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Bright Spot

Strong demand for perishables has ports scrambling for more cold storage space.

wilmington
The newly-expanded reefer container yard at the Port of Wilmington (Port of Wilmington)

Published Jan 25, 2021 10:09 PM by Tom Peters

(Article originally published in Nov/Dec 2020 edition.)

The deadly and persistent worldwide pandemic has become entrenched as a major factor in analysts’ forecasts regarding growth in marine cargo. Seaborne perishables are part of the equation, a bright spot apparently, as London-based marine consultancy Drewry says temperature-controlled cargo has been more resilient during the pandemic than dry cargo.

In its "Reefer Shipping Annual Review & Forecast 2020/21," Drewry says reefer cargo will hit 156 million tons by 2024, growing at an annual rate of 3.7 percent, a bigger increase than for dry cargo.

“Drewry expects the reefer trade to be more recession-proof against the economic impacts of Covid-19,” says Philip Gray, who heads up Drewry’s reefer shipping research practice. “Near-term, it will continue to benefit from African swine fever-induced protein demand in Asia. The continuing trade standoff between the U.S. and China remains a threat to transpacific trade but could provide opportunities on other routes through trade substitution, such as the South America East Coast to Asia.”

A sampling of ports around the U.S. and abroad confirms Gray’s analysis.

Fresh Fruits – and Beer!

The Port of Wilmington, Delaware, the number one port for banana imports into the U.S., saw “a significant increase in imported fresh fruits, particularly bananas, in the early months of the pandemic,” notes Kathryn Bradley, Head of Public Relations & Communications for port operator Gulftainer.

She says the increase was likely due to people working from home along with an element of “lockdown hoarding.” She adds that, “In addition, people now have more time on their hands to cook for themselves, so they began to buy more fresh produce.” Reefer imports far exceed exports at the port with bananas, clementines, table grapes, kiwi fruit, blueberries and pineapples leading the way.

At Florida’s Port Everglades, Acting Director of Business Development Ellen Kennedy says, “The perishables season is strongest between the months of October and April, so we didn’t have a big loss due to the pandemic. April was down, but overall our reefer volumes remained steady over the course of the year. In fact, volumes were up 22 percent in January 2020 and 10 percent in February 2020, so we might have had a banner year without the virus.”

Imports account for approximately 70 percent of the reefer business at Everglades with the majority coming from Central America and the Caribbean. The port’s top trading partners are Guatemala, Honduras and Costa Rica. The top commodities are bananas, other fruits and vegetables. Kennedy says flowers are an emerging market and that Crowley Maritime is bringing an increasing amount of pharmaceuticals through the port.

Crowley opened a new, USDA customs inspection dock earlier this year in Port Everglades, making for simpler, faster and more efficient inspections that increase speed to market for perishables from Central America and the Caribbean. The state-of-the-art dock further solidifies Crowley’s support for its cold chain customers.

Although the pandemic has impacted all cargoes at the Port of Baltimore, the reefer trade has shown resiliency and rebounded from early Covid-19 impacts, says Bill Doyle, Executive Director of the Maryland Port Administration (MPA): “The MPA works closely with Merchants Terminal Corporation (MTC), located near-dock at the Port of Baltimore and specializing in frozen products. Reefer cargoes never really tailed off and in fact increased due largely to the fact that people were cooking at home. MTC is on pace for year-over-year gains in 2020.”

On the West Coast, the only refrigerated cargo the Port of San Diego imports are bananas, pineapples and other perishables from Central and South America through its contract with Dole Fresh Fruit Company. “Fortunately, there was limited impact on these imports because bananas are typically a steady, staple fruit,” notes Greg Borossay, Principal for Maritime Business Development at the port.

“The primary refrigerated export we process is beer,” he says, “which goes back to South America on the Dole cargo vessels. San Diego has great potential for exported refrigerated cargo due to its proximity to the Imperial Valley agricultural region. A whole host of agricultural products including asparagus, broccoli, citrus, tomatoes, beef, dried fruits and seed are potential export opportunities for San Diego.”

