Coldstores Keep Cool as Economic Crisis Knocks at Door Of Europe’s Gateway
By JOHN M. SAULNIER, QFFI Chief Editor & Publisher

Derk van Mackelenbergh, managing director of the Eurofrigo BV/Nichirei Logistics Group, reports that company goals were met during 2009.

It’s “steady as she goes” for public refrigerated warehouse operators at Port of Rotterdam, as frozen food and juice concentrates enter and exit at fairly normal pace regardless of recession.

“Business levels are reasonable, given the state of the overall economy. Rates are relatively stable, though under pressure. While activity with some customers has decreased, we have fortunately found additional clients to make up for reduced volume.”

That was the general assessment for the second half of 2009 offered by Derk van Mackelenbergh, managing director of the Eurofrigo BV/Nichirei Logistics Group’s cold storage warehousing activities, during a meeting with Quick Frozen Foods International editors on November 9.

The company he runs operates two high-capacity coldstores at the Port of Rotterdam – one at Distripark Eemhaven near the Home Terminal, and the second at Distripark Maasvlakte near the Delta Terminal.

“While volumes have been somewhat lower than expected, we will nonetheless meet our goals at the end of the year,” stated the chief executive. “Some others in the cold chain have not been so fortunate, as the economic recession has led to a number of bankruptcies among forwarding companies.”

While fourth quarter statistics for overall port throughput were not available at the time of the interview, Van Mackelenbergh estimated that traffic was down by 10% in Rotterdam, and probably more at Europe’s other major Border Inspection Point (BIP) waterfront ports of entry.

“A year ago, if you had documents in hand to pick up a container, it could take half a day to get the job done. Today it takes only half an hour,” commented Eurofrigo’s managing director.

Nonetheless, Eurofrigo handled approximately 30,000 big boxes in 2009 [about the same as the year before], 27,000 of which were refrigerated containers. In all, Van Mackelenbergh estimated that the Port probably handled 400,000 reefers, most of which contained fruit.

Just before this magazine was scheduled to go to press, on Dec. 30 the Port of Rotterdam released figures showing that goods throughput in 2009 fell to 385 million tons, down 8.5% from 2008. Imports shrank by 13% to 272 million tons, while exports rose 5% to 113 million tons.

Agribulk imports dropped sharply (-22%) to just over 8 million tons. This was said to be because of Europe’s good harvest in 2008-09. Containers slipped by 6%, and fruit handling was off a bit.

Hans Smits, Port of Rotterdam Authority CEO, stated: “Considering the circumstances, we cannot be dissatisfied. After hitting rock bottom in the second quarter, throughput has been improving slightly each month.”

“Moreover,” he continued, “Rotterdam is doing better than its main rivals. But I am not unconcerned. Many of our clients are having a difficult time and that will not be much different in 2010. The best medicine for this is growth, partly through an increase in our market shares. We therefore intend to continue with our active commercial policy.”

With financial woes in Dubai reverberating around the region, on Dec. 4 the Port Authority issued a press release to reassure clients and the public that fallout from the cash-strapped, overextended Emirate would not adversely affect operations in Rotterdam. It stated:

“A subsidiary of Dubai World, DP World, is one of the companies behind the consortium Rotterdam World Gateway (RWG) that will be operating the first container terminal on Maasvlakte 2. However, insofar as this can be determined, the financial problems that Dubai World made news with recently will not have any impact on the Maasvlakte 2 development.

“DP World may be a subsidiary of Dubai World, but this does not mean that the former is involved in the latter’s problems. It is not for nothing, after all, that their activities are organized into separate legal entities. In addition, with a share of 30%, DP World is just one of the companies that together form RWG.

The other four are the shipping companies MOL (Japan), Hyundai (Korea), APL (Singapore) and CMA CGM (France). Finally, besides RWG, there are two other sites that have been allocated on Maasvlakte 2: one to APMT and one to Euromax.

“The Port of Rotterdam Authority has very regular contact with all the container companies that are active in Rotterdam, and the consequences of the economic crisis are a recurring topic of conversation.”

Busy Year for Kloosterboer

It was an especially busy time in 2009 for the Kloosterboer Group of coldstore operators, which runs a network of refrigerated warehouses in Holland, Norway, the Faroe Islands and the USA. Construction and acquisition were on the front burner as the family-owned company began building an automated high-bay, 70,000-pallet-place dedicated coldstore for McCain Foods in Harnes, France; purchased the Daalimpex cold storage facilities in Velsen, Holland; and opened a new coldstore in Dutch Harbor, Alaska [see related story at right].

