‘Prepare for a tough ride until the end of 2009’

CONTINUALLY SPIRALLING fuel costs are impacting negatively on airfreight exports, says Mike Froy, divisional CEO of Grindrod Perishable Cargo Agents. “There is a significant swing from airfreight to seafreight due to the escalating fuel prices, and freighter operators are feeling the pinch the most, with some already having gone to the wall.” There is no question that freighter operators are having the hardest time. “Fortunately,” says Froy, “our parent company Grindrod is diversified to include all modes of transport.” As to where this is likely to end, given that economists are predicting the possibility of crude oil reaching $200 a barrel, Froy comments: “Hopefully sanity will prevail shortly and prices will start decreasing.” His concerns are well founded, given that the mainstay – 70%, of Grindrod Perishable Cargo Agents – is airfreight perishable exports. “Perishable products are in the main low value so transport costs are a significant element of the total landed cost. “It is going to be tight for our industry in the foreseeable future. If the rand strengthens we would have a bit of a problem but the ride will be tough until the end of 2009.” The division exports, inter alia, fish, flowers, fruit and vegetables, meat, lobsters, abalone and cuttings. The main markets are Europe, the Middle East, Africa and the Far East. The remainder of Grindrod Perishable Cargo Agents’ mix is 20% domestic airfreight and courier cargo and 10% airfreight imports, mainly fresh flowers from Kenya. Of concern is that the EU is currently considering a ban on the importation of South African ostrich meat products due to question marks over health standards. Ostrich exports, mainly to Europe, are valued at around R1 billion a year so it follows any ban could hit the industry hard, coming on top of in-place (EU) prohibitions on red meat, poultry, honey, milk and, latterly, game meat. Established in 1956, Grindrod Perishable Cargo Agents is a division of Grindrod (South Africa). Its head office is situated in Johannesburg, with offices in Cape Town George, Port Elizabeth and Durban.