Reefer exports kick-start expected upturn

As reefer exports gain
momentum and the automotive
industry shows signs of
recovery, DAL Agency
managing director Ron Frick
is quietly optimistic about
the future.
DAL Agency, although
established in July 2008, took
over the sales and marketing
responsibility of DAL’s Europe
service from Safmarine
effective on November 1
last year.
And by Frick’s own
admission, the timing was
as imperfect as it gets.
“In my 38 years in the
shipping industry I don’t
remember a period where
freight rates were at such
depressed levels,” he
told FTW.
However, there are signs of
change, with shipping lines
on the Europe route having
implemented a $200 per
TEU general rates increase
north and southbound.
“In the SA-Europe
Container Service the Saecs
member lines have, due to
seasonality, temporarily
suspended the intermediate
service to reduce available
capacity to more appropriate
levels.
“The withdrawal of capacity
for a four month period has
resulted in the core service
taking over the cargo the
intermediate was carrying,
and that service is now
running full in both directions.
This reduction in capacity
creates an environment
conducive to restoring ocean
freight rate levels back to
where they were in the first
quarter of 2009,” said Frick.
“Europe-SA has always
been a very stable freight
market because of the
relatively limited container
volumes shipped between
Europe and South African
and vice-versa. In the good
years container volumes grew
at 1-2%. However, in the past
18 months the business has
shrunk in real terms
by 15-20%.”
Volumes have however
started picking up since July,
particularly southbound,
according to Frick. “It’s
nothing dramatic but we have
hopefully reached the bottom
of the curve and the only way
now is up.”
Northbound volumes have
been fairly static with strong
demand for 20 ft heavy
containers posing a challenge
for every shipping line. “The
modern vessels’ design is
more 40 foot friendly in
terms of container slots, so
if you carry 20 foot boxes
you sacrifice some container
space,” he explained.
“The average ship’s design
is around 14 tons per slot and a
lot of SA export cargo is heavy
– the likes of canned goods,
wine, wool and minerals and
copper – so you tend to hit
vessel weight limits before you
hit container utilisation.”
But this is a seasonal trend
and in the reefer season, reefer
cargo will get priority due to
its perishable nature. “For
us, reefer cargo is largely
behind much of the positive
sentiment.
“We anticipate the reefer
season in 2009/2010 will be
much better for exporters
than 2008/2009. Apart from
the limited buying power in
overseas markets as a result
of the recession, there was
carryover of deciduous fruits
held in cold stores in Europe
which suppressed the normal
demand from Southern Africa.
As a result a lot of SA fruit
was channelled to the Middle
East instead of Europe due to
better prices being achieved,”
he said.
Frick is also mildly
confident about the automotive
industry.
“It’s always a barometer
of the SA economy and if
you look at the National
Association of Automobile
Manufacturers of SA figures
on the sale of new vehicles,
the comparative year-on-year
decline is easing off. So in
real terms we have probably
seen a moderate growth, albeit
from a very low base, and we
are hopeful that this trend
will continue.
DAL Agency is in a
strong position to take
advantage of the expected
upturn, says Frick, with its
national and regional network
now firmly established.