“Business has been relatively good, so we can’t complain,” said Ad Coppoolse, commercial manager. “Export trade is less, especially to Russia, but the domestic market remains OK.”

While warehouse occupancy rates for frozen food products are high, he noted that “chilled is down, mainly due to reduced fruit shipments to the Russian market.”

The company, which employs 600 people and generated turnover of EUR 145 million in 2008, maintains a diversified client base that ranges from producers and distributors of fish and meat to poultry, vegetables, fruits, juices and other products. Furthermore, it has a separate business unit that designs and builds dedicated coldstores and distribution centers.

With an eye on further increasing its involvement in temperature-controlled cargo logistics, Kloosterboer last summer appointed Hans Kroes as its new chief executive officer. Among other things, he is responsible for project management, which is run on a daily basis by Maarten Res.

FrigoCare: New Name, Familiar Face

“Our coldstore has been pretty full since May,” reports Jan Bouman, manager of the FrigoCare Rotterdam operation. The Samskip Group company, which was previously doing business as Kloosteroer Terminal in Holland, officially changed its name on December 1.

Effective December 1, Kloosterboer Terminal Rotterdam and Kloosterboer Aalesund in Norway, both of which have been 100% owned by the Samskip Group since May of 2005, have been conducting business under a new name: FrigoCare.

“The decision to re-brand the companies was made to better differentiate our brand and to strengthen our product specialization,” explained Jan Bouman, the manager in charge of Rotterdam operations. “We will continue to work together with Kloosterboer as before.”

Bouman now reports directly to Samskip Chief Executive Officer A. Gisalson, who is based in Reykjavik, Iceland. Previously Johan Kloosterboer was in charge of Samskip’s fish product group in Rotterdam and Aalesund.

Fish and seafood species bound for further distribution in the European market account for approximately 75% of the products that FrigoCare stores, with much of the tonnage originating from Iceland. Among other imports of marine products handled, a good deal comes from the Southern Hemisphere and East Asia.

“We are having a good year,” Bouman told Quick Frozen Foods International on Nov. 16. “Actually, our coldstore has been pretty much full since May.

There were a few slow months to start with, but throughput of items ranging from cod and pangasius to tilapia, Atlantic and Pacific saithe and shrimp has been excellent.”

The manager noted that when fallout from the economic crisis initially hit the fish market in late 2008 and early ’09 a number of clients rushed to unload stocks, only to discover a few months later that the market was not as bad as they had thought.

“While prices for some species have been under heavy pressure, demand for most items remains intact. So this year [2009] many importers started building up stocks again in the spring,” said Bouman. “Volumes remain good and movement is steady, though pressure remains on prices. Quotes for cod, which I understand had been down by as much as 50% at one point, have now stabilized.”

A major change in the pace of incoming product flows during the economic recession has meant that long-term space utilization projections have been difficult to make with any degree of accuracy.

“A few years ago, by November we could forecast activity in the first quarter of the new year within 1,000 tons. Now our planning typically goes a week or two at a time, as there is a great deal more spot buying and selling going on,” explained the manager. “We are receiving more late advice regarding container shipments. Sometimes it even happens when containers are barely out of demurrage. This makes for a rush-rush response on our part, but we are well equipped to handle such situations.”

While noting that there were a few bankruptcies in 2009 among small companies with which it had been doing business, Bouman is “moderately optimistic” that an economic turnaround is not too far off. “Our client base is very solid as well as loyal. They are working harder to get positive results, and so are we,” he stated.

View from the Maersk Line Bridge

Welcoming QFFI editors to Maersk Line offices in the Netherlands are Captain Peter Wedell-Neergaard, who is the Copenhagen-headquartered company’s assistant general manager, and Bianca Verschoor, a reefer development executive based in Rotterdam. Portrayed in the painting seen decorating the wall is retired Chairman Maersk Mc-Kinney Møller, who remains on call when it comes to making important decisions.

The availability of refrigerated cargo ships will be tight in 2010, according to Bianca Verschoor of the Maersk Benelux BV division of Maersk Line. “No new vessels entered service in 2009, and over the last two years capacity has been falling,” advised the reefer development executive.

The trend among many frozen and cool cargo shippers is to shift from booking space on conventional refrigerated vessels in favor of ocean container carriers, Captain Peter Wedell-Neergaard told Quick Frozen Foods International during an interview at Maersk Benelux headquarters in Rotterdam on Nov. 11. At the same time, he added, aging conventional reefers that have been on the water for 23 years or more are being phased out of service.

Conventional vessels, which transported an estimated 80-85% of deep-sea reefer cargo to and from ports around the world 20 years ago, have been steadily losing market share over the past two decades. Today they are thought to carry no more than 40-45% of total cool cargo payloads.

