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Feb. 2014

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FEBRUARY 2014 COOL CARGOES 10 THE JOURNAL OF COMMERCE need to be nimble and put things together quickly so we are addressing global com- petition along with service factors." With seasonal commodities, price often isn't No. 1 — shippers have service concerns above rates because they are perishable commodities, Duggan said. "Having the right rate is an important factor, but there are so many things going on in the supply chain," he said. "Carriers and shippers both have to focus on mak- ing things more efficient." Instead of just rates, he said negotia- tions should include other items, such as point of service, communications, coor- dination, documentation and on-time reliability. "Someone on the carrier's side needs to shepherd the business from inception of a booking all the way through to delivery." Developing a rate index system is one way shippers and carriers can move past a rate-only negotiation, he said. "Once you work through how it will be set up and how it will work, you get to see a blended view of the market," Duggan said. "That puts you more into a strate- gic partnership with a customer and the supply chain moves for everyone with a lot more predictability." Duggan said slow-steaming is here to stay on westbound shipments, but there is a good prospect of increased on-time delivery for reefer shippers if regulators in the U.S., European Union and China approve the P3. "Right now, we are in a vessel-sharing alliance, but still operate as separate com- panies," Duggan said. "Each one operates different vessels, uses different ports and has different on-time performance." The plan is to operate the vessels neutrally and in a standardized fashion. Maersk Line consistently has the highest on-time performance rating of any con- tainer carrier, according to data compiled by research analyst SeaIntel. In a report issued in January, SeaIntel said P3 partner MSC has the worst on- time performance in the industry, with CMA CGM in the middle of the pack. "The goal is that the P3 on-time reliability rises to meet Maersk standards," Duggan said. CC Contact Stephanie Nall at By Stephanie Nall RETHINKING REEFER Niche carriers, reefer vessels and expedited service could add speed to shipping perishables W ESTWOOD SHIPPING HAS found new use for its f leet of four BulkCon ships. The carrier, which has specialized in transporting forest products since 1892, added refrig- erated cargoes to the mix in the summer of 2013. Westwood's BulkCon vessels have bulk capacity below deck and the ability to carry 200 20-foot-equivalent-unit con- tainers on deck. "Last summer, we started a reefer program because we saw a need and an opportunity, but we are doing it slowly," said Corey Heinz, regional vice president for Asia sales. "For reefer ship- pers, we have several advantages: We aren't slowing down at all. We're small, so there is high-touch service. And we call at ports not already served, so it's direct service and doesn't require a lot of inland shipping." He said the carrier has 15 to 20 reefer loads on each fortnightly sailing, but from an equipment and plug standpoint, there is plenty of room to expand. "We're going to grow the program, but if someone came in and said we want to put 50 or 60 reefer boxes on each sailing starting next month, we'd have to really sit down and talk about it. We want to grow, but we want to do it well, so it may be slow," Heinz said. "We think we're a good fit for the reefer shippers that want to reach our markets and have products with shorter shelf life. We go direct to a number of ports that aren't served by anyone else. There is no transship component, so there are no missed connections. The end-user can come pick up a box right away," he said. Some shippers, frustrated at slow- s t e a m i n g a nd d ropped por t c a l l s, especially by the major trans-Pacific container carriers, are looking for other options. One appealing, but expensive, alternative would be an expedited con- tainer service that would cater mainly to high-value reefer cargoes and other high- value time-sensitive cargoes. "The concept of a high-speed dedi- cated vessel has been discussed," said Bill Duggan, vice president for North Ameri- can refrigerated services at Maersk Line. "We do get together and say, 'What if we did this, or could we do that?' It's appeal- ing in many ways, but there is a definite cost to the carrier. It all comes down to demand for it," he said. Because the service would be more costly than on the regular slow-steaming routes, shippers would have to study the equation carefully, Duggan said. "If we get your box to Yokohama three or four days faster, will it go directly to a market or restaurant or does it go into storage? If it goes into storage at the destination, I'm not sure anyone would be willing to pay more for a service that would cost carriers a significant amount more," he said. Putting together such a service in the east-west trades would be difficult, and shippers other than food exporters would have to be interested. Terry Brown, president and CEO of Seaonus and Diversified Port Holdings, said he envisions other service possibili- ties. "There has to be a magic number or a formula where at some point slow-steam- ing doesn't work for some shippers," he said. "There will be some opportunities for niche reefer operators like Seatrade." A record number of conventional breakbulk reefer vessels were scrapped last year, leaving the global fleet much reduced. "At some point, we will see more conventional reefer vessels built," Brown said. CC Contact Stephanie Nall at

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