Transport Logistics and the Fruit Transport Logistics and the Fruit Export Value ChainExport Value Chain
Malcolm C DoddMalcolm C DoddProgramme Manager,Programme Manager,
Post Harvest Innovation Post Harvest Innovation ProgrammeProgramme
The aim of the Φ
Programme
is to raise the competitiveness of South African Fruit
Exports.
Presentation content.Presentation content.
• The Logistics/Value/Cold/Export chain• Evaluate costs in the value chain for apples,
grapes and oranges.• Discuss these costs and the issues that can
be addressed.• Examples of initiatives to reduce costs in the
value chain.• Conclusion.
FRESH PRODUCE VALUE/LOGISTICS/COLD FRESH PRODUCE VALUE/LOGISTICS/COLD CHAINCHAINInspection
Inspection
Inspection
Inspection
Orchard Pack-house Cold store
Ship/container Import port Discharge
DepotSupermarketConsumer
Transporter
Cold store
Loading Transfer
How fruit should be handledHow fruit should be handled
•• ““ Controlling product temperature Controlling product temperature and reducing the amount of time the and reducing the amount of time the product is at lessproduct is at less--thanthan--optimal optimal temperatures are the most important temperatures are the most important methods of slowing quality loss in methods of slowing quality loss in perishablesperishables””..
Thompson, Mitchell and Thompson, Mitchell and KasmireKasmire, Chapter 11, Post , Chapter 11, Post Harvest Technology of Horticultural Crops. University Harvest Technology of Horticultural Crops. University of California, Publication 3311. 2004.of California, Publication 3311. 2004.
HEAT OF RESPIRATION OF VARIOUS FRUITSHEAT OF RESPIRATION OF VARIOUS FRUITSPRODUCE KIND STORAGE TEMP ºC VITAL HEAT IN BTU/TON/HR
GRAPES 0 400
5 1000
APPLES 0 700
5 1350
SUMMERPEARS
0 1100
5 1650
CITRUS 5 1200
10 2600
PLUMS 0 550
5 1450
NECTARINES 0 1150
5 1700
AVOCADOS 5 5500
10 24500
MANGOS 10 9900
15 24900
Evaluation of costs in the South Evaluation of costs in the South African fruit export supply/value African fruit export supply/value
chain.chain.
• Evaluation of costs within the South African fruit export supply chain end to end for:– Apples– Grapes– Citrus
• Data is averaged over several packing operations within each fruit kind.
• Study was commissioned to provide us with facts to aid in decision making of where money could be best spent to aid in improving the competitiveness of the value chain.
Methodology.Methodology.
• The intention of the study was not to highlight the regional production differences but to obtain a South African average cost for production through to market
• The cost after the farm gate are very similar for all the regions barring one.
• Transport of citrus to port varies greatly depending on the distance to nearest suitable port.
• Transport to port varies between R1.20 and R10 per 15kg carton.
• In the study an average distance of 150 km from farm to port was used with a cost of R1.91 per carton.
Methodology 2.Methodology 2.
• The costs of each operation within the supply chain were gathered from four export houses.
• The export houses varied in size. This information has been averaged.
• Five citrus, apple and grape pack houses were used in the study to obtain an average cost for packing.
• The costs were very similar. For each fruit kind.• Adjustments were made for electricity, labour and distance from
raw material (packing material) costs.
Cost item Rand value
Retail profit (Gross) 42.00
European transport 4.25
Importers commission 8.65
European logistics 13.00
Europe duties -
Freight 26.88
Insurance 0.75
Exporters commission 5.10
Port costs 2.26
Cargo dues (conventional) 0.42
Transport to port 2.13
Finance charges 1.00
DFPT Levies 0.30
PPECB 0.36
Packing materials 11.08
Packing charges 11.33
Farm costs 14.64
NFI 14.89
Analysis of cost chain for apples (12.5kg.) Sale price ofZAR 175.00.
