opting for a justin- time approach, there is very little room for delays when it comes to moving cargo. If my wine is not in the retailer’s warehouse on time, he will find someone else’s wine to sell. Issues of port congestion remain problematic as we work to very tight deadlines. Of course the fruit industry is affected much more than wine, as the product is much more perishable, but ultimately the impact of delays and ever-increasing costs for exporters is taking its toll. We are competing with the likes of Chile and Australia who will grab our market share very quickly if we don’t keep a finger on the pulse. INSERT & CAPTION 1 The shift from air to sea transport occurred around 10 years ago. – Kum Naicker INSERT & CAPTION 2 Volumes are now back to 2009 levels thanks to, amongst others, a favourable exchange rate and an excellent season. – John Mac Donald INSERT & CAPTION 3 Success in new markets has definitely not been a lucky break but due to ongoing and persistent hard work. – Thys Lombard