China Connection

The deepwater Port of Nansha in the South China Sea brings a global perspective to the reefer trade.

“We saw a slight dropoff in February and March but not nearly as dramatic as our dry volumes,” notes John Painter, President & CEO of Guangzhou Port America in Wyckoff, New Jersey. “Both rebounded very strongly in the second and third quarters.” Guangzhou Port America works in partnership with Guangzhou Port Group, which owns and operates the Port of Nansha.

Imported reefers are greater than exports, and most are destined for the Western Pearl River regions with over 17 million consumers. “We see a lot of protein – chicken, pork and beef,” he says. “Imported cherries, especially from Chile, are another popular product. Customs in Nansha has done a tremendous job expediting these shipments.”

The Chilean cherries move from ship to market in an amazing two-and-a-half hours, the result of collaborative efforts among Nansha customs, port and wharf operators, Evergreen Marine and Haixin Cold Storage Inspection Center.

Infrastructure Challenges

According to industry watchers, one of the challenges facing increased volumes of temperature-controlled cargo and the global cold chain is the need for more cold storage.

Nansha, like many of its U.S. counterparts, is greatly expanding its cold chain infrastructure. Six eight-story cold storage facilities are currently under construction at the Nansha International Logistics Center. The new facilities will increase storage capacity by 460,000 tons and make Nansha the largest cold and fresh produce port in South China. Phase I of the project is expected to be completed by year-end.

San Diego has the only on-dock refrigerated facility for processing temperature-controlled cargo in Southern California, says Greg Borossay, with a unique operating environment that makes it highly competitive. But it will need more cold-storage investment in coming years due to strong anticipated growth.

The port recently completed the first phase of a project to modernize its Tenth Avenue Marine Terminal by demolishing two obsolete warehouses. One was located directly in front of a berth used for the Dole vessel that brings containers of bananas and other perishables. With the warehouse gone, there’s an unimpeded line directly to the cold storage warehouse, resulting in more efficient operations.

The Port of Wilmington has invested heavily in cold chain facilities over the years and currently has one million square feet of refrigerated space.

“In 2020 we added new RTG (Rubber Tired Gantry) stacks with reefer racks as part of the upgrade project to the container storage yard,” says Kathryn Bradley. “These improvements, along with on-site customs and agriculture inspections, means we have a very well-equipped facility for our customers. We continue to monitor customer needs on a regular basis and are looking at new cooling technologies in order to provide specific, targeted cooling for different types of produce that require special handling.”

She adds that Gulftainer has continued with its reefer and warehouse expansion throughout the pandemic.

CenterPoint Properties’ 300,000-square-foot International Logistics Center (ILC) at Port Everglades is now complete and open for business, says Ellen Kennedy: “Constructed on 16.657 acres of port property, it contains warehousing, refrigerated warehousing, office space and cross-docking facilities. The ILC is also the new home for Foreign Trade Zone No. 25.”

Everglades and its terminal operators have approximately 1,300 reefer plugs throughout the port.

Main Street

The Port of Baltimore’s cold chain infrastructure is enhanced by its location and rail connections. “The port is uniquely located immediately off Interstate 95, the main street of the U.S. East Coast,” notes Bill Doyle. “We also have a direct connection via Interstate 70 to the Midwest. In addition, CSX and Norfolk Southern service our port with on-dock rail.”

He says reefer supply chains have shifted during the pandemic to more retail versus food service: “Merchants Terminal Corporation (MTC) works very closely with Ports America Chesapeake and has reefer plugs onsite. Good communication and planning between MTC and Ports America is a real key to servicing reefer customers at the port, and MTC plans to grow its reefer footprint here.” – MarEx  

Tom Peters is the magazine’s ports columnist.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.