Figures researched and supplied by Reinhardt Siegruhn of Oursource
Cost item Rand value % of value
Retail profit (Gross) 42.00 26.11
European transport 4.25 2.64
Importers commission 8.65 8.08
European logistics 13.00 7.4
Europe duties - -
Freight 26.88 16.71
Insurance 0.75 0.47
Exporters commission 5.10 3.17
Port costs 2.26 1.41
Cargo dues (conventional)
0.42 0.26
Transport to port 2.13 1.32
Finance charges 1.00 0.62
DFPT Levies 0.30 0.19
PPECB 0.36 0.22
Packing materials 11.08 6.89
Packing charges 11.33 7.05
Farm costs 16.45 10.23
NFI 14
89 9 26
Analysis of cost chain for apples (12.5kg.) Sale price ofZAR 175.00.
Figures researched and supplied by Reinhardt Siegruhn of Oursource
Cost item Rand value % of value
Retail profit (Gross) 42.00 26.11
European transport 4.25 2.64
Importers commission 8.65 8.08
European logistics 13.00 7.4
Europe duties - -
Freight 26.88 16.71
Insurance 0.75 0.47
Exporters commission 5.10 3.17
Port costs 2.26 1.41
Cargo dues (conventional)
0.42 0.26
Transport to port 2.13 1.32
Finance charges 1.00 0.62
DFPT Levies 0.30 0.19
PPECB 0.36 0.22
Packing materials 11.08 6.89
Packing charges 11.33 7.05
Farm costs 16.45 10.23
NFI 14
89 9 26
Analysis of cost chain for apples (12.5kg.) Sale price of ZAR 175.00.
Figures researched and supplied by Reinhardt Siegruhn of Oursource
Cost item Rand value
Retail profit (Gross) 29.25
European transport 6.50
Importers commission 7.28
European logistics 5.85
Europe duties -
Freight 13.40
Insurance 0.75
Exporters commission 4.00
Port costs 0.50
Cargo dues (conventional) 0.16
Transport to port 3.90
Finance charges 0.50
SATI Levies 0.36
PPECB 0.30
Packing materials 8.60
Packing charges 2.30
Farm costs 29.00(20 t/ha))
NFI 14.00 (20 t/ha)
Analysis of cost chain for grapes (4.5kg. equivalent) Converted Sale price of ZAR 126.75.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Cost item Rand value % of value
Retail profit (Gross) 29.25 23.08
European transport 6.50 5.13
Importers commission 7.28 5.74
European logistics 5.85 4.62
Europe duties - -
Freight 13.40 10.65
Insurance 0.75 0.59
Exporters commission 4.00 3.16
Port costs 0.50 0.39
Cargo dues (conventional)
0.16 0.13
Transport to port 3.90 3.08
Finance charges 0.50 0.39
SATI Levies 0.36 0.28
PPECB 0.30 0.24
Packing materials 8.60 6.79
Packing charges 2.30 1.81
Farm costs 29.00 (20 t/ha) 16.90
NFI 14
00
(20
t/ha) 11
05
Analysis of cost chain for grapes (4.5kg. equivalent) Converted Sale price of ZAR 126.75.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Cost item Rand value % of value
Retail profit (Gross) 29.25 23.08
European transport 6.50 5.13
Importers commission 7.28 5.74
European logistics 5.85 4.62
Europe duties -
Freight 13.40 10.65
Insurance 0.75 0.59
Exporters commission 4.00 3.16
Port costs 0.50 0.39
Cargo dues (conventional)
0.16 0.13
Transport to port 3.90 3.08
Finance charges 0.50 0.39
SATI Levies 0.36 0.28
PPECB 0.30 0.24
Packing materials 8.60 6.79
Packing charges 2.30 1.81
Farm costs 29.00 (20 t/ha) 16.90
NFI 14
00
(20
t/ha) 11
05
Analysis of cost chain for grapes (4.5kg. equivalent) Converted Sale price of ZAR 126.75.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Cost item Rand value
Retail profit (Gross) 42.97
European transport 10.59
Importers commission 5.60
European logistics 13.00
Europe duties -
Freight 25.93
Insurance 0.63
Exporters commission 5.36
