Lob­sters, ahoy!

Car­ri­ers look to spe­cial­ized con­tain­ers to boost mar­gins “They don’t bite each other, and you don’t see legs fall­ing off”

Bloomberg Businessweek (Europe) - - CONTENTS - The bot­tom line Car­ri­ers say con­tain­ers tai­lored to trans­port goods such as fruit, flow­ers, or phar­ma­ceu­ti­cals can shore up flag­ging prof­its.

In Europe, lob­ster is an ex­pen­sive del­i­cacy, re­quir­ing con­stant cool­ing as the live crus­taceans make their way from traps off the coast of Nova Sco­tia to kitchens in Lon­don, Paris, or Frank­furt. Un­til re­cently, that meant ship­ping the crea­tures via air, crammed about 10 to 20 per box filled with ice packs. These days dis­trib­u­tors are con­sid­er­ing a new mode of trans­port: a stan­dard­size ship­ping con­tainer called Aqua­viva that can carry al­most 10,000 live lob­sters, each in its own cub­by­hole filled with sea­wa­ter that’s chilled, fil­tered, and mon­i­tored for oxy­gen. “It’s a more nat­u­ral en­vi­ron­ment, and the lob­sters are packed sep­a­rately, so they don’t bite each other, and you don’t see legs fall­ing off,” says Danielle Wester­weel, mar­ket­ing chief of Krijn Ver­wijs Yerseke, a 136-year-old Dutch seafood mon­ger. “The qual­ity is much bet­ter than air­freight.”

The Aqua­viva is made by France’s CMA CGM, the world’s third-largest con­tainer ship­ping line. Fol­low­ing four years of de­vel­op­ment, CMA in April started of­fer­ing it for trans­port­ing lob­sters and pos­si­bly other live seafood like mus­sels and oys­ters. The ef­fort is an ex­am­ple of a trend in which car­ri­ers such as CMA, Ger­many’s Ha­pag-Lloyd, and mar­ket leader A.P. Moeller-Maersk are try­ing to bol­ster mar­gins with spe­cial­ized con­tain­ers de­signed to move per­ish­able or frag­ile goods. The com­pa­nies need to court new cus­tomers as an over­sup­ply of ves­sels has sent freight prices down by two-thirds in the past four years, to about $500 per con­tainer shipped from China to Europe—barely enough to cover han­dling, fuel, and ter­mi­nal fees. The car­ri­ers are look­ing to ex­pand the use of re­frig­er­ated con­tain­ers and mak­ing their boxes more in­tel­li­gent, al­low­ing them to com­mu­ni­cate with port op­er­a­tors, truck­ers, ware­house man­agers, and com­pa­nies whose goods are be­ing shipped. “The in­dus­try is badly in need of beef­ing up the de­mand side at a time when de­mand for stan­dard goods is scarcely ris­ing,” says Peter Sand, an an­a­lyst at Bimco, a ship­ping trade as­so­ci­a­tion.

Maersk has equipped cool­ing con­tain­ers for an­other niche tra­di­tion­ally served by air­lines: the $500 mil­lion mar­ket for Kenyan roses shipped to Europe. The con­tain­ers can be driven di­rectly to farms, where the flow­ers are loaded in, cooled to just above freez­ing, and ven­ti­lated to limit fun­gus. They can keep the roses fresh for 25 days with­out wa­ter while cut­ting trans­porta­tion costs by as much as 70 per­cent, Maersk says.

Ham­burg Süd Group is work­ing to ex­tend the shelf life of pro­duce in con­tain­ers with con­trolled lev­els of oxy­gen and car­bon diox­ide. That would open dis­tant mar­kets to Latin Amer­i­can fruit and al­low im­porters to hold pro­duce in con­tain­ers if they ex­pect prices to rise. And Ha­pag has 10,000 con­trolled-at­mos­phere boxes that can main­tain con­stant tem­per­a­tures for ship­ping blood plasma, vac­cines, and other sen­si­tive phar­ma­ceu­ti­cal prod­ucts. Freight for­warders say such con­tain­ers cost at least dou­ble the stan­dard ship­ping rate, and so-called su­per­freez­ers for goods such as sashimi-grade tuna or vac­cines used to fight the re­cent Ebola epi­demic can cost as much as $15,000. “The chal­lenge is the shift away from stan­dard prod­ucts to­ward spe­cial­iza­tion,” says Nik­las Oh­ling, who over­sees con­tainer rout­ing at Ha­pag.

The risk is that spe­cialty con­tain­ers will gum up the sys­tem. Con­tain­ers have rev­o­lu­tion­ized ship­ping over the past six decades, in large mea­sure be­cause they’re in­ter­change­able. The stan­dard boxes can be filled with any­thing from shirts stitched in Bangladesh to iPhones as­sem­bled in China to BMW driv­e­trains made in Ger­many. Spe­cial­ized con­tain­ers of­ten must be shipped back empty be­fore they can be used again, be­cause there’s not a lot of de­mand in, say, Canada for lob­sters caught off the Dutch coast. “Each dis­tinct con­tainer type po­ten­tially in­creases im­bal­ances due to its re­stricted and less ver­sa­tile use,” says Ste­fan Duehring, global head of lo­gis­tics at Ham­burg Süd.

Some Euro­pean fish­mon­gers doubt CMA’s aquar­ium con­tainer will loosen air­freight’s grip on the lob­ster mar­ket, point­ing to the price risks of longer de­liv­ery times. While Cana­dian lob­sters can be flown to Brus­sels or Frank­furt within 48 hours of be­ing caught, sur­face trans­porta­tion takes about two weeks—long enough to see huge swings in price. Maersk in 2014 scrapped a sim­i­lar lob­ster con­tainer project, say­ing de­mand didn’t war­rant the ex­pense. CMA says its

project will be a suc­cess be­cause its cool­ing and fil­ter­ing tech­nolo­gies min­i­mize stress for lob­sters. Dutch fish seller Wester­weel says her com­pany isn’t plan­ning to switch solely to ocean ship­ping for lob­sters, but she sees a fu­ture for the spe­cial con­tain­ers. “There is al­ways a price risk,” she says. “We will prob­a­bly use both means of trans­port.” Ni­cholas Braut­lecht

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