Maersk, which operates a fleet of 498 container vessels and has in excess of 1,900,000 big boxes at its clients’ disposal worldwide, ordered 16 new container ships in 2008. Each is being designed to have enough reefer plug capacity to permit as many as 1,700 containers – out of up to 7,450 on board per voyage – to carry refrigerated goods.

However, during last year’s first three quarters 13 vessels were laid up by the company, thus removing from the market capacity of approximately 53,000 TEU. More capacity was expected to be taken out of service toward the end of the year.

While the container shipping industry as a whole is navigating through rough seas churned up by the economic recession and subsequent contraction of international trade, traffic in refrigerated foodstuffs remains relatively stable.

From refrigerated bananas, grapes and other fruit to frozen seafood, poultry, meats and vegetables, commodities as well as value-added products continue to be shipped from continent to continent via environmentally-friendly sea routes.

Indeed, according to researchers conducting an evaluation for the World Economic Forum, “The entire container voyage from China to Europe is equal in CO2 emissions to about 200 kilometers of long-haul trucking in Europe.”

Captain Wedell-Neergaard, who has been working harborside as assistant general manager at Maersk corporate headquarters in Copenhagen for the past two years, is engaged in activities ranging from reefer management and operations to technical sales and innovation.

These days, with most global shipping and transport companies operating in a crisis mode, innovation includes not only temporarily taking vessels out of service to await later deployment when demand picks up, but also issuing standing orders for “slow-steaming” to reduce consumption of bunker oil.

“This saves 150 tons of fuel or more per day,” pointed out Wedell-Neergaard, who during his years at the helm captained 349-meter long S-Class vessels. “At a time when rates in general are down and oil prices are unpredictable, it is more important than ever to utilize our fleet to the maximum.”

During the first three quarters of 2009, the economic crisis took a toll on the activities of the A. P. Moller - Maersk Group, parent of Maersk Line, as spelled out in an interim management statement released by the company on Nov. 12. Freight rates and volumes in container shipping were reported as 30% and 5%, respectively, below the same period of 2008.

“As expected, the Group was still negatively affected by the challenging market conditions in the third quarter of 2009, particularly in the markets for container vessels and tankers,” said Group CEO Nils Smedegaard Andersen. “The strong focus on reducing the level of costs continues to yield positive results.”

Revenue for the period fell to US $35,304 million, 25% lower than during the same period in 2008. The result was a loss of $706 million compared to a profit of $3,606 million. The third quarter result was a loss of $166 million, including impairment losses of $96 million.

For container trades, the outlook for the full year of 2009 was summed up as follows: “Average rates including bunker surcharges for the fourth quarter are expected to be slightly above the third quarter level, while volumes are expected to be somewhat below due to seasonal fluctuations.”

The statement also declared:

“The global economic crisis is still having a severe negative impact on the market for container shipping. Falling demand and additions of new tonnage led to substantially lower freight rates in the first nine months of the year than in the same period of 2008. Due to the current market conditions, approximately 10% of the global fleet has been taken out of service.

“In the third quarter of 2009, volumes showed an upward trend compared to the second quarter, primarily reflecting the traditional peak season, however, volumes were lower than in the third quarter of 2008. Combined with temporary capacity reductions, the rising volumes led to a general increase in freight rates in the third quarter. Nevertheless, rates were considerably lower than in the same period of 2008, and further increases are required for the container market to become profitable again.”

Extended Gate in Moerdijk

Meanwhile, on the logistics front in Holland, Maersk Line is proactively working to help alleviate congestion around the busy Port of Rotterdam.
“We initiated the extension of the gate entrance of our deep-sea terminals in Rotterdam to the extended gate in Moerdijk,” said Bianca Verschoor. She listed a number of advantages that this brings, including:

• Service reliability increases by avoiding the crowded port area, especially with the 20% road capacity reduction on the A15 port access road.
• Quick container handling, as there is sufficient gate capacity for trucks and berth capacity for barges that move cargo directly to inland depots for further distribution into Europe.
• Cost efficiencies through faster container handling, reduced demurrage charges and higher service reliability.

The extended gate is available for customers with cargo in the carrier’s haulage at no extra cost. This applies to the transportation of containers in the relevant catchment area of the Moerdijk extended gate. For those customers using a merchant’s haulage product, a Port Additional Fee (based on cost-recovery) is charged for the transportation between Moerdijk and the port.

“At the moment this service has been utilized mostly by dry cargo shippers, but of course we are well equipped to handle reefers as well as dry containers,” said Verschoor.