Port costs 5.00
Cargo dues (conventional) 0.23
Transport to port 1.91
Finance charges 0.90
CGA Levies 0.32
PPECB 0.22
Packing materials 11.08
Packing charges 18.06
Farm costs 9.82 (80 t/ha) 11.85 (60 t/ha)
NFI 25
14
(80
t/h
)
23
10
(60
Analysis of cost chain for citrus (15.0kg.) week 27Sale price of ZAR 159.25.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Cost item Rand value % valueRetail profit (Gross) 42.97 26.98
European transport 10.59 6.64
Importers commission 5.60 3.5
European logistics 13.00 8.16
Europe duties -
Freight 25.93 16.28
Insurance 0.63
Exporters commission 5.36 3.3
Port costs 5.00 3.19
Cargo dues (conventional)
0.23
Transport to port 1.91 1.1
Finance charges 0.90
CGA Levies 0.32
PPECB 0.22
Packing materials 11.08 6.95
Packing charges 18.06 11.06
Farm costs 9.82 (80 t/ha) 11.85 (60 t/ha)
NFI 25.14 (80 t/ha)23.10 (60 t/ha)
Analysis of cost chain for citrus (15.0kg.) week 27Sale price of ZAR 159.25.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Cost item Rand value % valueRetail profit (Gross) 42.97 26.98
European transport 10.59 6.64
Importers commission 5.60 3.5
European logistics 13.00 8.16
Europe duties - -
Freight 25.93 16.28
Insurance 0.63
Exporters commission 5.36 3.3
Port costs 5.00 3.19
Cargo dues (conventional)
0.23
Transport to port 1.91 1.1
Finance charges 0.90
CGA Levies 0.32
PPECB 0.22
Packing materials 11.08 6.95
Packing charges 18.06 11.06
Farm costs 9.82 (80 t/ha) 11.85 (60 t/ha)
NFI 25.14 (80 t/ha)23.10 (60 t/ha)
15.78
Analysis of cost chain for citrus (15.0kg.) week 27Sale price of ZAR 159.25.
Figures researched and supplied by Reinhardt Siegrund of Oursource
Comparing citrus cost chain between Comparing citrus cost chain between week 27 and week 43. Converted to SA week 27 and week 43. Converted to SA
Rand.Rand.Item Week 27 Week 43
Sales price 159.25 113.75
Retail profit 42.97 29.32
Europe transport 4.81 4.81
Free on truck 18.60 18.60
Freight cost 25.93 25.93
FOB costs 10.59 8.04
Delivered in port 3.35 3.35
Packing cost 18.06 18.06
Farm cost before interest and depreciation
16.01 16.01
Farm profit (Loss) 18.94 (10.36)
Summary of analysis of the Summary of analysis of the value chain 1.value chain 1.
• The margin made by the main risk taker (the grower) is very low at 9 to 15% and this is very sensitive to sales price and exchange rate.
• For example the SA Rand has moved from 9.5 to 7.5 to the US$ during the course of this year.
• The picking and packing costs make up between 8 to 18% of the total cost.
• Across all fruit kinds the gross margin made by the supermarkets varies between 23 to 26%.
Summary of analysis of the Summary of analysis of the value chain 2.value chain 2.
• The European importers commission is 3.5%. • The European inland transport is 6.64% of the total
value chain. • Logistics costs 8.16% of the total.• Freight costs are fruit type dependant and vary
between 10.6% to 16 %.• Packaging costs are also fruit kind dependant and
vary between 9.5% to 18%.
A Project to audit A Project to audit the energy consumption of the energy consumption of
packhousespackhouses
and cold stores .and cold stores .
• An Engineering Consultancy was commissioned to develop an audit tool to capture and analyse the energy consumption in pack houses and cold stores.
• This revealed some startling information regarding how much energy was being wasted.
