‘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.