Greater efficiency in cost chain is answer to rampant rand

RAY SMUTS IT IS a fait accompli that some players in the fruit business are heading for the wall - if they have not already gone that route - as the rand continues to pummel exports, but LauritzenCool Logistics (LCL) is fortunately not among them. Indeed, MD Johan Kruger concedes the company has been “thankful” for what it has been able to offer the market. Now in its third year of operation in South Africa, LCL - 50%-owned by NYK Line - is going from strength to strength and Kruger expects to double export volumes within the next year or two. He expresses the wish however for the company to remain of a size where personalised service will still be possible. “The strong rand is making life very difficult for exporters and exports, impacting especially on fruit and vegetables,” he told a gathering of clients aboard the LauritzenCool specialised reefer vessel Tundra King in the port of Cape Town recently. “Hopefully, we as service providers integrating services can contribute toward making it possible for people to survive longer.” LCL’s general manager Cobus van der Merwe believes the solution to the current exchange dilemma and other factors is to effect greater efficiencies in the total cost chain. This, in his view, can be brought about by reducing the number of elements in the chain and paying those remaining the market-related rate. “A lot of people have already gone down and it is sad but inevitable some producers will go out of business. But in the difficult year ahead we still expect to be up by about 20%.” Van Der Merwe says a big problem for growers is that much of their costs for essentials such as fertiliser, pesticides and packaging, is determined by global pricing. “They need to come down but that does not always happen due to currency fluctuations.” To this should be added that the present uncertainty in the fruit market is not due to the rand’s strength alone but also new market forces that have come into play in the form of newly- competing countries and companies involved in areas in which South Africa was unique at one stage. Reviewing LCL’s progress to date, Van Der Merwe says the company will probably handle around 2300FEU this year, compared with between 600 and 700 FEU in start-up 2002.