Relative rankings for fuel energy consumed Relative rankings for fuel energy consumed ((litreslitres/ton fruit produced)./ton fruit produced).
0
20
40
60
80
100
0 10 20 30
liter/ton
Citrus
Pome
Grapes
EfficiencyRank
Energy consumption by the different Energy consumption by the different components in a cold store operation .components in a cold store operation .
Compressors49%
Extractor fans25%
Lighting5%
Condenser Pumps
2%Condenser Fans
3%
Evaporator Fans15%
Other1%
Improvement PotentialImprovement Potential
(The Yellow line is Pome CA storage)
Refrigeration Plant ControlRefrigeration Plant Control
• Suction Temperature• Discharge Temperature• Units in Balance• Re-use Condenser Heat• Avoid Peak Tariff
Packaging Considerations
STANDARD CARTON
NEW A15C CARTON
Base Lid
SOUTHERN BELLE IN PLASTIC CARTONSSOUTHERN BELLE IN PLASTIC CARTONS
Value chain service
SOUTH AFRICA CHILE NEW ZEALAND
Pack House 87 91 109
Infrastructure &Operations
36 49 45
Road Transport Fleet 22 27 30
Rail infrastructure 15 0 15
Infrastructure & operations
32 49 44
IT Systems 13 19 22
Container ports 21 28 28
TOTAL RANKING 21 28 28
Commonwealth Secretariat benchmarking Commonwealth Secretariat benchmarking of the South African supply chain farm to of the South African supply chain farm to
port.port.
Benchmarking study comparing South Benchmarking study comparing South AfricaAfrica’’s s
fruit export supply chain from farm to local fruit export supply chain from farm to local port to Chile and New Zealand.port to Chile and New Zealand.
Conventional reefer terminalsConventional reefer terminals
CAPE TOWN
DURBAN PORT ELIZABET
H
SAN ANTONI
O
VALPARAI SO
AUCKLAN D
Typical pallet consignment
4150 4250 3500 4500 5500 4250
No. of containers per vessel
85 80 35 na 115 100
Pallets/berth/day 2150 2750 2000 2750 3200 2650
Containers/crane/h our
10 6 6 na 12 10
Shifts per day 2 x 8 3 x 8 3 x 8 3 x 8 3 x 8 2 x 8
The competitive costs of transiting The competitive costs of transiting South African reefer container South African reefer container terminals. Costs in US$terminals. Costs in US$
TYPICAL STEVEDORING
CHARGE
ESTIMATED PORT DELAYED
COST *
SHIPPING DELAY COST
**
TOTAL
SOUTH AFRICA 225 145 35 405
NEW ZEALAND 185 15 5 205
CHILE 215 22 24 261
ComsecComsec
Benchmarking study. Benchmarking study. Proposed action items.Proposed action items.
Comsec ranking Action item Industry ranking
1 Centralised information
technology hub
1
2 Establishment of remote (away from port area) logistics zone for trucks and
containers
2
3 Boost rail use to move fruit from production
area to port
4 Establish a continuous innovation resource
5 Introduction of private expertise into
ports
Ranking Action item
6 Electronic data interchange.
3
7 Ocean freight charges.
8 Government- led reforms to stimulate excellence in the fruit logistics sector.
9 Alleviating container terminal congestion.
ComsecComsec
Bench marking study action Bench marking study action items 2.items 2.
Transporter
Loading
THE THE COLD/SUPPLY/VALUE CHAIN FOR PERISHABLESCOLD/SUPPLY/VALUE CHAIN FOR PERISHABLES
CONCLUSIONCONCLUSION
There are many costs associated with the supply chain.Some of these are out of our control.Analysis of the costs show that there are few we can control in order to reduce them.
PackagingEnergy use in the pack house cold stores
Consider vertical integration to further reduce costs.To be able to analyse and improve we must measure as many cost and quality influencing issues , for example:
Energy use,Air and fruit pulp temperatures.
THANK YOUTHANK YOU